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December 6,2011

Energy Data Highlights

Retail gasoline price12/5/2011: $3.290/galdown$0.017 from week earlierup$0.332 from year earlier

Retail diesel price12/5/2011: $3.931/galdown$0.033 from week earlierup$0.734 from year earlier

Crude oil futures price12/2/2011: $100.96/bblup$4.19 from week earlierup$12.96 from year earlier

Natural gas futures price12/2/2011: $3.584/mmBtu

up$0.042 from week earlierdown$0.759 from year earlier

Weekly coal production11/26/2011: 20.807 million tonsdown0.411 million tons from week earlierup0.324 million tons from year earlier

Natural Gas/ Power News

EIA Storage Release 11/23/11 (Actual): -1 Bcf Previous Week: +9 Bcf +1.1% Change from 1 Year Ago+7.3% Change 5-year Average

Shale-Gas Drilling to Add 870,000 U.S. Jobs

Producing natural gas from shale will support 870,000 U.S. jobs and add $118

billion to economic growth in the next four years, according to a report from IHS

Follow

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Global Insight. Gas from shale, which accounts for 34 percent of U.S. output, also

will contribute $57 billion in federal, state and local taxes by 2035, or $933 billion

in the next 25 years, according to today’s IHS report, commissioned by America’s

Natural Gas Alliance, a Washington-based industry group. Shale gas is extracted

using hydraulic fracturing, a process in which millions of gallons of chemically

treated water and sand is forced underground, breaking up the rock to freetrapped gas. Industry expansion is adding jobs in an otherwise disappointing

economy, said John Larson, a vice president at Lexington, Massachusetts-based

IHS, a management consulting company for the energy industry. “Shale gas

combines a capital-intensive industry with a broad domestic supply chain,” Larson

said in an interview. “We think that these jobs through 2015 are net new jobs

because of high unemployment.”

http://www.bloomberg.com/news/2011-12-06/shale-gas-drilling-to-add-870-000-u-

s-jobs-by-2015-report-says.html 

EU energy regulators, traders, brokers unite in fight against VAT fraud  

European regulators, trading firms, exchanges and brokers in the energy sector

have committed to make full use of the EU's Regulation on Energy Market

Integrity and Transparency (REMIT) to clamp down on VAT fraud in power and gas

trades.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8666876

German, French exchange-traded power volumes fall 29% on year in

November 

 Total German, French and Swiss power volumes traded on the EPEX Spot and EEX

energy exchanges in November changed little from the previous month, but fell

29% year-on-year to 101.4 TWh, data from the exchanges showed Monday.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/8661714

Green/ Alternative Energy News

New policy approaches key to scale up renewable energy 

Governments should consider scaling up of renewable energy as part of their

robust economic development strategy, rather than as an environmental strategy

with the secondary benefits of job creation. Such an approach is fundamental for

attracting new private-sector investment to finance renewable projects at a scale

that is needed to address climate change. Proven mechanisms should not be

abandoned, but new policies have to target ways to reduce the risk-to-reward

ratio in order to enhance private sector investor confidence for investment in

large-scale renewable energy.

http://www.commodities-now.com/commodities-now-reports/environmental-

markets/9122-new-policy-approaches-key-to-scale-up-renewable-energy.html

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Crude Oil News

OPEC Daily Basket Price 12/5/2011- $110.35

(OPEC Daily Basket Price 12/2/2011- $109.66)

Oil Recovers on Speculation Impact of S&P Ratings Reviews May Be

Limited 

Oil traded near its highest in three weeks in New York, recouping earlier losses as

a surge in German manufacturing tempered concerns that Standard & Poor’s may

downgrade the credit ratings of European nations. West Texas Intermediate was

little changed after recouping a loss of 0.6 percent. German factory orders rose

the most in 19 months in October after three straight declines. Standard & Poor’s

said yesterday it may strip Germany and France of AAA credit ratings as it weighsdowngrades for 15 nations. U.S. gasoline and distillate stockpiles rose last week

while crude supplies shrank, according to a Bloomberg News survey.

