Russia and China Working on Natural Gas Deal

Russia and China have are close to reaching an agreement on a natural gas supply deal, Milton Financials sources report Russian Prime Minister Vladimir Putin as having said recently.

Speaking after talks with his Chinese counterpart, Putin told reporters that while a final pricing agreement is not expected until next year negotiations between Russia’s Gazprom and China National Petroleum Corporation on the prospects of supplies of Russian natural gas to China are looking very positive.


Under the terms of an earlier agreement Russia is to supply China a total of 30 billion cubic meters of natural gas a year beginning in 2015 via the Altai gas pipeline, which joins Siberia and China's western border with Russia.


The two nations have been locked in the final supply price negotiations of the gas from 2006, with China demanding a lower price than that charged by Russia for supplying European countries

With the difference between what Russia is asking and what China is prepared to pay being around $100 per 1,000 cubic meters being the final hurdle, negotiations are expected to conclude by mid-2011.

Milton Financials data shows that economic ties between the two countries have significantly strengthened over the past year with mutual trade between Russia and China increasing by 56% in the first nine months, reaching $42 billion.

Russia also recently completed the Skovorodino-Daqing section of the East Siberia-Pacific Ocean oil pipeline that connects Skovorodino in the Amur region with Daqing in northeastern China and supply is expected to begin by early next year.

Milton Financials has learned that the two nations signed a total of 11 documents during Putin’s meeting with Wen, including an agreement to construct the third and fourth phases of the Tianwan nuclear power plant situated on the Yellow Sea coast. The Tianwan power plant currently consists of two reactor units each rated at 1,000 MW capacity, which were constructed by Russia's Atomstroyexport. The first reactor began full operations in 2006 and the second in 2007

Gas Association Promoting Fracking

ALBANY – As environmental groups across the Hudson Valley and Catskills regions and statewide lobby the state Assembly to have it approve a moratorium on natural gas drilling in the Marcellus Shale formation until all studies have been completed, a gas and oil trade association is urging lawmakers not to do it.

The Independent Oil and Gas Association of New York says the bill would halt most oil and gas drilling currently allowed, would intrude on the current work of the state DEC and contain flaws that would harm the state's entire oil and gas industry.

The group said the bill would bar existing safe drilling that has been going on in the state; result in the loss of 5,000 jobs; and jeopardize $1 million in annual revenue the state collects from traditional drilling permit fees.

“The members of the Assembly must understand that [the proposed legislation] would jeopardize an industry that has operated safely in New York for more than 100 years and employes more than 5,000 people today,” said Brad Gill, executive director of the association. “We hope the Assembly will allow the DEC to complete its review of the state's regulations governing high volume fracturing and not cave to the smear campaign being waged by radical opponents against the people of our industry.”

Natural Gas Fracking TV Show

WASHINGTON--(BUSINESS WIRE)--Citizens at the center of the natural gas boom will soon have the chance to see Shale Gas and America’s Future, a 30-minute, made-for-TV film that provides a unique look at how local communities are balancing trade-offs related to drilling in their back yards.
TV Broadcast Schedule
The following provides a partial list of when and where Shale Gas and America’s Future is being broadcast.

Albany		Ch. 6 WRGB, CBS affiliate, 11 a.m. Sundays Nov. 28 and Dec. 5
Binghamton/Ithaca		Ch. 12 WBNG, CBS affiliate, 8:30 a.m. Sundays Nov. 28 and Dec. 5
		Ch. 34 WIVT, ABC affiliate, 11:30 p.m. Saturdays Nov. 27 and Dec. 4
Harrisburg		Ch. 27 WHTM, ABC affiliate, 11 a.m. Sundays Nov. 28 and Dec. 5
Pittsburgh		Ch. 11 WPXI, NBC affiliate, 2:30 p.m. Saturday Dec. 4
Wilkes-Barre/Scranton		Ch. 22 WYOU, CBS affiliate, 6:30 a.m., 8:30 a.m. and 11 a.m. Sundays Nov. 28 and Dec. 5

