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October 20, 2011

Energy Data Highlights

Crude oil futures price 10/18/2011: $88.34/bbl up$2.53 from week earlier up$5.26 from year earlier

Natural gas futures price 10/18/2011: $3.553/mmBtu down$0.063 from week earlier up$0.123 from year earlier Retail heating oil price 10/17/2011: $3.768 /gal up$0.086 from week earlier up$0.796 from year earlier Crude oil inventories 10/14/2011: 332.9 mmbbl down4.7 mmbbl from week earlier down28.3 mmbbl from year earlier Weekly coal production 10/8/2011: 21.602 million tons down0.309 million tons from week earlier up0.137 million tons from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 10/13/11 (Actual): +112 Bcf Previous Week: +97 Bcf -1.6% Change from 1 Year Ago +2.0% Change 5-year Average Big Gas Find for Italy's Eni Eni SpA, the Italian energy giant, has made a very large natural-gas discovery off the coast of Mozambique, big enough that it could turn the East African country into a major exporter of gas to Asia. The company's first well in a deepwater exploration campaign has found about 15 trillion cubic feet of gas, according to people briefed on the discovery. They said the gas reservoir is of very high quality and Eni should be able to get an unusually large percentage of the gas out of the

ground. Eni reported 17.7 trillion cubic feet of proved natural-gas reserves at the end of 2010. http://online.wsj.com/article/SB1000142405297020375260457664161229384848 4.html?mod=WSJ_hp_LEFTWhatsNewsCollection Canadian gas exports to US fall 7.3% in August versus July level Canadian natural gas exports to the US fell 7.3% from July to August to around 237.1 million cubic meters/day, according to statistics released by the National Energy Board Wednesday. The biggest drop in exports was seen at the Kingsgate point in British Columbia, a gateway to US Pacific Northwest markets. Market sources attributed the fall to a return to seasonal temperatures in the region and the opening of the Ruby Pipeline -- which brings supplies from the Rockies to Malin, Oregon, where it then can access Northern California markets -- in late July, which pushed back some western Canadian volumes. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6598466 Russia needs $2.5 trillion in energy investments to 2035 Russia needs to invest a total of $2.5 trillion between now and 2035 in its energy industry to guarantee stable growth and development, Russia's Deputy Energy Minister Anatoli Yanovsky said Thursday at an industry conference, citing estimates given by the International Energy Agency. "At its annual ministerial meeting earlier this week, the IEA said it sets its estimation of required investments into the Russian energy market until 2035 at $2.5 trillion," he said at an energy forum organized by Russia's Chamber of Commerce and Industry. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8486319

Argentina plans to increase LNG purchases in 2012 Argentina plans to step up LNG imports next year as domestic gas production declines and energy demand rises with a growing economy, a source close to the planning process said Wednesday. The country will seek 50-to-60 cargoes of 138,000 cu meters each, up from 50-to-55 cargoes this year, a source at the state energy company Enarsa said on the condition of anonymity. "The purpose for importing more is because gas production is falling and demand is rising," said the source. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6598440

Shale boom leads Enterprise to add NGL capacity Enterprise Products Partners has launched operation of a fifth natural gas liquids fractionator at a Houston-area complex and will start a sixth in early 2013, in response to surging supply and demand for shale gas, the company announced Tuesday. The new fractionators each add 75,000 barrels per day of natural gas processing capacity to Enterprise Products complex in Mont Belvieu, and will bring the total complex capacity to 450,000 barrels per day. Fractionators separate various gases, including ethane, propane and butane, found in the mixture of natural gas

liquids (NGLs) extracted from shale rock and other formations. The rapid addition of capacity is a response to growing demand for ethane from Gulf Coast petrochemical companies, said A.J. Teague, Enterprise executive vice president and chief operating officer. The domestic shale boom has put a glut of natural gas into the market, significantly reducing its price compared to imported crude oil and making it a more attractive feedstock for petrochemicals. http://fuelfix.com/blog/2011/10/19/shale-boom-leads-enterprise-products-to-addngl-capacity/ Kinder Morgan reports lower net income, higher distributions Oil and natural gas pipeline and storage giant Kinder Morgan Energy Partners said Wednesday its net profit was down 32 percent in the third quarter due to charges related to an acquisition, but cash distributions to unit holders were up near 5 percentEarlier this week Kinder Morgan said it would buy El Paso Corp. for $21.1 billion, creating the 4th largest energy business in the U.S. http://fuelfix.com/blog/2011/10/19/kinder-morgan-reports-lower-net-incomehigher-distributions/