http://www.bloomberg.com/news/2011-12-06/oil-snaps-two-day-gain-as-s-p-

threatens-european-credit-rating-downgrades.html 

Crude Seesaws With EUOil futures jumped above $102 a barrel for the first time in more than two weeks,

boosted by optimism over progress on Europe's debt crisis and the prospect of 

additional sanctions on Iran. Those gains were largely wiped out after reports of a

possible downgrade of European sovereign debt undercut the rally.Light, sweet

crude for January delivery rose as high as $102.44 a barrel, its highest level since

Nov. 17, after French President Nicolas Sarkozy and German Chancellor Angela

Merkel said they agreed to firm up financial discipline in the euro zone. In the end,

U.S. crude futures settled up only three cents at $100.99 a barrel on the New York

Mercantile Exchange. Brent crude settled down 13 cents, or 1.0%, at $109.81 a

barrel. The Sarkozy-Merkel proposal is expected to be discussed at a meeting of 

European Union in Brussels Thursday and Friday.

http://online.wsj.com/article/SB1000142405297020490380457708014242782994

0.html?mod=WSJ_Commodities_LEFTTopNews 

Spread between WTI and Brent prices narrows on signs of easingtransportation constraintsBetween October and November, the spot price of West Texas Intermediate (WTI)crude oil increased $23 per barrel partly on signs that transportation constraintsout of the U.S. Midwest, the main market for WTI, are beginning to ease. At thesame time, the price of European benchmark Brent crude oil was up much less,only about $7 per barrel. As a result, the WTI-Brent crude oil price difference hasnarrowed. The WTI-Brent crude oil price difference was smaller earlier in the year.While the WTI-Brent oil price narrowed, gasoline prices continue to track the price

of Brent as they have for much of the year. The average price for gasoline moved

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about 6 cents a gallon from early October through mid November and then fell 13cents during the last two weeks of November.http://www.eia.gov/todayinenergy/detail.cfm?id=4170 

Big Oil Heads Back Home

Big Oil is redrawing the energy map. For decades, its main stomping grounds werein the developing world—exotic locales like the Persian Gulf and the desert sands

of North Africa, the Niger Delta and the Caspian Sea. But in recent years, that

geographical focus has undergone a radical change. Western energy giants are

increasingly hunting for supplies in rich, developed countries—a shift that could

have profound implications for the industry, global politics and consumers.

Driving the change is the boom in unconventionals—the tough kinds of 

hydrocarbons like shale gas and oil sands that were once considered too difficult

and expensive to extract and are now being exploited on an unprecedented scale

from Australia to Canada. The U.S. is at the forefront of the unconventionals

revolution. By 2020, shale sources will make up about a third of total U.S. oil and

gas production, according to PFC Energy, a Washington-based consultancy. By

that time, the U.S. will be the top global oil and gas producer, surpassing Russia

and Saudi Arabia, PFC predicts.

http://online.wsj.com/article/SB10001424052970204479504576638731600191382.html?mod=WSJ_hps_RIGHTTopCarousel_1 

Oil's Growing Thirst for Water Water has always been a concern for 65-year-old Joe Parker, who manages a

19,000-acre cattle ranch here in South Texas. "Water is scarce in our area," he

says, and a scorching yearlong drought has made it even scarcer. What has Mr.

Parker especially concerned are the drilling rigs that now dot the flat, brushylandscape. Each oil well in the area, using the technique known as hydraulic

fracturing, requires about six million gallons of water to break open rocks far

below the surface and release oil and natural gas. Mr. Parker says he worries

about whether the underground water can support both ranching and energy

exploration.

http://online.wsj.com/article/SB1000142405297020452820457700993022284724

6.html?mod=WSJ_Commodities_LEFTTopNews 

Russian Oil Frontier: Nowhere Land  There's the middle of nowhere, and then there's here. The place isVerkhnechonsk, an oil field in eastern Russia operated by TNK-BP Ltd. that is oneof the remotest spots on the planet. To get there you have to fly to Siberia, takean aging turboprop plane deep into the taiga, or subarctic forest. Then hop on ahelicopter heading north. From Moscow, the journey takes a day, includinglayovers—longer if there are snowstorms. It is so far from anywhere that TNK-BP,a joint venture of BP PLC and a group of Soviet-born billionaires, runs operationsvia video link from an office in Irkutsk, some 600 miles away. "It's like living on anisland," says Albert Gilfanov, the oil field's deputy manager. Russia is an energysuperpower, with 13% of the planet's oil resources and a quarter of its natural gas.Having declined steeply after the collapse of the Soviet Union, oil production has

come back strongly, hitting a new post-Soviet high of 10.3 million barrels a day in