“This film shows the whole hydrofracking process and what local citizens and state regulators are doing to limit potential environmental problems. It also puts local issues into context,” said Gregory C. Staple, CEO of American Clean Skies Foundation. "The film talks about why we are drilling for gas – jobs, energy independence, the climate. On the flipside, the film gives voice to those who feel we should refrain from drilling for natural gas because it may endanger drinking water supplies or spoil the landscape. There are plenty of opinions. We want residents across the Marcellus shale region in Pennsylvania to look at what’s happening for themselves and draw their own conclusions.”
Shale Gas and America’s Future has already been watched by thousands of people at cleanskies.org, shalegasfuture.com and youtube.com/shalegasfuture.
The broadcast in the Marcellus shale area reflects the interest in the topic, which has dominated local and state politics, as well as community meetings. The timing coincides with the holidays when families are home and can watch together.
This new film supplements a Foundation-supported web site on the same subject – www.shalecountry.com – that was launched this summer.

DOE Grants Money for Natural Gas Van

nditional loan commitment with the U.S. Department of Energy (DOE) under its Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. VPG will use the DOE funds to enter into full production of the CNG version of the MV-1, which the company expects to begin late in the first quarter of 2011.

he MV-1 is the first and only purpose-built vehicle designed from the ground up to meet the needs of people in wheelchairs as well as for the demanding duty cycles of fleet operators. It is the only factory built light-duty vehicle to date that meets or exceeds the guidelines of the Americans with Disabilities Act. The vehicle features a deployable access ramp with a 1,200-pound weight capacity, a 36-inch entryway and an interior that accommodates up to six occupants with the optional jump seat, including either one or two wheelchair passengers and the driver.

“With this conditional commitment, the Department of Energy has demonstrated its confidence in our program and the impact that it will have in transforming a significant portion of U.S. light duty fleets to clean-burning, natural gas vehicles,” said David Schembri, CEO of VPG. “The MV-1 will help to reduce America’s dependence on foreign oil and substantially reduce light-duty fleet emissions and costs, while at the same time dramatically increasing the quality of life for millions of Americans with physical disabilities.”

The MV-1 will be available with a factory-installed Ford 4.6L V8 engine, configured either for gasoline or compressed natural gas fuel. VPG estimates that the company will manufacture at least 24,000 vehicles per year and over 900 workers will be involved in the project. Over 70% of the vehicle’s content is domestic, making it compliant with the Buy American Act. The vehicle will be built in Mishawaka, IN, under a contract with AM General, the manufacturer of the HUMVEE for the U.S. armed forces. VPG is headquartered in Miami, FL with offices in Troy, MI.

VPG is a portfolio company of Perseus, L.L.C., a private equity fund management company with offices in Washington, D.C. and New York.

About the ATVM Loan Program

The Department of Energy’s Loan Programs Office oversees the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. The ATVM Loan Program supports the development of innovative, advanced technologies that create thousands of clean energy jobs while reducing the nation’s dependence on oil. The Department has provided over $8 billion in loans to advanced technology vehicle manufacturers, including Ford Motor Company, Fisker Automotive, Nissan North America and Tesla Motors.

About The Vehicle Production Group LLC

Headquartered in South Fla., The Vehicle Production Group LLC (VPG) designs, manufactures, markets and distributes the first mobility vehicle engineered from the ground up for wheelchair accessibility. The vehicle, aptly named the "MV-1" (the first Mobility Vehicle), is the only vehicle that meets or exceeds the stringent vehicle guidelines of the Americans with Disabilities Act (ADA). For more information, visit www.vpgautos.com.

About Perseus, L.L.C.

Perseus, L.L.C. is a merchant bank and private equity fund management company headquartered in Washington, D.C., with an office in New York City. Since its inception in 1995, Perseus has made investments in more than 60 portfolio companies in a wide variety of industries in which Perseus and its principals have expertise, including energy, environmental, and engineering technologies; healthcare, and branded consumer products. For more information on Perseus, L.L.C. visit http://www.perseusllc.com.

