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NORTH AMERICAN RIG COUNTSThe U.S. rotary rig count was unchanged at 1,864 for the week of September 14, 2012. It is 121 rigs (6.1%) lower than last year. The number of rotary rigs drilling for oil was up 4 at 1,413. There are 351 more rigs targeting oil than last year. Rigs drilling for oil represent 75.8 percent of all drilling activity. Rigs directed toward natural gas were down 4 at 448. The number of rigs currently drilling for gas is 464 lower than last year's level of 912. Year-over-year oil exploration in the U.S. is up 33.1 percent. Gas exploration is down 50.9 percent. The weekly average of crude oil spot prices is 9.4 percent higher than last year and natural gas spot prices are 27.6 percent lower. Canadian rig activity is up 9 at 354 for the week of September 14, 2012 and is 147 (29.3%) lower than last year's rig count. The number of rigs drilling for oil was unchanged at 256 and is 86 (25.1%) lower than last year. Gas directed rig count was up 9 at 98 and is 61 (38.4%) lower than a year ago.

OIL FALLS BACK ON SELLOFFOil plunged suddenly Monday afternoon, dropping more than $4 US per barrel at one point in a dramatic end to an otherwise quiet trading day in New York. Benchmark crude fell $2.38, or 2.4 per cent, to finish at $96.62 a barrel on the New York Mercantile Exchange. That's the biggest percentage decline since July 23. Oil plunged below $95 per barrel during the sell-off. Traders were unsure of the cause of Monday's price drop. Some questioned whether an errant trade or another rumour about a release of oil from the Strategic Petroleum Reserve was to blame. The White House has been considering tapping the SPR to stem the rising cost of crude and gasoline. A little over a week ago, Reuters reported the Obama administration was considering a release much larger than the 30 million barrels from last year. Oil rose 2.7 per cent last week and touched a high above $100 a barrel after getting a boost from the Federal Reserve's latest plan to spur the U.S. economy. Concerns that unrest in the Middle East over an anti-Islam film could trigger supply disruptions were a contributing factor. Brent crude, which is used to price international varieties of oil, fell sharply as well. Brent lost $2.91, or 2.9 per cent, to $113.77 a barrel on the ICE Futures Exchange in London.

U.S. CRUDE INVENTORIES RISE U.S. crude oil inventories rose more than expected last week, led by gains in Gulf Coast stockpiles, as imports shot up, data from the American Petroleum Institute

showed on Tuesday. Crude inventories rose by 2.4 million barrels in the week to Sept. 14, compared with analysts' expectations for a build of 1 million barrels, the API reported. Gulf Coast inventories showed a nearly 1.37 million barrel increase from the previous week. The rise came as imports of crude oil increased to 9.39 million barrels per day, up 1 million bpd from the previous week, the report showed. Earlier in the month, imports of crude oil were hampered by Hurricane Isaac, which shut in refineries, offshore oil production platforms, and offloading facilities along the U.S. Gulf of Mexico. Refinery utilization jumped by 3.5 percentage points, to 87.8 percent of capacity last week, according to the API. Analysts had forecast a 1.1 percentage point rise in utilization. Stockpiles of crude at the Cushing, Oklahoma, delivery point for the New York Mercantile Exchange's crude oil contract fell by 705,000 barrels last week. U.S gasoline inventories rose by 135,000 barrels last week, compared with forecasts for a build of 1.2 million barrels in

a Reuters poll of analysts. Stockpiles of the fuel on the Gulf Coast showed the largest build, up 825,000 barrels, while East Coast stocks fell by more than 500,000 barrels. U.S. distillate stocks fell by 1.1 million barrels, countering analyst expectations for a 1 million barrel rise. Gulf Coast inventories led the decline, off nearly 1.48 million barrels. Brent crude prices traded down $2.16 to $111.63 a barrel in post-settlement trade after the data was released. Earlier, the contract had settled down $1.76 at $112.03 a barrel.

