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October 31, 2011

Energy Data Highlights

Crude oil futures price 10/27/2011: $93.96/bbl up$8.66 from week earlier up$12.02 from year earlier Natural gas futures price 10/27/2011: $3.524/mmBtu down$0.106 from week earlier up$0.234 from year earlier Weekly coal production 10/22/2011: 21.159 million tons down0.227 million tons from week earlier down0.111 million tons from year earlier Natural gas inventories 10/21/2011: 3,716 Bcf up92 Bcf from week earlier down28 Bcf from year earlier Crude oil inventories 10/21/2011: 337.6 mmbbl up4.7 mmbbl from week earlier down28.6 mmbbl from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 10/27/11 (Actual): +92 Bcf Previous Week: +112 Bcf -0.7% Change from 1 Year Ago +4.4% Change 5-year Average Frosty Air Heating Up Gas Futures Natural-gas futures jumped 4.2% as large swaths of the U.S. braced for an early shot of winter weather, increasing the need for gas-fired heating. After weeks of

above-normal temperatures, heating demand from the cold blast is likely to make at least a small dent in U.S. gas stockpiles, which have increased to near-record levels over the past month. http://online.wsj.com/article/SB1000142405297020450530457700412313199948 2.html?mod=WSJ_Commodities_LEFTTopNews

U.S. Utilities Work to Restore Power as Snowstorm Cuts Supply to 3 Million U.S. Northeast utilities (NU) promised a round-the-clock restoration effort amid freezing temperatures after the biggest October snowstorm in decades knocked out power to more than 3 million homes and businesses.

http://www.bloomberg.com/news/2011-10-31/about-3-million-withoutpower-as-freeze-to-hit-u-s-northeast.html

Shale Gas Fuels Legal Boom The natural-gas boom in Pennsylvania is stoking legal battles over who owns gas that was worthless until a few years ago but now holds the promise of great wealth. New drilling techniques have made it possible for energy companies to extract natural gas from a layer of rock deep underground called the Marcellus Shale, and the companies have paid Pennsylvania property owners billions of dollars since 2008 for the right to do so. But because surface rights to properties in the state are sometimes sold separately from rights to the underlying minerals, such as coal, or oil and gas, and because mineral law in Pennsylvania remains murky, lawsuits are mounting. These skirmishes could cause problems both for the energy industry and for people like Jim Grande, a retired printer in northern Pennsylvania. The 158-acre farm he bought in 1965 didn't include mineral rights, which are commonly sold separately in Pennsylvania. http://online.wsj.com/article/SB1000142405297020450530457700396052492309 8.html?mod=WSJ_WSJ_US_News_3 Reed Smith Launches Energy & Natural Resources Group Reed Smith today announced the formation of an Energy & Natural Resources (ENR) Group, a multi-disciplinary practice comprising more than 100 lawyers drawn from the firm's offices in the United States, Europe, the Middle East and Asia, to address the transactional, dispute and regulatory needs of global clients engaged in the extraction, production, distribution or financing of ENR projects, products and services. The ENR Group is an integrated and coordinated team of lawyers focused on the sector at large, as well as on its multiple, interrelated subsectors. The group features a market-leading trade and commodities practice, a fast-growing role as counsel for the largest players in the Marcellus and other shale gas formations, and considerable renown for its decades advising on significant renewable energy projects.

http://www.commodities-now.com/commodities-now-news/general/8605-reedsmith-launches-energy-a-natural-resources-group.html US gas exports could converge global prices: IEA deputy chief The $10/Mcf premium for natural gas in Asian markets compared with the US could shrink if North American LNG exports become established, the deputy chief of the International Energy Agency said Monday in Singapore. "If it does happen and the US does become an exporter, that will help bring the global markets together," said Richard Jones, IEA's deputy executive director, during the Singapore International Energy Week. UAE oil minister Mohammed Bin Dhaen alHamli said during the same panel that LNG export terminals and pipelines linking otherwise isolated markets would put the gas world through "tremendous change in the coming years." http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8522827

Gazprom offers to drill 10 onshore gas wells in Bangladesh Gazprom Monday offered to drill 10 onshore gas wells in Bangladesh at a total cost of $193.55 million and help raise the country's overall gas output to meet rising demand, state-owned oil and gas company Petrobangla's chairman, Hussain Monsur told Platts Monday. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8522618

Green/ Alternative Energy News

Less government meddling could unlock green energy's power The book 'Reinventing Fire' outlines what consumers and industries need to do to make energy independence a reality. Much of the vision involves letting market forces and innovation work their magic. http://www.latimes.com/business/la-fi-hiltzik-20111030,0,245833.column

Look out: Fossil fuels may be out-innovating green tech Scrappy green-tech start-ups aren't the only ones who make big bets on technology. A spate of articles this week points to the fact that new technologies in the fossil fuel industry are making it harder for alternative clean energy technologies to get a larger foothold http://news.cnet.com/8301-11128_3-20127247-54/look-out-fossil-fuels-may-beout-innovating-green-tech/

Crude Oil News

OPEC Daily Basket Price 10/28/2011- $109.15 (10/27/2011- $109.09)