Contacts

Fracking is Key for New York Development

Hydrofracking—drilling into the Marcellus shale near the Finger Lakes—continues to be a big controversy in New York. The public and the natural gas industry are still waiting for the state Department of Environmental Conservation to complete its environmental impact study, two-and-a-half years after it started. As the Innovation Trail's Daniel Robison reports, the natural gas industry hopes permits for new drilling follow soon after.

The Innovation Trail is a collaboration among five upstate public media outlets, reporting about New York's innovation economy. Support comes from the Corporation for Public Broadcasting.

U.S. Rig Count 936

The number of rigs drilling
for natural gas in the United States slid by 19 this week to
936, according to a report on Friday by oil services firm Baker
Hughes in Houston.

The gas-directed rig count, which has fallen four times in
the last six weeks, hit 992 in mid-August, its highest level
since February 2009 when there were 1,018 rigs drilling for
gas.

Horizontal rigs -- the type most often used to extract oil
or gas from shale -- dropped by eight to 932, the second
straight weekly decline after hitting a record high of 943 on
Nov. 5.

Analysts estimate that two-thirds of horizontal rigs are
drilling for natural gas, and these comprise part of the
overall rig count. The rest are drilling for oil.

Graphic: link.reuters.com/sup34k

Front-month U.S. natural gas futures NGc1, which were up
about 13.5 cents in the $4.43 per mmBtu area just before the
data were released at 1 p.m. EST (1800 GMT), hit an intraday
high of $4.17 after the report.

Despite relatively low gas prices this year, gas drilling
activity has been slow to react, but recent declines,
particularly in the horizontal count may signal a shift away
from gas to more profitable oil-related projects.

Some firms have said they will shift spending away from gas
due to relatively low prices, but most analysts expect no
meaningful slowdown in gas production until the second half of
2011, at the earliest.

They said some producers may continue drilling for gas to
meet lease obligations, while others may be protected by
profitable hedges and can still produce and sell gas at prices
well above current levels.

The gas-drilling rig count is still up 271 since bottoming
at 665 on July 17, 2009, its lowest since the 640 posted on May
3, 2002.

While the gas rig count is 42 percent off its record peak
of 1,606 from September 2008, it stands 210 rigs, or 29
percent, above the same week last year.

Rising output from shale gas has been the primary driver of
increased gas production in the last few years, and most
traders agree it will be difficult to tighten the gas market
unless drilling slows sharply.

Some analysts estimate the gas rig count will have to fall
well below 850 to tighten the overall market.

Recent estimates by the U.S. Energy Information
Administration put U.S. gas output this year at more than 22
trillion cubic feet, its highest since 1973, but next year the
EIA sees output dropping 1.2 percent.

With gas inventories heading into winter at record highs
and production likely to remain strong into 2011, many traders
expect gas prices to remain cheap relative to oil, at least
until an improving economy boosts industrial demand, which
accounts for nearly 30 percent of U.S. gas consumption.
 (Reporting by Joe Silha;editing by Sofina Mirza-Reid)

Marcellus Production to Effect Canadian Production

According to a new report from BENTEK Energy, LLC, Canadian producers face serious challenges as the continued growth of unconventional natural gas supplies and newly added pipeline infrastructure in the U.S. push Canadian imports out of the U.S. market. The Big Squeeze: Ruby, Canada and Marcellus examines the broad displacement of Canadian imports and its impact on the North American natural gas market, which will ultimately lead to curtailments in Canadian production.

“Marcellus shale volumes are now pushing Canadian imports out of the Northeast, and this trend will accelerate as new pipeline expansions drive additional U.S. gas supplies into Ontario,” said BENTEK Managing Director E. Russell (Rusty) Braziel. “In the West, the new Ruby and Bison pipelines will increase deliverability of the more economical Rockies gas to Western markets and the Midwest, respectively, while displacing gas back into Canada. Because of this, we anticipate gas imports to the U.S. to drop 2.0 billion cubic feet per day (Bcf/d) or 30% by 2015.”