OPEC PUMPS MORE OILOil consumers have enough crude supply and the risk to global demand growth remains skewed to the downside, exporter group OPEC said on Tuesday, in a report that builds a case against any use of strategic reserves by consumer nations to lower prices. The Organization of the Petroleum Exporting Countries said its production rose by about 260,000 barrels per day (bpd) in August, despite a European Union embargo on Iran's

exports, due to higher output from other members of the 12-member group. OPEC's report comes as the United States and other consumer nations are worried about high oil prices, which have risen to $115 a barrel for Brent crude. Leaders of the Group of Eight major economies have signaled their readiness to tap into emergency oil stockpiles if needed. But OPEC said it saw enough crude oil in the market, a day after similar remarks by its top producer Saudi Arabia which were seen by some in the market as a signal to consumers there was no need for a release of emergency reserves. "OECD crude oil stocks remain at comfortable levels, especially in the U.S. market," OPEC said in the report. "As a result, any product shortage could be readily met by higher utilization of idle refinery capacity in a market with abundant crude supplies." Analyst Sam Ciszuk of UK-based consultant KBC Energy Economics said the report signaled OPEC's dislike of any use of emergency stocks, such as the U.S. Strategic Petroleum Reserve (SPR), and

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agreed with OPEC that supply was ample. "OPEC itself is never really happy with SPR releases," Ciszuk said. "Our view is also that supply is sufficient for the moment. When you look at the stocks situation, it is not problematic." OPEC's report is the first of this month's trio of major oil outlooks to emerge. The U.S. government's Energy Information Administration issues its report later on Tuesday, followed by the International Energy Agency on Wednesday. The rebound in OPEC output last month was driven mainly by extra barrels from Angola and Nigeria - and the lack of a further sizeable decline in Iranian supply. Citing secondary sources, OPEC said its production rose to 31.41 million bpd in August from 31.15 million bpd in July. Iranian supply last month was 2.77 million bpd, versus 2.78 million bpd in July. Iranian output has fallen sharply this year because of European and U.S. sanctions over its disputed nuclear program. The EU embargo bars EU insurance firms from covering Iran's exports, which has hindered imports by non-EU buyers. The OPEC report adds to earlier signs of the drop in Iranian shipments bottoming out as some non-EU buyers find ways around the insurance ban. In Japan, government-backed shipping cover has encouraged

purchases, say industry sources. Output also declined in OPEC's top producer, Saudi Arabia, which told OPEC it had trimmed supply by 50,000 bpd to 9.75 million bpd in August. An August 30 Reuters survey also said Saudi supply dropped by that amount. OPEC now expects demand for its crude to average 29.55 million bpd in 2013 - unchanged from last month and significantly less than it is pumping at present. Also in the report, OPEC left its forecast for the growth in world oil demand next year unchanged at 810,000 bpd and repeated the view from last month's report that oil use could undershoot the estimate by 20 percent. "The economic picture is vague and there are plenty of potential uncertainties going forward," OPEC said. "Downside risks exist as the spillover from the slowing global economy could reach some regions of the non-OECD."

CANADIAN SPOT GAS RISES Canadian spot natural gas prices rose on Monday as short-term supply in Alberta remained tighter than usual. Spot gas at the AECO storage hub in southeastern Alberta rose 4 Canadian cents to average C$2.26 a gigajoule. Deals were done between C$2.22 and C$2.29 a GJ. Daytime temperatures in Toronto,

Canada's largest market, will be at or below average through Monday, Environment Canada said. Southern Alberta will be warmer than normal for the next six days. Alberta's main pipeline system ran at 15.94 billion cubic feet, 300 million cubic feet under TransCanada Corp's target line pack. Producers delivered 9.3 bcf into the system and a net 308 mmcf was placed into st o rage facilities in the province. Export prices were mixed. Spot gas at Niagara, for shipment into the U.S. Northeast, fell 3 cents to average $3.15 per mmBtu. Spot gas at Huntingdon-Sumas on the British Columbia-Washington border averaged $2.72 per mmBtu, up 3 cents.

