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December 29, 2011

Energy Data Highlights

Retail gasoline price 12/26/2011: $3.258/gal up$0.029 from week earlier up$0.206 from year earlier Retail diesel price 12/26/2011: $3.791/gal down$0.037 from week earlier up$0.497 from year earlier Crude oil futures price 12/23/2011: $99.68/bbl up$6.15 from week earlier up$8.17 from year earlier Natural gas futures price 12/23/2011: $3.114/mmBtu down$0.013 from week earlier down$0.969 from year earlier Weekly coal production 12/17/2011: 21.938 million tons up0.274 million tons from week earlier up1.303 million tons from year earlier NYMEX January gas futures contract falls 2.6 cents midday Tuesday The NYMEX January natural gas futures contract reversed course, trading in negative territory midday Tuesday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6803095

Quicksilver, KKR partner for Horn River gas output Subsidiaries and affiliates of Fort Worth, Texas-based upstream operator Quicksilver Resources and global private equity energy financiers Kohlberg Kravis Roberts have formed a partnership to build and operate natural gas midstream services for output from Canada's British Columbia and Northwest territories, the companies said late Tuesday http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/7932372

Appeals court remands to US FERC decision on ISO-NE capacity markets US federal energy regulators must revisit previous decisions stipulating that PSEG Energy Resources & Trade could not reduce its capacity supply obligation in New England because of reliability concerns, a federal appeals court ruled Friday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/6803101 Cyprus says finds 5-8 tcf of natgas offshore Cyprus said on Wednesday an offshore prospect where exploratory drilling is under way contains an estimated 5 to 8 trillion cubic feet (tcf) of natural gas, a find which will make the Mediterranean island self sufficient in energy for decades. Based on the exploratory drill by U.S. based Noble Energy the prospect, which lies south of the island, contains on average 7 tcf of gas, Cypriot President Demetris Christofias said in a statement. http://www.reuters.com/article/2011/12/28/cyprus-natgasidUSL6E7NS18W20111228 Azerbaijan to Ship Natural Gas to EU Border Using Own Pipelines Azerbaijan plans to build pipelines to deliver natural gas to the European Union border as part of a strategy to ensure export security in the coming 50 to 60 years, the head of the state energy company said. The OMV AG-led Nabucco pipeline or smaller-volume transit projects may be selected by the BP Plc-led partners developing the Shah Deniz field to carry the gas from the Turkey-EU border, Rovnaq Abdullayev, president of State Oil Co. of Azerbaijan, said in an interview broadcast on the private ANS television channel late yesterday. The company, known as Socar, is also a partner in Shah Deniz. http://www.businessweek.com/news/2011-12-28/azerbaijan-to-ship-natural-gas-toeu-border-using-own-pipelines.html U.S. natural gas exports could surge if DOE approves applications Companies could ship about one-fifth of the United States' annual natural gas production to countries including India, Japan and China if the Department of Energy approves an increasing number of export applications, a senior department official confirmed Tuesday. Applicants began requesting permission to export American natural gas late last year. The latest and biggest application arrived a week ago, said John Anderson, manager of natural gas regulatory activities at DOE's Office of Fossil Fuels. That application, from Gulf Coast LNG Export LLC, asks to export 2.8 billion cubic feet of gas daily to countries with whom the United States has no free-trade agreements. http://www.pittsburghlive.com/x/pittsburghtrib/s_773917.html

Green/ Alternative Energy News

US wind trade group touts its successes in 2011 Over the past 12 months, two states -- including Iowa, where Republicans will cast

the first votes of the 2012 presidential campaign -- saw 20% of their electricity generated from wind and dozens of lawmakers from both parties signaled support for extending a key tax credit set to expire at the end of next year. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ElectricPower/6803113