According to BENTEK, in the next few weeks Western Canadian supply currently bound for the Midwest markets on Northern Border Pipeline will face direct competition from Rockies supplies flowing east on the newly installed Bison Pipeline. By next summer, Rockies producers will have an additional 1.5 Bcf/d of westbound capacity on El Paso’s Ruby Pipeline bound for Malin, Oregon. These supplies will compete head-to-head with Canadian supply for PG&E’s Citygate, the premium market in the West.

“We are looking for a 1.0 Bcf/d decline in Canadian production from 2010 to 2015, despite the growth of Canadian unconventional shale production in the Montney and Horn River plays of British Columbia,” continued Braziel. “The bright spot on the Canadian supply/demand horizon is a significant increase in Canadian natural gas demand, which will partially help offset the otherwise bearish outlook for Canadian gas prices.”

BENTEK forecasts an increase in gas usage due to the renewed focus on oil sands development in Alberta and increased power generation in Ontario as coal-fired power plants are replaced with natural gas power generation.

The Big Squeeze: Ruby, Canada and Marcellus examines these issues in detail, including a five-year outlook of the expected market changes throughout North America. The report includes an in-depth look at the Canadian import outlook through 2015, including the impact of the Ruby and Bison pipelines and the supply increases expected from the Marcellus shale.

For more information on The Big Squeeze: Ruby, Canada and Marcellus and BENTEK’s Forward Curve Suite visitwww.bentekenergy.com or call BENTEK at 888-251-1264.

About BENTEK Energy, LLC

BENTEK Energy, LLC, is the leading energy markets information company. Based in Evergreen, Colorado, BENTEK brings customers the analytical tools and competitive intelligence needed to make time-critical, bottom-line decisions in today's natural gas and power markets. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com.

No Natural Gas Drilling in Pittsburgh

By a vote of 9-0, the council adopted an ordinance that would prevent any energy company from drilling a gas well within city limits.

No wells currently exist but the industry has about 1,500 acres of city land under lease, according to Councilman Douglas Shields, who sponsored the measure.

Shields said he believes Pittsburgh is the first U.S. city to ban natural gas drilling at a time when abundant domestic reserves of the cleaner-burning fuel are seen as a way of reducing U.S. dependence on imported oil and cutting greenhouse gas emissions.

The vote reflects concern about possible water and air contamination from hydraulic fracturing, an extraction technique that has enabled a boom in gas drilling in Pennsylvania's Marcellus Shale formation.

"This is a dangerous activity to be doing in a densely populated area," he said. "The industry is in total denial about its impacts. All they care about is jobs and money."

The Marcellus Shale Coalition, an industry group, said the vote was expected, but disappointing.

"The vote represents a blow to the city's weak financial standing, and at the same time is a straightforward attack on individual property rights," said MSC president Kathryn Klaber in a statement.

Shields said the vote represents a challenge to Pennsylvania's 1985 Oil and Gas Act which asserts the right of the state to preempt local laws that would ban oil and gas drilling.

According to the Community Environmental Legal Defense Fund, a Pennsylvania nonprofit that drafted the Pittsburgh ordinance, local communities have a constitutional right to deny drilling rights to companies within their bounds.

Norway Calms Natural Gas Market

Norway, the world’s second-biggest natural-gas exporter, expects increased demand will reduce a glut of the fuel more quickly than forecast by the International Energy Agency, according to its Oil Minister.

An excess of supply capacity will peak at more than 200 billion cubic meters next year, from 130 billion in 2009, before starting “a hesitant decline” to at least 150 billion in 2020, the IEA said in a report this month. The Paris-based agency defines the glut as the capacity of inter-regional pipelines and LNG export plants minus the volume of gas actually traded.