SHELL SUSPENDS ALASKAOFFSHORE OIL DRILLING

Shell's offshore drillers have lost their race with the Arctic winter and abandoned hope of striking oil this year but will drill wells before the ice closes in to prepare for a 2013 search for the region's elusive riches. Shell had until Sept. 24 to drill into oil reservoirs in the Chukchi Sea, according to U.S. rules designed to accommodate the dangers of drilling in increasing ice and d e t e r i o r a t i n g w e a t h e r i n t h e environmentally sensitive region. But Shell's U.S. offshore Arctic expedition has

cost $4.5 billion since 2005, almost one sixth of Shell's annual capital spending budget, and has faced a series of setbacks. The latest came on Monday when the company said its containment dome, a giant metal box on a barge that is standing by to help contain any oil spill resulting from a well blowout, had been damaged during tests. "In order to lay a strong foundation for operations in 2013, we will forgo drilling into hydrocarbon zones this year. Instead, we will begin as many wells, known as `top holes,' as time remaining in this season allows," the company said. By Oct. 31, Shell must halt all operations, including top hole wells which stop short of the oil reservoirs but prepare the way for drilling in earnest next year. Last week, Shell was forced to unhook its drilling vessel from anchors holding it over a drill site to escape encroaching ice, just a day after it started drilling the first hole in the Chukchi seabed for more than two decades. The work had begun after a series of delays having finally won permission from the U.S. I n t e r i o r D e p a r t m e n t a n d t h e Environmental Protection Agency. U.S. regulatory oversight of the Arctic has long been intensive, but it has stepped up a gear since the Macondo oil spill in 2010. The absence of a certificate for the barge

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itself from the U.S. Coast Guard delayed operations earlier in the summer. Ice cover in unexpected quantities has also been a complication. Shell's activities in the Beaufort Sea, another Arctic province, have been hit by some of the same issues and by the need to avoid disturbing the autumn whale hunting season nearby. Drillers there have yet to get a drill bit into the seabed. The remoteness, the extreme cold, and the threat from ice floes crushing equipment pile more costs on top of those imposed by restrictions on drilling during hunting and breeding seasons and requirements for expensive emergency equipment to be on standby. And industry executives acknowledge that the economics of Arctic exploration is shaky. "The Arctic has a high cost of supply and it is going to take high oil prices to keep it competitive until we can drive down the costs," ConocoPhillips Chief Executive Ryan Lance said last month. In July, BP,

Europe's second largest investor-controlled oil company behind Shell, indefinitely suspended a $1.5 billion offshore oil project in Alaska due to cost overruns and technical setbacks. And last month, the Shtockman consortium that had been looking to exploit a huge gas field in the Russian Barents Sea put the plan in mothballs, saying it is too costly for now. Nevertheless, Shell and other international oil and gas companies are moving into the Arctic because of increasing resource nationalism and dwindling production in their traditional heartlands of the Middle East, South America, the United States, the North Sea and elsewhere. Persistently high oil prices are also making the huge engineering challenges of working in such a hostile environment look more worthwhile. In addition, the climate change that burning hydrocarbons contributes to has pushed back the ice, opening up access to, and

markets for, the hydrocarbons there. The prize of success could be huge. The International Energy Agency (IEA) estimates that some 30 percent of the world's undiscovered natural gas and 13 percent of its oil is waiting to be exploited in the Arctic. Norwegian oil producer Statoil, another Arctic pioneer which recently teamed up with Russia's Gazprom and others, is working on a prototype of a gas compressor the size of a football field and 20 metres (66 feet) high designed to sit on the seabed beneath the ice and operate all year round. Drilling in the Arctic Barents Sea, off Norway, has continued unabated this year after a string of major discoveries recently and the government will offer 72 Arctic blocks in a licensing round later this year. Statoil already operates the Snoehvit LNG facility in the Barents and Italy's ENI is putting the finishing touches to the $6.4 billion Goliat facility, which will start up in 2014.