Oil Declines in New York, Paring Biggest Monthly Increase Since May 2009 Oil fell in New York on speculation demand will falter after the biggest monthly gain in more than two years and a surge in the dollar. Brents premium to U.S. crude slid to a four-month low. Futures fell as much as 1.2 percent after Japan took steps for the third time this year to weaken the yen against the dollar, making commodities priced using the U.S. currency less attractive to investors. Crude prices at $80 to $100 are reasonable, the United Arab Emirates energy minister said in Singapore today. Oil is up 17 percent in October, the biggest monthly increase since May 2009. Oil is down with other commodities as the dollar strengthens, said Christopher Bellew, a senior broker at Jefferies Bache Ltd. who correctly predicted prices would recover from last months slump. But I think it will go up again, as we head into the winter with low inventories. If its especially cold, Brent may climb as high as $120. http://www.bloomberg.com/news/2011-10-31/oil-declines-paring-biggest-monthlyincrease-since-may-2009.html

Crude Steady Above $93; G20 Meeting Eyed U.S. crude oil futures were steady above $93 on Monday as investors pinned their hopes on a Group of 20 leaders' meeting this week to provide details on Europe's plan to expand the powers of its rescue fund. U.S. crude climbed 5 cents, or 0.05 percent, to $93.37 a barrel at 2339 GMT after jumping 6.8 percent last week, the fourth straight week of gains. Brent crude slipped 1 cent to $109.90 a barrel after rising 0.3 percent last week. Spain and Portugal said on Saturday the euro zone's debt crisis is a global problem, calling on the United States and other G20 powers to help contain the fallout as the summit of leading economies takes place in Cannes, France, on Nov. 3-4. http://www.cnbc.com/id/45097388 Ebbing Oil Prices Point to Market Shift For all the bullish talk about tight supplies next year if the global economy skirts renewed recession, and occasional sharp short-covering rallies, benchmark oil prices are softening... Prices have eased despite several potentially bullish factors: (1) Reported tightness in the cash market evidenced by premiums for quality crude and steep backwardation in the Brent forward curve; (2) The Fed's commitment to keep interest rates lower for longer and attempt to pull down longterm rates; (3) Rallying equities; (4) Continued demand growth in Asia; and (5)

Warnings from prominent forecasters at major commodity banks about continued upside price risks from a tightening supply-demand balance in 2012. http://www.commodities-now.com/commodities-now-news/power-andenergy/8601-ebbing-oil-prices-point-to-market-shift.html

Irans Khatibi Sees Oil Market Balanced, No Need for Emergency OPEC Talks Irans Governor to OPEC Mohammad Ali Khatibi said supply and demand in world oil markets are balanced and he sees no need for an emergency meeting of the producer group, according to the state-run Iranian Students News Agency. The Organization of Petroleum Exporting Countries plans to meet next on Dec. 14 in Vienna. http://www.bloomberg.com/news/2011-10-30/iran-s-khatibi-sees-oil-marketbalanced-no-need-for-emergency-opec-talks.html

Tale of Two Prices for World's Crude Many companies that refine and market oil in the heart of the U.S. look set to have a bumper third quarter, as their costs have fallen through the floor compared with the price of the fuel they sell. This bonanza is the result of a breakdown in the historic relationship between the world's two main benchmark crude oil grades West Texas Intermediate, which is based at the Cushing pipeline and storage hub in Oklahoma, and Brent, based in the U.K. North Sea. Global oil prices represented by Brent, have risen by around a third over the last 12 months due to supply disruptions in several countries, notably Libya. Other oil-product prices usually track Brent closely. U.S. gasoline has done so, rising by almost a quarter over the same period. WTI, on the other hand, has gone from trading at a premium of 63 cents a barrel to Brent a year ago, to a record discount of almost $30 earlier this month. Historically, WTI has traded at a small premium to Brent because of its higher quality. That relationship inverted last year as an increase in oil production in Canada and North Dakota resulted in a glut of crude at Cushing. This means the relative materials cost of refiners who use WTI and other related crudes has plummeted, even as the price of their main product has risen. http://online.wsj.com/article/SB1000142405297020368750457700138014590778 6.html?mod=WSJ_Commodities_LEFTTopNews Recent Rig Counts Change from Prior Count -10 Date of Prior Count 14 Oct 11 Change Date of from Last Last Year's Year Count +344 22 Oct 10

Area U.S.

Last Count 21 Oct 11

Cou nt 2013

Canada

21 Oct 11

497

-15 -9

14 Oct 11 August 2011

+78 +54

22 Oct 10 September 2010

Internatio Septemb 1174 nal er 2011

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

Weather
Snowstorm Tangles Commutes in Northeast Commuters are facing rough conditions Monday across parts of the Northeast still recovering from a surprisingly strong weekend snowstorm. The rare October storm dropped anywhere from a trace to 30 inches of wet, heavy snow from Maryland to Maine. At least 10 people died over the weekend. More than three million people lacked electricity at one point as trees toppled under the weight and brought down power lines; that number was down to about 2.1 million by early Monday. http://online.wsj.com/article/SB1000142405297020452820457700942428388352 2.html?mod=WSJ_WSJ_US_News_5 6 to 10 Day Outlooks Temperature

Precipitation

8 to 14 Day Outlooks Temperature Precipitation