“I’m a little bit surprised to hear that the IEA is projecting a glut of natural gas for the next ten years, this is contrary to the message I get from the industry and other market advisers who say that much of the gas surplus has already disappeared,” Terje Riis-Johansen said today in an Oslo interview. “We see an imbalance in the market now, but we believe this will stabilize itself relatively soon.”

Gas for next month has tumbled 32 percent in New York this year amid rising production from U.S. shale formations and as exporters increased liquefied natural gas capacity. European gas demand dropped 5 percent, or 27 billion cubic meters last year, according to Bank of America Merrill Lynch. Global demand will return to growth this year after dropping in 2009, the IEA said.

“The size of the gas glut will go down, but it may be with us for some time to come,” Fatih Birol, chief economist at the agency, said today at a conference in Oslo.

Gabon Natural Gas Cost

Resource rich Gabon Saturday signed a 1.3 billion dollar deal to set up a fertiliser complex with Singapore-based Olam International, on the back of its cheap natural gas reserves, officials said.

Gabon President Ali Bongo Ondimba hailed the agreement as an opportunity to "build one of the most competitive fertiliser businesses in the world in Gabon".

Olam Group Managing Director and chief executive Sunny Verghese said Olam believed that "Africa, and Gabon in particular" offered the best prospects for the complex "due to long term availability of natural gas at competitive prices..."

Gabon was "the ideal location" largely due to "one of the lowest cost natural gas reserves in the world...", he added.

The Gabonese presidency added in a statement released in Libreville that the agreement could generate around 10,000 jobs.

The deal was inked in Singapore by Gabonese Finance, Commerce and Tourism Minister Magloire Ngambia and Mines, Petrol and Hydrocarbon Minister Julien Nkoghe Bekale at a ceremony presided by the president, it said.

Olam added it had also signed a 236 million dollar deal with Gabon to develop large scale palm oil plantations.

Gabon said in August it had signed 4.5 billion dollars in contracts with Indian and Singaporean companies for infrastructure projects although it did not name the companies involved.

The projects included the construction of 1,000 kilometres (600 miles) of roads, the construction of a special economic zone for the processing of wood, creating palm plantations and building 5,000 homes.

GE to Buy GM Electric Cars

General Electric has said it will make a record order of electric cars, to try to kick-start the market.

It hopes that its purchase of 25,000 electric vehicles will drive the development of a network of charging stations, and other related products, which it produces.

Its first order is for 12,000 Chevrolet Volts, which will start to roll off GM's production lines this month.

GE will use them as company cars and lease them to corporate customers.

It intends to buy the 25,000 cars by 2015. It will use some of them in its own fleet.

The rest will go into its Capital Fleet Services business, which leases cars to corporate customers.

GM said it wanted to "lead wide-scale electric adoption and generate growth for its businesses".

GE's Jeff Immelt said he hope the purchase would "move electric vehicles from anticipation to action".

It predicts that the nascent electric vehicle market could be worth $500m (£310m; 366m euros) in revenue to GM over the next three years.

Cheniere Making LNG for China

A subsidiary of Cheniere Energy Inc. ( LNG | PowerRating) said Thursday that it is working toward a deal to supply liquefied natural gas from its Sabine Pass terminal in Louisiana to one of China's largest independently owned natural gas companies.

Cheniere Energy Partners LP ( CQP | PowerRating) said it signed a memorandum of understanding with China-based ENN Energy TradingCo. that could lead to ENN's contracting 1.5 million metric tons per year of processing capacity at Cheniere's terminal. That capacity could be used to import or export gas for an initial term 20 years, Cheniere said.

ENN Energy Trading Co. is a subsidiary of ENN Energy Holdings Ltd. (XNGSF, 2688.HK), formerly known as XinAo Gas. The deal will be contingent on Cheniere's securing regulatory approval and moving forward with the construction of a facility to turn natural gas produced in the U.S. into liquid for export. If that occurs, LNG exports could begin in 2015.

Cheniere originally built its Sabine Pass terminal, the largest regasification facility in the world, with the aim of importing LNG to the U.S. But the glut of natural gas that has come from domestic shale formations in recent years has turned the U.S. natural gas market upside down--and seems to make massive importation of LNG unnecessary.