Crude Oil News

OPEC Daily Basket Price 12/27/2011- $107.77 (OPEC Daily Basket Price 12/23/2011- $107.65) Oil Trades Near Six-Week High on Iran Threat to Strait of Hormuz Shipping Oil declined from a six-week high as concerns eased that Iran will block the Strait of Hormuz, a corridor linking the Persian Gulf with international ports. Futures lost as much as 0.7 percent after rising yesterday for a sixth day, the longest run of advances since November 2010. Irans official Islamic Republic News Agency cited Vice President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports. Iran is attempting to distract attention from its nuclear program with its threat, Mark Toner, a State Department spokesman, said at a briefing yesterday in Washington. Shutting down the strait militarily is the last bullet that Iran has, said Olivier Jakob, managing director at Petromatrix GmbH, a Zug, Switzerland-based researcher. We have to express some doubt that they would do this, and at the same time lose their support from China and Russia. http://www.bloomberg.com/news/2011-12-27/oil-trades-near-six-week-high-oniran-threat-to-strait-of-hormuz-shipping.html Brent Snaps 6-day Rally: Iran Support Fades Brent crude slipped on Wednesday as some investors took advantage of a six-day rally to lock in profits and the market saw Iran's threat to halt oil shipments via the Strait of Hormuz as no more than rhetoric. Brent was down 92 cents to $108.35 a barrel by 1051 GMT, having dropped by more than $1 earlier. Prices have surged over 5 percent since Dec. 16, including a gain of more than a dollar on Tuesday. U.S. crude was down 57 cents at $100.77 by the same time. Trading volumes were thin for both contracts. Iran's first vice-president warned on Tuesday that the flow of oil through the Strait of Hormuz would be stopped if foreign sanctions were imposed on Iran's crude exports over its nuclear ambitions. The remarks coincided with a 10-day Iranian naval exercise in the strait and nearby waters, a show of military force that began on Saturday. The U.S. State Department said it saw "an element of bluster" in the threat. The United States and its allies maintain a large fleet of warships in the region. http://www.cnbc.com/id/45800562 Crude Oil Tops $101 on Iran Worry, Solid U.S. Data Crude-oil futures closed above $101 a barrel Tuesday, as tension in Iran sparked concerns over global supplies and improving U.S. consumer confidence helped buoy prospects for oil demand. Crude for February delivery gained $1.66, or 1.7%, to settle at $101.34 a barrel on the New York Mercantile Exchange. That was the

highest settlement price for a most-active futures contract since Nov. 16. Futures prices, which gained 6.6% last week to mark their biggest weekly gain since the week ended Oct. 28, have now scored a six-session gain of 8.4%. "The Iranian statements threatening a close of [the Strait of] Hormuz are a big driver of prices today," said Jason Schenker, president of Prestige Economics. He noted that the statements have "become increasingly bolder, and that's pushing crude oil prices higher." "Their rhetoric of political brinkism is swiftly approaching a point of no return," he said in emailed comments. http://online.wsj.com/article/SB1000142405297020339110457712413426930864 6.html?mod=WSJ_Commodities_LEFTTopNews Oil price climbs amid Iranian threat Iran on Tuesday threatened to close the Strait of Hormuz, a chokepoint for a third of the worlds seaborne oil trade, if the west imposes oil sanctions on Tehran, causing a rise in oil prices. The warning by Mohammad Reza Rahimi, Irans first vice-president, came days after Iran staged naval war exercises in the strait. If they [the West] impose sanctions on Irans oil exports, then not even one drop of oil can flow through the Strait of Hormuz, he told the official Iranian news agency Irna. Iranian officials have in the past threatened to shut down oil traffic through the strait, but the comments by Mr Rahimi are the strongest yet. France, Germany and the UK are pushing for an embargo on Iranian oil exports to Europe, although several countries, including Greece, have some reservations. EU foreign ministers are scheduled to consider the embargo on January 30. http://www.ft.com/intl/cms/s/0/969649bc-30a5-11e1-943600144feabdc0.html#axzz1hpnNfqqx OIL FUTURES: Crude Prices Down As Risk Appetite Falls Crude-oil futures were down Wednesday in thin trade amid lower risk appetite, as persistent worries over Europe's sovereign debt crisis and weaker-than-expected household spending and retail sales numbers from Japan pushed futures lower. At 1151 GMT, the front-month February Brent contract on London's ICE futures exchange was down $1.00, or 0.9%, at $108.27 a barrel. The front-month February contract on the New York Mercantile Exchange was trading down 43 cents, or 0.4%, at $100.91 a barrel. Futures failed to strengthen even after a new Italian bond auction was well received, with yields falling sharply from the last auction held in November. Italy is the third-largest economy in the euro zone. Focus is strong Wednesday on macro-economic news, with thin trading volumes also contributing to higher volatility in the market, said Thina Saltvedt, senior oil market analyst and Nordea Bank Norge. http://online.wsj.com/article/BT-CO-20111228-702828.html

Saudi export crude seen averaging $92/b in 2012 Riyadh-based securities company Jadwa has predicted that Saudi export crude will average $92/barrel in 2012 amid falling prices for benchmark crudes due to a weakening global economy. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7932499

Gasoline prices set December record The most expensive year ever for gasoline purchases in the U.S. is heading to a close but not without another dig at motorists' wallets. Pain levels at the pump rose again over the last week in California and across most of the nation, assuring that 2011 will mark the second year in a row that prices have posted record December highs http://www.latimes.com/business/la-fi-gas-prices-20111228,0,2851248.story

Recent Rig Counts

Date of Cou Change from Prior nt Prior Count Count -11 -125 -12 16 Dec 11 16 Dec 11 October 2011 Change from Last Year +294 +95 +55 Date of Last Year's Count 23 Dec 10 23 Dec 10 November 2010

Area U.S. Canada

Last Count

22 Dec 2008 11 22 Dec 11 406

Internatio Novemb 1185 nal er 2011

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

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