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October. Yet the mainstay of Russia's hydrocarbon wealth—the big Soviet-era oilfields of Western Siberia—is in decline. To keep production stable, Russia has nochoice but to expand into new areas like Eastern Siberia—where oil reserves areless plentiful, production costs higher and the logistical challenges mind-boggling.http://online.wsj.com/article/SB10001424052970203764804577060200073674124.html?mod=WSJ_Commodities_LeadStory 

Brazil acts fast to clear up oil spillsIt was about a month ago when Chevron workers first noticed small bubbles of oil

emerging through cracks in the seabed near one of their wells, 230 miles off the

coast of Rio de Janeiro. Over the next four days, those bubbles spewed more than

2,000 barrels of oil into the Atlantic, leading to a temporary ban of the US

company, a police investigation, millions of dollars in fines, the shutdown of 

another of its wells and now threats of regulatory change in one of the world’s

most promising oil industries. Speaking to the Financial Times, Carlos Minc, Rio’s

environment secretary and the country’s former environment minister, says he is

now pushing for tougher rules for companies looking to profit from Brazil’s oil

boom. “We may be a tropical country but we’re not a ‘banana republic’,” he says.“Everyone wants to come to Brazil and if we’re not strict with [Chevron], this place

is going to turn into a pool of oil.”

http://www.ft.com/intl/cms/s/0/dabd7c7a-1e6f-11e1-bae4-

00144feabdc0.html#axzz1flBF0c5J 

Paris and London to press EU for Iran oil banFrance and the UK will use a gathering of European Union leaders this week topush forward their plan to approve a full embargo on oil imports from Iran. Themeeting will be dominated by efforts to shore up the single currency. Butdiplomats in Brussels say France is also pushing to use the occasion to advance itscase for strong measures against Iran over its nuclear weapons programme. EUforeign ministers agreed last week to start work on a ban, with the aim of imposing sanctions at their next meeting in January, in a move that could putsignificant new pressure on Tehran’s foreign currency receipts. British and Frenchdiplomats say Greece, which receives between 25 and 30 per cent of its oil fromIran, is the only state raising serious objections to a ban on Iranian oil imports butthose objections should be overcome by the January meeting. http://www.ft.com/intl/cms/s/0/823241ca-1f5b-11e1-ab49-

00144feabdc0.html#axzz1flBF0c5J 

Oil rises above $101 as Iran tensions rise

Oil prices rose above $101 a barrel Monday in Asia amid growing tensions

between Iran and Western powers and signs the U.S. economy is improving.

Benchmark crude for January delivery was up 50 cents to $101.46 a barrel at

midday Singapore time in electronic trading on the New York Mercantile

Exchange. The contract rose 76 cents to settle at $100.96 on Friday.

http://www.taiwannews.com.tw/etn/news_content.php?id=1779220

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End of Easy Mideast Oil Means Work for Exxon, BP: Energy Markets

 The Middle East will need more help from international investors to keep the title

of world’s biggest oil and gas producer because its remaining deposits are harder

to get at. Technology is the “key to prolonging the life span of the reservoirs, and

we’ve been doing this with our partners for a long time,” Mohamed Al-Hamli, oil

minister of the United Arab Emirates, said yesterday at the World PetroleumCongress in Doha, Qatar. “We are forced to go down the road of enhanced oil

recovery and using more advanced technology.” 

http://www.bloomberg.com/news/2011-12-05/end-of-easy-mideast-oil-means-

work-for-exxon-bp-energy-markets.html

Peak oil debate losing relevance due to new upstream technology:

Repsol CEO 

 The debate over whether the world's reserves of hydrocarbons have now peaked

and are in decline has lost relevance over recent years as new technology allows

oil companies to find and exploit new hydrocarbon sources, the CEO of Repsol

Antonio Brufau said Tuesday.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8666877

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. 2 Dec11

1993 -7 23 Nov 11 +280 24 Nov 10

Canada 2 Dec11

484 Unchanged 23 Nov 11 +35 24 Nov 10

International

October2011

1197 +23 September 2011

+98 September2010

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

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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