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December 16, 2011 Energy Data Highlights Crude oil futures price 12/14/2011: $94.95/bbl down$5.54 from week earlier up$6.67 from year earlier Natural gas futures price 12/14/2011: $3.136/mmBtu down$0.285 from week earlier down$1.119 from year earlier Weekly coal production 12/10/2011: 21.664 million tons down0.442 million tons from week earlier down0.112 million tons from year earlier Natural gas inventories 12/9/2011: 3,729 Bcf down102 Bcf from week earlier up154 Bcf from year earlier Crude oil inventories 12/9/2011: 334.2 mmbbl down1.9 mmbbl from week earlier down11.9 mmbbl from year earlier

Natural Gas/ Power News

EIA Storage Release 12/15/11 (Actual): -102 Bcf Previous Week: -20 Bcf +4.3% Change from 1 Year Ago +10.3% Change 5-year Average Market changes contribute to growing Marcellus area spot natural gas trading Marcellus-area spot natural gas trading (InterContinentalExchange (ICE) dayahead transactions) has more than doubled from under 1 billion cubic feet per day (Bcfd) to almost 2 Bcfd on average since 2005 (see chart). The largest gains in Marcellus area trading volumes were at the Tetco M3 trading point, up 178% to 0.5 Bcfd and at the Dominion South trading point, up 168% to 0.7 Bcfd since 2005. Key factors likely contributing to increased natural gas spot trading in the

Marcellus area include: rapid increases in Marcellus shale gas production; direct deliveries of Wyoming gas to the Ohio/Pennsylvania border through the Rockies Express Pipeline; and increased use of natural gas for power generation. http://www.eia.gov/todayinenergy/detail.cfm?id=4330 Fracking revolution goes global Forget OPEC. By far the most important oil news is that Saudi Aramco and China's giant Sinopec and CNOOC energy firms are each in talks to buy up to a 30 percent stake in U.S. oil and gas services company Frac Tech International. http://www.commodities-now.com/commodities-now-reports/power-andenergy/9290-fracking-revolution-goes-global.html California PUC agrees to lift more pressure restrictions on PG&E system The California Public Utilities Commission on Thursday approved Pacific Gas and Electric's request to lift operating pressure restrictions on three more transmission line sections. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/6773109 Canadian Gas Gains as U.S. Inventory Decline Exceeds Estimates Canadian natural gas rose as U.S. inventories declined more than analysts estimated. Alberta gas gained 0.9 percent after the Energy Department reported stockpiles of the fuel fell 102 billion cubic feet last week. Inventories had been expected to drop 92 billion, the median of 25 analyst estimates compiled by Bloomberg http://www.businessweek.com/news/2011-12-16/canadian-gas-gains-as-u-sinventory-decline-exceeds-estimates.html Report: Natural gas exports wouldnt move prices much
Exporting liquefied natural gas wont have a major effect on the fossil fuels low average price, which has plummeted due to the oversupply unleashed by the shale gas boom, according to a report by consulting firm Deloitte. The report, released Thursday, addresses how future demand for natural gas will effectthe commoditys price and makes the case for stemming the nations natural gas glut by exporting it. http://fuelfix.com/blog/2011/12/15/report-natural-gas-exports-wouldnt-move-prices-much/

Green/ Alternative Energy News

Ambitious renewable energy targets flawed Ambitious targets for renewable electricity in the medium-term are likely unfeasible, given they demand forced, early write-offs of fossil fuel power plants and may downplay rival shale gas and the unpredictability of wind and solar power. The European Commission on Thursday unveiled its "Energy Roadmap 2050" laying out options for making sweeping carbon emissions cuts through a combination of efficiency and renewable energy and other low-carbon technology. http://www.commodities-now.com/commodities-now-news/power-andenergy/9310-ambitious-renewable-energy-targets-flawed.html EU Energy Roadmap 2050 To achieve the goal of cutting emissions by over 80% by 2050, Europe's energy

production will have to be almost carbon-free, according to the EU Energy Roadmap 2050 unveiled yesterday. How to achieve this without disrupting energy supplies and competitiveness is the question answered by the Energy Roadmap 2050. Based on the analysis of a set of scenarios, the document describes the consequences of a carbon free energy system and the policy framework needed. This should allow member states to make the required energy choices and create a stable business climate for private investment, especially until 2030. http://www.commodities-now.com/commodities-now-reports/power-andenergy/9309-eu-energy-roadmap-2050.html

Crude Oil News

OPEC Daily Basket Price 12/15/2011- $104.60 (OPEC Daily Basket Price 12/14/2011- $106.88) Oil Trades Near Six-Week Low in New York, Heads for Second Weekly Decline Oil traded close to a six-week low, heading for a second weekly decline, on concern that oil demand will shrink in the U.S. and Europe. Futures closed down 1.1 percent yesterday after reports showed U.S. industrial production shrank for the first time since April and European factory output contracted, potentially curbing oil use. Crude oil may fall next week, a Bloomberg News survey showed. The outlook for U.S. oil demand remains bleak, David Wech, head of research at Vienna-based consultant JBC Energy GmbH, said in a note today. The feeble recovery is at risk from Europes looming recession. http://www.bloomberg.com/news/2011-12-15/crude-oil-declines-a-third-day-innew-york-to-trade-at-lowest-in-six-weeks.html Oil settles lower as relief buying fizzles U.S. crude-oil futures declined Thursday after their early-session relief rally lost steam despite good news on the economic data front. Crude oil for January delivery declined $1.08, or 1.1%, to $93.87 a barrel on the New York Mercantile Exchange. That was oils lowest settlement since early November. Prices got tenuous support from a weaker dollar, rising stocks, and good news about manufacturing levels in the Philadelphia and New York areas, as well as a drop in jobless claims. Jobless claims fell to their lowest since May 2008. A gauge of manufacturing activity in the Philadelphia area rose to 10.3 in December, from 3.6 in the previous month. Analysts had expected a rise to 5. http://www.marketwatch.com/column/Futures%20Movers