The U.S. Department of Energy granted Cheniere permission in September to begin annually exporting up to 16 million metric tons of liquefied gas, culled from shale formations in Texas, Oklahoma, Arkansas and Oklahoma, through the Sabine Pass terminal. However, the company needs to build the exporting infrastructure first.

No LNG export facilities exist in the lower 48 states, although there is one in Alaska.

"We are excited to participate in supplying natural gas to China and we believe that ENN is a successful model for developing diverse solutions to serve its fast growing energy markets," Cheniere Energy Partners Chief Executive Charif Souki said in a news release.

Surplus Gas and Consolidation

If you didn't think America's energy policy battles could get any more confusing, consider this: Some fossil fuel companies are pulling for a carbon tax. Specifically, companies that focus on cleaner-burning natural gas would benefit from subsidies for energy that generates less carbon dioxide.

But it will be almost impossible to squeeze a carbon tax through Congress in the aftermath of the midterm elections. The new Republican majority means that more politicians in power support both the coal industry and the concept of less government regulation of businessThat knocks out one strut that could have supported energy companies through a recent tough spate where they are locked into producing more gas than the market demands.

Overproduction has led to a natural gas surplus. In the United States, we produce about 24 trillion cubic feet of gas per year. In 2009, the country consumed under 23 trillion cubic feet of gas. According to the U.S. Energy Information Administration, the United States had a record-setting amount of natural gas in storage this year, about 3.8 trillion cubic feet.

The makings of the surplus started in 2003 when Halliburton introduced a new well stimulation method called horizontal hydraulic fracturing to a shale play in Texas. The method enabled drillers to get much more gas out of wells, which ignited a gold rush on major gas plays in the United States. Companies scrambled to borrow money or go in on joint ventures to afford the drilling equipment and land leases. They started drilling, and producing, like crazy.

Centerpoint Energy Passing the Savings to Customers

Through the Gas Supply Rate (GSR), an allowed adjustment to the gas supply charge portion of a customer bill, CenterPoint Energy passes on increases and decreases in the cost of natural gas with no markup. The GSR typically makes up 60-70 percent of a customer bill.

After lowering the GSR, a typical Oklahoma residential customer's bill using a winter usage of 120 Ccf that was $107.95 last winter will be $100.03, excluding taxes. This represents a more than 7 percent decrease.

"This is good news for consumers and we are happy to be able to pass this natural gas price decrease on to customers particularly because natural gas usage typically increases in the winter months due to heating needs," said Walter Bryant, division vice president of Gas Operations in Oklahoma.

In most cases, natural gas continues to be the best energy value for home heating, water heating, cooking and clothes drying.

CenterPoint Energy recommends that customers take advantage of the many low-cost, no-cost things they can do around the home to save energy and money:

Lower your thermostat to 65 degrees when you're home and even lower when you're not. By lowering your thermostat 10 - 15 percent for eight hours a day, you can save up to 10 percent a year on your heating costs. Installing a programmable thermostat can help you automatically control your heat usage.

Change your air filters regularly. A dirty filter restricts airflow and can increase the operating cost of your furnace by as much as 10 percent.

Set your water heater temperature at 120 degrees and wrap water heater pipes. Lowering the temperature to 120 degrees from 140 degrees and insulating your pipes can save you up to 10 percent on your water heating costs.

Seal leaks around doors, windows and other openings such as pipes or ducts, with caulk or weather-stripping. The most common places where air escapes in homes are floors, walls and ceilings, ducts, fireplaces, plumbing penetrations, doors, windows, fans and vents, and electrical outlets.

On sunny days, open draperies and blinds to let the sun's warmth in. Close them at night to insulate against the cold air outside.

Customers can enroll in Average Monthly Billing to spread heating costs more evenly throughout the year and avoid high winter bill peaks.

To learn more helpful information on ways to save energy and money, visitwww.centerpointenergy.com/readyforwinter.

