On the shale gas patch, the twain decidedly do not meet: Shale gas drillers, on the receiving end of two years of withering attacks by anti-fracking elements, have launched a counter-offensive. A special-purposed group of 11 big industry players including ExxonMobil, Shell, Chevron and Anadarko issued an eight-page code of conduct for hydraulic fracturing in Pennsylvania and New York (pictured above, outside the town of Waynesburg, Pa.). I spoke with Anadarko CEO James Hackett, a leader of the group, before the Obama administration's release today of somewhat stiff rules governing fracking on federal land. As I wrote at EnergyWire, Hackett said the group wished to "set a good example" -- a high bar for all operators on the patch in order to reassure public opinion. But Hackett's vituperative description of critics suggests little room for conciliation between the sides. In a nutshell, Hackett sees himself as a patriot, and his critics as anti-science extremists, and worse.

The industry embarked on the standards as part of studies requested by the Department of Energy and a diverse group called the National Petroleum Council. But it was all against the backdrop of hyper-critical media like "Gasland," Josh Fox's much-watched 2010 documentary on fracking. The companies felt that shale gas "can be developed responsibly, but you had a slew of articles coming out from the New York Times. Whether they were fact-based or not didn't seem to matter," Hackett told me. "The Cornell study, the Duke study, the hysteria that people were trying to create around hydraulic fracturing, which was scientifically misplaced."

So there was industry interest in counter-attacking, Hackett said. But once they were into the process, the CEOs started thinking more broadly that they had something to gain by conceding to regulation. Hackett:

There was a feeling that this could be a useful way for us to proceed long term, because the truth is that the technology does keep changing and the practices keep changing. And we have every bit or more a stake of how the regulatory process evolves and society's acceptances of our industry. We have a bigger stake than I'd say than anyone else but the citizenry that we want to make sure is educated about what the benefits of this are so that they don't just say, ‘You lose your license to operate,' without understanding what it means when they say that.

Read on for more of James Hackett, and the rest of the Wrap.

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Until September, Russia was ruled in a careful choreography: President Dmitry Medvedev was the face on a tough but reformist agenda that included the construction of Skolkovo, a richly financed version of Silicon Valley in the Moscow suburbs, and a more conciliatory approach to western foreign policy initiatives. Actual power was held by Prime Minister Vladimir Putin, who nevertheless in public was the "chest," spending much time traveling the country in service of showing off his physique and harpooning abilities.

On Sept. 24, however, Putin announced his intention to return as president in elections next year; he would swap with Medvedev, who would take occupancy of the lesser post of prime minister. It would be Putin's third term in the Kremlin, a home he surrendered in 2008 because of a constitutional limit of two consecutive terms.  Putin thought that his word, along with the largesse-enabling factor of high oil prices, were sufficient in terms of setting in motion Russia's next political transition. But on Sunday voters told him otherwise -- the ruling United Russia party received less than half the total vote, and had to cheat to get that much. Russians informed Putin that he will have to campaign for victory on March 4.

So why did the ostensibly long-suffering Russians turn on Putin and deny United Russia continuation of the two-thirds margin that it won in the Duma four years ago?

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A question of power in Saudi Arabia: The al-Saud family of Riyadh has two principal tasks -- securing its rule, and guaranteeing the smooth, long-term flow of oil income. When these dual objectives come in conflict -- such as they have in the Arab Spring -- the former takes precedence. So it is that, with King Abdullah having allocated a whopping $129 billion in social spending over five years in order to pre-empt restiveness within his population, he has cancelled plans for a $100 billion buildup of the Kingdom's oil production capacity. Saudi Arabia can currently produce about 12.5 million barrels of oil a day, and it had plans to increase capacity to 15 million barrels a day by 2020. In the Financial Times, Aramco CEO Khalid al-Falih said the expansion is no longer necessary because of increased supplies announced elsewhere. The new Saudi plans could exacerbate a projected significant tightening of global supplies in the coming years. But Barclays Capital's Amrita Sen, quoted in the FT, suggested that the rationale is the family's core agenda: "The current focus of Saudi is on domestic social spending on the back of [the] Arab Spring."

Go to the Jump for more of the Wrap

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Russian Prime Minister Vladimir Putin's decision to reclaim the Kremlin is a bet on high oil prices.

The weekend announcement has rattled markets a bit, Reuters reports -- the value of the ruble dropped after the current president, Dmitry Medvedev, fired Russia's rebellious finance minister, Alexei Kudrin, who is much respected abroad. Some of the angst is rooted in Russia's continued reliance on revenue from its 10 million barrels a day of oil production, and continued failure to diversify its economy.