GIBSON ANNOUNCES HARDISTYSTORAGE EXPANSION

Gibson Energy Inc. has announced two expansion opportunities at its Hardisty Terminal near Hardisty, Alberta. Subsequent to the previously announced open season process, the Company has received sufficient, long-term, committed customer support to begin construction of two 400,000 bbl oil storage tanks for an aggregate addition of 800,000 bbls of storage. Located immediately adjacent on the East boundary of the existing Gibson's Hardisty Terminal, the two tanks will form the initial anchor for an expansion of the facility. The new tanks will be well connected to third party receipt pipelines and facilities and will have connectivity to all current export pipelines from Hardisty. They will also benefit from the synergies and operational flexibility provided by Gibson's existing Hardisty Terminal complex. Site preparation for the two

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400,000 bbl tanks is scheduled to start in the fourth quarter of 2012. Commissioning is expected to occur in early 2014. "This initial development on our eastern lands at Hardisty Terminal starts to take advantage of the Company's strategic 184 acre undeveloped land position in the area," said Rick Wise, Gibson's Senior Vice-President Operations. "We expect continued growth at our Hardisty Terminal as oil sands and conventional oil production continue to develop at an accelerated pace." Gibson a lso announced that it has signed a Letter of Intent with a major unit train developer to explore unit train shipments from the Hardisty area. The proposed facility would use Canadian Pacific's North Main Line for transporting crude by rail to markets across North America.

SUNCOR ENERGY ANNOUNCESNORMAL COURSE ISSUER

Bid Suncor announced today that the Toronto Stock Exchange (TSX) has accepted the notice filed by Suncor of its intention to commence a Normal Course Issuer Bid (the Bid) through the facilities of the TSX, New York Stock Exchange

and/or alternative trading platforms. The notice provides that Suncor may, commencing September 20, 2012 and ending September 19, 2013, purchase for cancellation up to $1 billion worth of its common shares. The actual number of common shares that may be purchased and the timing of any such purchases will be determined by Suncor. All purchases are expected to be made from existing cash. All common shares acquired by Suncor under the Bid will be cancelled. Suncor believes that, depending on the trading price of its common shares and other relevant factors, purchasing its own shares represents an at t ract ive investment opportunity and is in the best interests of the company and its shareholders. Between September 6, 2011 and September 5, 2012, and pursuant to Suncor 's previously announced Normal Course Issuer Bid, Suncor successfully completed the purchase of $1.5 billion worth of its common shares (50,160,465), at a weighted average price of $29.90 per common share. Pursuant to the Bid, Suncor has agreed that it will not purchase more than 38,392,005 common shares,

being approximately 2.5% of i ts 1,535,680,218 issued and outstanding common shares as at September 14, 2012. In addition, and subject to the 'block purchase' exemption, Suncor will not acquire through the facilities of the TSX more than 25% of the average daily trading volume of its common shares during a trading day on the TSX, being 903,755 common shares.

FIRE AT MEXICO PEMEXGAS FACILITY KILLS 10

Ten people were killed in a fire that broke out at a gas facility of Mexican state oil monopoly Pemex in the northern state of Tamaulipas. In a statement, Pemex said 10 of its workers had been killed at the gas compression station near the city of Reynosa on Tuesday. Local reports said the total number of injured could be over 40, though Pemex has not confirmed this. The incident follows two other fires at Pemex facilities in Tamaulipas in the past few weeks. The cause of the blaze had not been determined but Pemex said the fire was extinguished by early Tuesday afternoon. The facility belongs to its exploration and production arm, PEP. The

facility sends gas imports from the United States as well as domestic gas production from Mexico's Burgos fields to the industrial city of Monterrey. Houston-based oil analyst George Baker said gas deliveries to Monterrey could be compromised. "When you get a leak in the pipeline and the gas moves over to the engine, that's doing the compression, that's going to cause an explosion, not just a fire," he said. Earlier this month, four Pemex workers were injured after a fire broke out at the Madero refinery in Tamaulipas. Another blaze at the same refinery occurred on Aug. 13. A number of blazes at Pemex facilities have been caused by illegal tapping of pipelines, which have been preyed upon by criminal gangs. Tamaulipas, which borders the United States, has been ravaged by drug gangs in recent years.

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