Green/ Alternative Energy News

Green gains in importance to manufacturers, survey says U.S. manufacturers are far more likely now than just two years ago to emphasize green practices, such as reducing their energy use and making environmentally friendly products, a survey of companies found. More than 59 percent of manufacturers reported that sustainability is important or highly important to their future, up from 35 percent in 2009, according to the report put out by the American Small Manufacturers Coalition, an industry group based in Washington. Looking to rebound from the recession, manufacturers said theyre facing higher demand for greener products and seeking to save money by consuming less energy and re-using materials, the report found. http://fuelfix.com/blog/2011/10/19/green-gains-in-importance-to-manufacturerssurvey-says/

U.K. Cuts Support for Onshore, Offshore Wind; Boosts Wave, Tidal The U.K. government cut support for land-based and offshore wind farms, while boosting aid for wave and tidal plants, under a program that compels electricity suppliers to get power from alternative energy. Each megawatt-hour of electricity generated from onshore wind will be rewarded with 0.9 tradable certificates, down from 1, the Department for Energy and Climate Change said today on its website. Offshore wind was cut to 1.9 from 2, as wave and tidal steam were boosted to 5 from 2. http://www.bloomberg.com/news/2011-10-20/u-k-cuts-support-for-onshoreoffshore-wind-boosts-wave-tidal.html

U.S. Solar Companies Seek Tax on Chinese Imports Claiming Unfair State Aid U.S. solar-equipment makers asked the government to slap duties on more than $1 billion of Chinese imports, joining the wind-power industry in seeking compensation for alleged unfair state aid undercutting American competitors. China uses cash grants, preferential loans, discounts on raw materials, tax incentives and currency manipulation among tactics to boost exports of solar cells, the main device used in solar panels, the U.S. unit of Bonn-based SolarWorld AG (SWV) said yesterday in the complaint supported by six other U.S. solar companies. Suntech Power Holdings Co., LDK Solar Co. and Trina Solar Ltd. (TSL), the three-biggest China-based makers of crystalline silicon panels, sell in the U.S., according to Bloomberg data. http://www.bloomberg.com/news/2011-10-19/solarworld-says-it-will-file-tradeaction-with-u-s-today.html

Crude Oil News

OPEC Daily Basket Price 10/19/2011- $108.65 (10/18/2011- $107.94)

Oil Rebounds on Speculation EU Will Reach Agreement to Help Fight Crisis Oil rebounded on speculation that European Union leaders will reach agreement on enhancing their rescue fund and help fight the regions debt crisis. Futures gained as much as 1.2 percent in London and 1 percent in New York after European Commission President Jose Barroso said government leaders may reach a very positive outcome at a meeting this weekend in Brussels. Prices fell earlier as divisions emerged between France and Germany on the bail-out strategy. U.S. fuel consumption fell last week, according to data released yesterday by the Energy Department. These are political markets right now, said Carsten Fritsch, an analyst in Frankfurt at Commerzbank AG http://www.bloomberg.com/news/2011-10-20/oil-rebounds-on-speculation-eu-willreach-agreement-to-help-fight-crisis.html

Betting on the return of WTI-Brent parity The price difference between West Texas Intermediate and Brent crude reached a record high of more than $28 a barrel earlier this month. But, almost unnoticed,

the market has started to price a return to the parity between the two benchmarks in five years. The direction of the five-year forward WTI-Brent spread has captured quite a lot of attention among hedge funds, with savvy traders taking opposite long and short positions. The recent abrupt price swings suggest that someone has lost some serious money... The bet on a return to WTI-Brent parity appears based on progress to build several new pipelines that promise to de-bottleneck Cushing, the key delivery point for the WTI benchmark, and the return of Libyan crude. http://www.ft.com/intl/cms/s/0/a4074bcc-faf5-11e0-bebe00144feab49a.html#axzz1b8IkMBRu

Iraq Projects $100 Billion Investment in Oil Fields Exxon Mobil Corp., BP PLC and Eni SpA will spend around $100 billion to upgrade three oil fields in southern Iraq, an Iraqi official said. Thamer Ghadhban, the top energy adviser to Iraq's prime minister, said about $50 billion would be spent to upgrade the big West Qurna Phase 1 oil field which is being developed by Exxon Mobil. The remaining $50 billion will be spent by BP and Eni to upgrade the Rumaila and Zubair oil fields, respectively, he said Wednesday on the sidelines of an Iraqi energy conference here. The huge investment would help unleash Iraq's massive oil reserves, whose development was stunted by years of sanctions under Saddam Hussein's regime and then continued strife after his downfall. http://online.wsj.com/article/SB1000142405297020448530457664067415312577 8.html?mod=WSJ_Commodities_LEFTTopNews Recent Rig Counts Change from Prior Count +11 -10 -9 Date of Prior Count 7 Oct 11 7 Oct 11 August 2011 Change Date of from Last Last Year's Year Count +353 +89 +54 15 Oct 10 15 Oct 10 September 2010

Area U.S. Canada

Last Count 14 Oct 11 14 Oct 11

Cou nt 2023 512

Internatio Septemb 1174 nal er 2011

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

Weather

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