Oil prices falling as troubled European economies see no sign of relief from central bank Oil prices continued to drop on Thursday after Wednesdays 5 percent plunge, as Europes weakest economies failed to get more help from their central bank. Heres how energy contracts traded. http://www.washingtonpost.com/business/markets/oil-prices-falling-as-troubledeuropean-economies-see-no-sign-of-relief-from-centralbank/2011/12/15/gIQAn4lUwO_story.html

Oil Prices Show No Clear Direction, Consultant Says Investors continue to expect steep oil price volatility in the months ahead as political strife continues in the Arab world pushes prices higher and the recession bound economies of Europe are pushing prices lower. Oil prices fell again on Thursday after declining by more than 5% in some oil futures contracts Wednesday due to markets eroding confidence in a European bailout deal. http://www.forbes.com/sites/kenrapoza/2011/12/15/oil-prices-show-no-cleardirection-consultant-says/ The Keystone Ultimatum Congress is now fighting over the details of how to "pay for" this lost revenue with spending cuts. But the only certainty is that most of those cuts will be either notional or pulled from the later years of the 10-year budget window and thus never happen. The real news in this end-of-year political rush is that total federal spending in fiscal 2012 will increasenotwithstanding all the posturing about a new era of spending restraint. Mr. Obama and Senate Democrats have blunted House GOP efforts this year and largely preserved the government they grew so rapidly in 2009-2010. Which makes it all the more important for Republicans to show some achievement for their first year controlling the House. They're trying to do that now with a series of policy riders in the spending and payroll-tax bills, and two in particular are worth stressing because they have considerable Democratic support. One provision would force a decision on the Keystone XL pipeline within 60 days. This is the most shovel-ready project in America, as the TransCanada company has already made plans to buy the steel pipe to carry crude oil from Canada and the Upper Great Plains to the Gulf of Mexico. The pipeline would create thousands of new jobs, both immediately and downstream, which is why the Teamsters and other unions support it. http://online.wsj.com/article/SB1000142405297020389340457710086163960189 8.html?mod=WSJ_hps_sections_opinion Oil Sector Sets Sights High, Adds More Muscle Oil companies active in the south of Iraq have beefed up security to deal with fears over the security implications of the U.S. troop withdrawal, but they say the pullout hasn't caused them to change plans to significantly ramp up production. "We have to wait and see.If the security situation deteriorates that means we will hire more security personnel to protect us," said an executive of one of the oil majors. The challenge was highlighted when executives from BP PLC, Royal Dutch

Shell PLC, Exxon Mobil Corp., Eni SpA and Lukoil Holdings withdrew from an industry conference in the southern oil hub of Basra starting on Nov. 25, after bombings at a busy market the previous day killed 25 people, including the deputy police chief.Security contractors working for the companies warned the executives not to travel from their heavily protected compounds to the city center, where the exhibition and conference were held. http://online.wsj.com/article/SB1000142405297020484450457709815357307436 4.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond BP accepts $250m Gulf spill settlement BP has accepted a $250m settlement from Cameron International over last years Gulf of Mexico disaster. Cameron, which manufactured the blow-out preventer on BPs Gulf of Mexico Macondo well, agreed to pay the oil major $250m to settle all claims relating to the accident that claimed 11 lives. Under the terms of the agreement, BP will indemnify Cameron against damage claims, but will not protect the US group from any punitive damages, or from criminal or civil penalties under the Clean Water Act. The $250m cash settlement will be placed into the $20bn trust that BP set up to compensate victims of the disaster, which caused widespread environmental and economic damage to the region. http://www.ft.com/intl/cms/s/0/59e18bb8-27c6-11e1-943300144feabdc0.html#axzz1ghe7gudu

NEB leaves same-season relief well policy in place for Arctic drilling The future of offshore drilling in Canada's Arctic is back in the hands of oil and gas companies after the National Energy Board on Thursday announced tough filing requirements for future applications http://www.canada.com/business/leaves+same+season+relief+well+policy+place +Arctic+drilling/5868027/story.html IEA welcomes OPEC agreement for 30 million b/d output ceiling The head of the International Energy Agency Thursday welcomed OPEC's agreement for a new crude production ceiling of 30 million b/d, saying it was especially significant given the risk at present to the global economy. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8706095 Gulf Coast propane sinks to nine-month low on demand woes Gulf Coast propane at the Mont Belvieu, Texas, non-LST trading hub plunged to a nine-month low Thursday on receding crude oil futures and lackluster propane demand. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6773533 Shell enters shale oil and gas project in Argentina Shell has agreed to partner with Argentina's Medanito on a shale oil and natural gas project in southwestern Argentina, with plans to invest at least $200 million over the next five years, a person involved in the deal said Thursday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6773138

Recent Rig Counts Date of Last Year's Count 3 Dec 10 3 Dec 10 November 2010

Area U.S. Canada

Last Count 9 Dec 11 9 Dec 11

Date of Cou Change from Prior nt Prior Count Count 1987 504 -6 +20 -12 2 Dec 11 2 Dec 11 October 2011

Change from Last Year +264 +22 +55

Internatio Novemb 1185 nal er 2011

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

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