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipelines, and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $19 billion. With about 8,800 employees, CenterPoint Energy and its predecessor companies have been in business for more than 135 years. For more information, visit the Web site at www.CenterPointEnergy.com.

Creative Idea for in Serbia for Natural Gas

NEW YORK, November 8, 2010 /PRNewswire via COMTEX/ -- Energtek Inc., a leader in hi-tech natural gas solutions and Adsorbed Natural Gas (ANG) technology, today announced that its recently formed subsidiary, Pan Energy d.o.o., has signed a gas supply contract with an industrial energy consumer in Northern Belgrade, Serbia.

Natural gas will be transported from a filling station by Pan Energy to a local dairy factory. The contract provides for the ongoing supply of natural gas, utilizing Energtek's cost-effective and environmentally-friendly mobile transportation solutions. The transportation project will help test the local technological, organizational and regulatory components of the supply system in Serbia.

"Pan Energy's first customer in Serbia will demonstrate the effectiveness of Energtek's bulk transportation natural gas solutions," said Energtek CEO Lev Zaidenberg. "Our mobile solutions enable the delivery of a viable and affordable alternative energy source. With the success of this pilot project, we anticipate growing regional demand for natural gas supplied by Pan Energy."

About Energtek

Energtek develops and applies innovative low-pressure storage technology and expertise to provide complete well-to-wheel pipeless Natural Gas supply solutions to industrial consumers and fleets of small vehicles. Energtek's Natural Gas solutions reduce pollution and alleviate consumer energy costs. Energtek provides competitive bulk transportation solutions to industrial users and alternative motor fuel solutions for 2- and 3-wheel vehicle drivers in Asia. Energtek operates subsidiaries in North America, Europe, Asia and the Middle East. To learn more about Energtek, visithttp://www.energtek.com

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of Energtek and its technologies. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and other matters set in Energtek's filings. These risks and uncertainties could cause actual results to differ materially from those indicated in the forward-looking statements.

Crude Oil Hits $84.33/bbl This Week

The price of December crude jumped 2.1% Nov. 4 to the highest level for a New York front-month contract since Apr. 6 as the market continued its reaction to the Federal Reserve Bank’s decision to buy $600 billion of Treasuries over the next 8 months to stimulate the US economy. 

It was the fourth consecutive price hike for crude this week. The December natural gas contract increased 0.5%, regaining most of its loss from the previous session. 

Analysts in the Houston office of Raymond James & Associates Inc. said, “Apparently, the market needed some time to make up its mind about the Fed's latest round of quantitative easing (QE2). After posting modest gains [on Nov. 3], the broader market screamed higher yesterday with the Standard & Poor’s 500 Index (up 1.9%) reaching levels not seen since 2008.” They said energy corporate stocks “took the cue from crude,” outperforming the broader market. 

The Fed’s monetary stimulus plan furthered weakened the US dollar, which fell 0.4% against the euro to the lowest level since Jan. 20, encouraging investors to shift their money to the riskier commodities of oil and gold. Gold prices surged 2.5%, the biggest 1-day jump in nearly 6 months. 

“We don’t see crude decoupling from the currency markets in the near future as the reactions about the US’s looser monetary policy will keep this pot boiling,” said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. “The Fed also kept the benchmark funds rate unchanged at 0.25% as economic recovery remains disappointing slow.” 

The dollar exchange rate and equity market trends “are working in favor of even higher oil prices,” said Adam Sieminski, chief energy economist for Deutsche Bank in Washington, DC. However, he said, “We would be more convinced of the sustainability of the oil price rally if it were accompanied by an elimination in contango in the crude oil forward curve and improvements in fundamentals.” 

Sieminski said, “The recovery in middle distillates demand growth has been more robust relative to other fuels.” Demand growth among nonmembers of the Organization for Economic Cooperation and Development—specifically Asian countries—continues to outpace the developed world. “In our view, these two features of the market will persist, which has implications for supply-demand balances from a seasonal perspective as well as price trends,” he said. 