Yet it is this very hydrocarbon foundation that Putin is banking on in a new period as president starting next May. Western financial analysts wring their hands that Russia needs at least $116-a-barrel oil to balance its budget, while the price of the Brent benchmark is just $105 at the moment and is forecast to drop over the next year or so. But, with his move, Putin aligns himself with the longer-term outlook of most oil-price forecasters, who foresee a major spike in prices starting in roughly 18 months or two years and running until the end of the decade. At that point -- 2020 or so -- many forecasters think oil prices will be so high that they will begin to trigger more or less a permanent destruction of much demand as consumers switch to alternatives.

By that time, Putin will be the end of a new 12-year run as president. His last, highly popular 8-year term as Russian president coincided with high world oil prices -- reaching a record high of $147 a barrel -- which he used to boost employment, to build up a war chest of financial savings, to elevate the buying power of ordinary citizens, and to lead a voluble, chin-out foreign policy.

In remarks in recent days, former Finance Minister Kudrin said that Russia already is having problems absorbing the income from oil prices, resulting in the flight of $31 billion in largely oil proceeds out of the country in the first half of the year, Bloomberg reports. But Putin could simply begin to resume socking away the largesse into a rainy-day fund, or a sovereign wealth fund.

Vladimir Putin's announcement today that he is returning to the Russian presidency is risky -- as Russia continues its roller-coaster economic ride over the next six years, wholly subject to the whim of oil and natural gas prices, Putin and Putin alone will be the hero or the dog in the view of his citizens. I had thought that, for the reasons of populism -- the ability to duck blame or claim responsibility when it suited him -- Putin would keep Dmitry Medvedev as a proxy in the Kremlin. But the lack of clarity in power -- the talk that Medvedev might be moving to establish his own power base - may have finally persuaded Putin to push his protégé back into the bleachers. Medvedev will be prime minister.

For the last three months, O&G has been running a betting competition called the Kremlin Contest. We have two winners. I am trying to reach them, and when I do I will announce their names. Congratulations to them, and thanks to all who participated and gave me their thoughts on Russia's always-murky politics.

Update: I have reached the two winners by email. They are Michael Perice, a fresh political science graduate of Temple University, and Theo Francis, a writer from Footnoted.org, a digital news service. Both correctly guessed that Putin and Medvedev would swap places. Both also selected Dec. 8 as the day that Putin would announce his choice, which was the closest to the correct date. I will write more about the winners in a Monday post that analyzes the news. I will also announce how the pot will be split between them. For now, congratulations to the winners, and also to everyone who participated.

Further update: This is awkward. Finance Minister Alexei Kudrin has made a post-game play to upend the Putin-Medvedev swap.  There is a conceivable chance that he could succeed. We have standing bets for a Putin-Kudrin ticket. Therefore, we are withdrawing the declaration of winners pending clarification. Both Perice and Francis agree that this approach is best.

What do a big oil deal and the arrest of an alleged murderer suggest about presidential politics? In Russia, where just one man will determine who rules for the next six years, they are among the only bits of evidence that political junkies can cobble together for insight into the country's next election.

In the case of the first, Reuters' Doug Busvine writes that ExxonMobil's coup in the Russian Arctic this week suggests that Prime Minister Vladimir Putin will return to the Kremlin in March. A raid by masked police on BP's premises does imply that Russia still favors Putin's tough-guy approach to dispute settlement.

But can't this simply mean what we all know -- that if you want to talk to the guy in charge, that would be Putin?

After all, we also have Russia's arrest of a ringleader in the 2006 murder of crusading Russian writer Anna Politkovskaya. If Russia's dark side were truly ascendant, we are similarly seeing adherence to the views of President Dmitry Medvedev, who has publicly advocated the rule of law. Does Medvedev look unhappy in the photo above, taken a few days ago?

Putin will rule regardless of where he sits, even if it is Moscow mayor. But we are accustomed to such figures keeping their cards close to their chest until the last moment -- it does not behoove them to tip their hand. What do you think -- will Putin return, or will Medvedev remain in place?

It is not a requirement to be a Russia expert to make your guess in the Kremlin Contest. Today is the last day to vote. Send an email, using the link above my postage-stamp-size photo to the right on this blog. Name Russia's next president, prime minister, and the date that Putin makes the announcement. Identify your small non-cash wager (current bets are a t-shirt, a mug, a book and glasses of wine).

What does the nurturing of professional football clubs by Russia's billionaire oligarchs say about the country's coming presidential election? In the case of at least one oligarch, it may mean a bet that Prime Minister Vladimir Putin is headed back to the Kremlin next year. Last week, mining billionaire Suleiman Kerimov made Camaroonian star forward Samuel Eto'o (pictured above in Moscow) the highest-paid soccer player in the world with a salary of $29 million a year. He'll play for Kerimov's Anzhi Makhachkala club, based in his boyhood home, the Russian region of Dagestan. According to Jonathan Wilson at the Guardian, the London newspaper, this is all about pleasing Putin, who has long urged Russia's oligarchs to put their wealth into the country's struggling regions. The soccer club has a long history of supporting Putin.

