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December 12,2011

Energy Data Highlights

Crude oil futures price12/8/2011: $98.34/bbldown$1.86 from week earlierup$10.06 from year earlier

Natural gas futures price12/8/2011: $3.457/mmBtudown$0.191 from week earlierdown$1.149 from year earlier

Weekly coal production12/3/2011: 22.106 million tonsup1.299 million tons from week earlierup0.273 million tons from year earlier

Natural gas inventories12/2/2011: 3,831 Bcf 

down20 Bcf from week earlierup102 Bcf from year earlier

Crude oil inventories12/2/2011: 336.1 mmbblup1.3 mmbbl from week earlierdown19.8 mmbbl from year earlier

Natural Gas/ Power News

EIA Storage Release 12/8/11 (Actual): -20 Bcf 

Previous Week: -1 Bcf +2.7% Change from 1 Year Ago+8.7% Change 5-year Average

Middle East can expect 'dash for gas', Shell exec tells Oman conference

Shell anticipates a dash for gas in the Middle East to cope with increasing energy

demand and expectations that some 60 million people are due to enter its jobs

market over the next ten years. The forecast came from Mark Carne, Shell's

Executive Vice President for the Middle East and North Africa, addressing the Gas

Arabia conference in Muscat Monday.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8687320

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Novatek to double gas output by 2020, Total ups stake

Novatek is in talks to acquire up to four partners to handle marketing and plans to

double its annual gas output by 2020, its chairman said on Friday after France's

 Total said it had boosted its stake in Russia's biggest private gas company.

http://www.reuters.com/article/2011/12/09/us-total-novatek-

idUSTRE7B80WV20111209

EU leaders commit to complete single energy market by 2014 

National leaders from the EU's 27 countries on Friday signed up to a report from

the current Polish presidency committing them to complete the EU's single market

for electricity and gas by January 2014, conclusions from the European Council

meeting in Brussels showed.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/8686978

Wyoming’s Tainted Water Puts Pressure on EPA to Act on Gas Fracking

A U.S. Environmental Protection Agency report linking hydraulic fracturing for

natural gas to groundwater contamination for the first time puts pressure on the

agency to move sooner on efforts to regulate drilling. The Dec. 8 report that

chemicals consistent with those used in drilling were found in groundwater

samples in west-central Wyoming may be used by the agency to accelerate

action, according to Ken von Schaumburg, a Washington-based attorney and

former EPA deputy general counsel. The EPA is weighing three rules on fracturing,or fracking, the first of which is planned for April. Environmental groups say

fracking, in which millions of gallons of chemically treated water are forced

underground to shatter rock and let gas flow, is a threat to drinking-water

supplies. The EPA’s draft report on groundwater contamination in Pavillion,

Wyoming, about 230 miles (370 kilometers) northeast of Salt Lake City, is the first

to blame the drilling technique for spoiling water.

http://www.bloomberg.com/news/2011-12-12/wyoming-s-tainted-water-pressures-

epa-on-to-act-on-gas-fracking.html 

Industry Study: 1.6M Shale Jobs by 2035

America's Natural Gas Alliance, an industry trade group based in Washington,

D.C., says shale gas production will support more than 800,000 jobs nationwide by

2015 and 1.6 million jobs by 2035, and "generate more than $933 billion in

federal, state and local government tax revenues and federal royalty payments

over the next 25 years." The Alliance released the results of a report prepared by

IHS Global Insight, Englewood, Colo. "At a time when our nation's economy is still

suffering from a downturn and jobs are top-of-mind for many Americans, the

impact of shale gas on employment is invaluable. Last year, shale plays supported

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600,000 jobs, and by 2035, the study projects that shale gas will support more

than 1.6 million jobs," said Regina Hopper, president of the Alliance. "Capital

investment as a result of shale gas production is expected to total nearly $1.9

trillion between 2010 and 2035," she continued. "As natural gas prices remain low

with increased shale gas production, electricity costs are lower and the overall

stronger economy will bring to every American household a savings of $926 peryear between 2012 and 2015."

http://business-journal.com/industry-study-m-shale-jobs-by-p20581-1.htm 

Gas drilling surge in Ohio spurs fear, brings jobs

 The drilling activity promises huge opportunity for energy firms and, said

Republican Gov. John Kasich, for Ohio's struggling economy. The vast Marcellus

and Utica shale formations already are paying off in thousands of wells in

Pennsylvania and West Virginia, bringing great wealth to landowners and jobsthroughout the region. "We're talking about a generation who have lived in

poverty and this is an opportunity to pull them out," Kasich said in an Associated

Press interview. What he views as an opportunity and Gorcheff and other residents

view with skepticism are the 5 billion barrels of recoverable oil underneath them,

making Ohio the latest battleground between companies eager to profit off of the

oil and landowners who want a more measured look at the potential impact. Even

before Kasich took office in January, his team worked on a strategy to exploit the

energy riches embedded in the Marcellus and deeper Utica shale formations under

eastern Ohio.