Meanwhile, Walter de Wet at Standard New York Securities Inc., the Standard Bank Group, said, “We believe that the Commodity Futures Trading Commission data released later today is likely to show that noncommercial long positions have increased from already high levels last week.” The weekly CFTC report last week showed net speculative length in crude pushed higher last week, while net speculative length in oil products declined. 

De Wet said, “The current level of the speculative length in oil could cause oil prices to pull back very sharply despite the Fed’s QE2 program. To highlight the risk of such a correction, there were two previous big drops in oil prices when net speculative length had reached current levels. One was in January-February, another was April-May. We believe that commodity markets are pricing in QE2 already, and commodities will not necessarily continue to rally. We need new data to support higher prices.” 

The biggest immediate threat to the current commodity price rally is “another round of tightening in monetary policy in China,” he said. 

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “We continue to believe that QE2 is better played in equities than in oil futures. Oil prices are already back to the end 2007 levels, but the oil fundamentals are nowhere near those of 2007, and we continue to expect that higher commodity prices will be met with increasing hectic reactions from the CFTC (never mind that it is the Fed fueling the commodity price hike).” 

In its just-published medium-term outlook for crude, the Organization of Petroleum Exporting Countries assumes oil prices will stay at $75-85/bbl until 2020. “They have a Call-On-OPEC for 2014 at 30.4 million b/d, i.e. only 1.2 million b/d higher than the current production and 1.6 million b/d less than the 2007 Call-On-OPEC,” Jakob noted. “It is easy to discount anything that comes out of OPEC, but we need to keep in mind that the International Energy Agency also is not calling for an increase in the Call-on-OPEC for next year. In the meantime, unresolved unemployment and rising oil prices are not a positive for oil demand, and it is at those price levels that US oil demand started to get hit at the end of 2007.” 

Energy prices 
The December contract for benchmark US light, sweet crudes traded at $84.92-86.83/bbl Nov. 4 before closing at $86.49/bbl, up $1.80 for the day on the New York Mercantile Exchange. The January contract climbed $1.81 to $87.16/bbl. 

On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.80 to $86.49/bbl, once more in lockstep with the front-month futures price. Heating oil for December delivery gained 4.52¢ to $2.33/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 3.91¢ to $2.18/gal. 

The December natural gas contract recovered 2¢ to $3.86/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated by 13.9¢ to $3.51/MMbtu. Meanwhile, the Energy Information Administration reported the injection of 67 bcf of natural gas into US underground storage in the week ended Oct. 29. That put working gas in storage above 3.8 tcf—up 37 bcf from the comparable period last year and 353 bcf above the 5-year average (OGJ Online, Nov. 4, 2010). “Weak supply and demand balances suggest excess storage will persist across the winter,” Sieminski said. 

In London, the December IPE contract for North Sea Brent crude was up $1.62 to $88/bbl. Gas oil for November gained $15.25 to $737.50/tonne. 

The average price for OPEC’s basket of 12 reference crudes rose $1.77 to $84.33/bbl. 

Barnett Shale Very Productive

Total natural gas production in North Texas' Barnett Shale has passed a milestone level of 8 trillion cubic feet. And the area continued to produce more than 5 billion cubic feet per day in the first eight months of this year, despite a steep decline in drilling since gas prices crashed in the latter half of 2008, the Powell Barnett Shale Newsletter reported Monday.

The authoritative newsletter noted that with gas prices remaining weak, drilling has made a dramatic shift to the "wetter" part of the play, where Barnett wells not only produce dry gas, but also higher-priced liquids, including oil, condensate and natural gas liquids such as butane and propane. The Barnett Shale lies under more than 20 North Texas counties.

Gene Powell, an oil industry veteran and the newsletter's publisher, told the Star-Telegram on Monday that he stands by his forecast, first made in 2004, that the Barnett will produce 94 trillion cubic feet of gas over 80 to 100 years, a volume roughly quadruple current annual U.S. gas production.