http://www.freep.com/article/20111212/NEWS07/112120332/Gas-drilling-surge-in-Ohio-spurs-fear-brings-jobs 

Green/ Alternative Energy News

HyperSolar's "No Fracking" Renewable Natural Gas Technology HyperSolar, Inc. , the developer of a breakthrough technology to make renewable

natural gas using solar power, today announced that its technology can help

reduce the need for hydraulic fracturing (fracking) used to access undergroundnatural gas resources. The company's renewable natural gas is a clean, carbon

neutral methane gas that can be produced above ground and used as a direct

replacement for traditional natural gas to power the needs of the world. Even

though the United States has vast natural gas resources, a majority of these

reserves are only accessible through fracking, a potentially environmentally-

hazardous process that many environmentalists claim could contaminate our

water supplies and the air we breathe," said Tim Young, CEO of HyperSolar.

"Rather than extracting difficult-to-reach fossil fuel reserves, we think that the

focus should be on alternative technologies that can provide the world with

affordable and clean sources of energy. We believe it is far better to consider

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sources of energy that are renewable instead of limited depleting resources such

as coal, oil or natural gas."

http://www.marketwatch.com/story/hypersolars-no-fracking-renewable-natural-

gas-technology-2011-12-12 

Valero takes majority stake in Michigan cellulosic ethanol plant 

US refiner/marketer and ethanol maker Valero Energy has signed definitive

agreements to fund most of the $232 million needed to build a cellulosic ethanol

plant in Michigan, project partner Mascoma said Friday. The Department of 

Energy and the state of Michigan will help fund the plan, which calls for a 20

million gal/year plant to be built in Kinross by year-end 2013.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8686881

Crude Oil News

OPEC Daily Basket Price 12/9/2011- $107.45

(OPEC Daily Basket Price 12/8/2011- $108.98)

Oil Falls on Europe’s Debt Crisis as Moody’s Readies to Review

Oil fell in New York, extending last week’s decline, on concern the European debtcrisis may spread and as Moody’s Investors Service said it will review ratings for

countries in the region. Futures dropped as much as 1.5 percent, adding to the 1.5

percent loss in the five days to Dec. 9. Last week’s European Union summit

offered few new measures and doesn’t diminish the risk of credit-ranking

revisions, Moody’s said today. EU leaders will have to quickly implement an

agreement to strengthen budget rules to regain market confidence, according to

German Finance Minister Wolfgang Schaeuble. “We expect prices to stay under

pressure as long as macro- fears stay high,” Eugen Weinberg, head of 

commodities research at Commerzbank AG in Frankfurt, said by phone. “At the

moment it’s Europe, providing contagion that other countries will be dragged into

it, that’s keeping demand away. China’s growth may disappoint if European jitters

continue.”

http://www.bloomberg.com/news/2011-12-11/crude-oil-trades-little-changed-near-

two-day-high-in-new-york.html 

U.S. Crude Oil Falls $1 on Euro Zone Gloom

U.S. crude oil futures fell more than $1 a barrel on Monday on deepening concern

over the prospects for the euro zone, despite a deal last week among Europeangovernments to work towards closer fiscal union. On Monday morning, the

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benchmark January light, sweet crude oil contract was trading around $98.35,down $1.06 per barrel, having reached an intra-day low of $98.30. Investors worrythe long-term EU steps may not be sufficient to avert a short-term funding crisisfor one or more of the euro zone's most indebted economies. Tight budget controlis also likely to imply lower economic growth in the medium term, economists say.http://www.cnbc.com/id/45633533 

Rising Consumer Confidence and Fading Euro Fears Lift Oil Markets The refusal of the Untied Kingdom to go along with proposed euro treaty changesand Moody’s credit rating downgrade to 3 of France’s major banks helped drivethe oil markets lower in choppy overnight trading to begin today’s final tradingday of the week. Although China’s announcement that it will create a $300 billioninvestment vehicle for the US and Europe helped drive oil and fuel prices higherinitially in overnight trading, as the markets realized that the entire EU was not inagreement about the proposed EU treaty changes, prices quickly reversed and slidinto negative territory as today’s pit opening neared and the energy marketcontinued to take direction from changing economic perception. Crude oil rangedfrom a low at $97.55 up to a high at $99.03 in moderate overnight trading volume

before slipping back to near $98.00 as today’s pit opening approached.http://www.theenergydesk.com/editorial.aspx?id=1134860

Oil falls below $99 ahead of OPEC meetingOil prices fell below $99 a barrel Monday in Asia as traders looked to this week'sOPEC meeting for clues about the cartel's future crude output. Benchmark crudefor January delivery was down 79 cents to $98.62 a barrel in midday Singaporetime in electronic trading on the New York Mercantile Exchange. The contract rose$1.07 to settle at $99.41 on Friday.http://www.sacbee.com/2011/12/11/4116067/oil-hovers-above-99-ahead-of-opec.html 

Credibility and unity at top of Opec’s agenda

 The world’s largest oil producers meet in Vienna this week amid uncertainty overthe outlook for crude markets next year. Delegates from the Organisation of 

Petroleum Exporting Countries, the cartel which accounts for about a third of the

world’s oil production, will have to weigh conflicting issues, in particular the

uncertain economic backdrop in Europe, heightened tensions with Iran over

possible European Union sanctions and the increase in supply from Libya after the

overthrow of Colonel Gaddafi. The cartel will also have to present a united front

after its last meeting in June ended in disarray, with no agreement reached on

production levels. Saudi Arabia, Opec’s most influential member which had argued

for an increase in output, called it: “One of the worst meetings we have ever had”.

Saudi Arabia responded to the impasse, along with Kuwait and the United Arab

Emirates, by unilaterally boosting its output in order to make up for the loss of 

Libyan production amid civil unrest.

http://www.ft.com/intl/cms/s/0/edf6c46c-2415-11e1-bbe6-

00144feabdc0.html#axzz1gK9HETBK  

New Opec quota accord ‘will fail amid wrangling'

Opec may struggle to agree on a new quota this week, six months after its last

meeting collapsed, as Saudi Arabia pumps the most crude in 30 years and Iran

risks losing customers as a consequence of European sanctions

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http://gulfnews.com/business/oil-gas/new-opec-quota-accord-will-fail-amid-

wrangling-1.948049

Saudi output points to healthier oil demand 

Saudi Arabia is by far the world’s largest oil exporter. Thus, when it raises itsproduction, oil prices usually fall. Yet, when Ali Naimi, Saudi oil minister, said last

week Riyadh was pumping more than 10m barrels a day, prices barely moved a

few cents. Oil traders were in disbelief at the number. The International Energy

Agency estimated that in October the kingdom pumped 9.45m barrels a day and

Opec itself put Saudi production at 9.47 b/d in the same month. The level of 

production that Mr Naimi stated suggested a huge increase, in only a few weeks.

Moreover, the 10m b/d is a psychological barrier – a level the kingdom has not

reached since the aftermath of the second oil crisis in 1979. The level of Saudi oil

production has triggered a heated debate among oil traders, analysts and

government officials. The discussion is twofold: on the one hand, about the level

itself; on the other, about why it has boosted its output at a time when many are

betting that oil demand growth is slowing down, not accelerating.

http://www.ft.com/intl/cms/s/0/3bc35d9a-249d-11e1-ac4b-

00144feabdc0.html#axzz1gK9HETBK  

Saudi Aramco to keep crude supply volumes to Asian buyers unchanged 

in Jan 

Saudi Aramco will supply full contractual volumes of crude loading in January to at

least two term customers in Asia, unchanged from the previous month, sources atthe two refineries said Monday.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7851523

Oil group to dilute shares in Kazakh project An international oil group led by BG and Italy’s Eni is expected to sign an

agreement with Kazakhstan this week to transfer a stake in the Karachaganak

oilfield to the central Asian state and end a bitter dispute that has bedevilled the

project for more than two years. Under the deal Kazakhstan will pay $1bn to

acquire a 10 per cent interest in the Karachaganak Petroleum Operating company

and withdraw legal claims against the foreign partners including a $1.1bn claimfor back taxes. BG and Eni and its partners in KPO, including Chevron and Lukoil,

the Russian oil group, will dilute their shares in the Karachaganak project on a pro

rata basis to make room for KazMunaigas, the Kazakh state oil company. A person

familiar with the group said negotiators were racing to put the finishing touches to

the agreement that is expected to be signed this week when Kazakhstan

celebrates 20 years of independence.

http://www.ft.com/intl/cms/s/0/52d2fbda-2407-11e1-bbe6-00144feabdc0.html#axzz1gK9HETBK  

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Two-month deadline for Keystone XL embedded in US tax proposal  

A provision forcing a decision on the Keystone XL pipeline appeared in a key end-

of-year tax package introduced Friday by US House Republicans. The bill would

give the Obama administration 60 days to approve TransCanada's Alberta-to-

 Texas pipeline or declare it against the national interest. The latter finding would

require the administration to submit to Congress within 15 days a report justifyingthe decision, "including consideration of economic, employment, energy security,

foreign policy, trade and environmental factors."

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8686883

Recent Rig Counts

Area

Last

Count

Cou

nt

Change from

Prior Count

Date of 

Prior

Count

Change

from Last

 Year

Date of 

Last

 Year's

Count

U.S. 9 Dec11

1987 -6 2 Dec 11 +264 3 Dec 10

Canada 9 Dec11

504 +20 2 Dec 11 +22 3 Dec 10

International

November 2011

1185 -12 October2011

+55 November2010

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

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Weather 6 to 10 Day Outlooks  Temperature

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Precipitation

8 to 14 Day Outlooks Temperature 

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Precipitation

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