Is this a shrewd bet? Do you agree that Putin is returning to the presidency? Or will he elect to keep President Dmitry Medvedev in his post? Perhaps Putin will spring a surprise and put someone else in the slot?

Just three days remain to voice your opinion in the Kremlin Contest, O&G's wagering competition for who will be Russia's next president.  Using the email link to the right on this blog just above my photo, tell me your best guess for Russia's next president, prime minister, and the date Putin will make his wishes known. For your bet to be valid, you must make a small non-cash wager. Current examples have been mugs, t-shirts and glasses of wine.

A friendly wager -- the Kremlin Contest: Among friends, I'm regarded as a bit of an outsider for my call on next year's Russian presidential elections -- a forecast here and elaboration here that strongman Prime Minister Vladimir Putin will opt not to return to the slot he held for eight years, and instead will select his friend, President Dmitry Medvedev (pictured above), to run again next March. Over at the Washington Post, my former colleague Fred Hiatt is upset with the Kremlin's approach to electoral politics, but that's beside the point. The prevailing opinion is that Putin will return to the Kremlin, but I bet a glass of Rioja on Medvedev with the husband of a senior FP editor who sides with the conventional wisdom (she herself declined to reply to the challenge). None of this sways my colleagues. The other day, one fellow in the office called my prediction "implausible."

So I am throwing out a public wager -- an election pool of a sort. Here are the rules: The winner must correctly name who is Russia's next president and prime minister, plus the date when Putin makes the announcement. To be eligible, contestants must toss a small non-cash item into the pot (you will be wise to carefully observe this rule, because unless you yourself prevail, you'll be mailing your contribution to the winner or otherwise arranging for its receipt; I'm throwing in another glass of Rioja, and if necessary will figure out how to deliver it.). The contest is winner take all, to be divided up on my judgment alone in the event of a tie. If the correct date isn't guessed, the winner will be closest to the actual date without going over. The deadline for entry is Sept. 1 since Putin probably won't make his choice clear before then.

This may not be as easy as it sounds. A ringer in the mix for example is metals-and-basketball tycoon Mikhail Prokhorov, who under certain circumstances could be prime minister.

Here are my guesses: President -- Medvedev. Prime Minister -- Putin. Date -- Dec. 9, 2011. Send your own to me, using the email link just above my photograph, in the About This Blog box on the right side of the blog.

The casino moves faster than expected: We knew that oil traders wouldn't stand by and allow the United States and other oil consuming states to think they could bring some order to volatile prices, as the U.S. suggested a week ago. But we didn't suppose that traders could or would move this fast. On June 22, the price of oil closed at $95.41 a barrel. The following day, it plunged to around $90 a barrel when the U.S. along with other members of the International Energy Agency pledged to sell 60 million barrels of oil into the global oil market from their strategic petroleum reserves; it appeared as though consuming states were drawing a line in the sand, and saying they would pay no more for oil. They would drive the price down by making the market more uncertain for traders. But, as we discussed that day and Monday, traders were bound to perceive a dare, and to engage in some brinksmanship. They would make clear that the oil-consuming states were not prepared to keep intervening in the market. And that's precisely what happened. As if to make a point, the price closed at $95.42 yesterday, or a penny above the level just before the intervention.

An official from the U.S. Energy Department says that traders have snapped up the 30 million barrels that the United States offered up for sale, Reuters reports. One reason is that it's light, sweet oil, the type that Libya producers and has been in short supply on the global market. Yet Bloomberg's Paul Burkhardt writes that some of these barrels are destined not for U.S. vehicles, but for U.S. storage tanks. In another gaming move, traders will hope to sell the volumes on again at a profit. (Update: In this document forwarded by an alert reader, Barclays Bank is attempting to snap up 200,000 barrels from yesterday's SPR sale at $104.97 a barrel. If successful, Barclays at today's prices would be able in this case to flip the volumes for an immediate profit since the curent premium for light, sweet crude is about $14 a barrel above the price of U.S. benchmark West Texas Intermediate.) 

The takeaway is that oil prices will not moderate through sleight of hand, such as the injection of strategic reserves onto the market, or even Saudi Arabia's planned addition of a half-million barrels a day or more to the global mix. The reason is that traders will always look to demand, and spare production capacity to meet it in a fix. That is, should there be a devastating hurricane, a new Arab Spring uprising, or a well-placed war, is there sufficient unused production capacity to make up for lost volumes? So we are talking a need for a continued rise in Brazil's reserves; more production from the U.S. Baaken and Eagle Ford shales; and so on.

The Gulf of Mexico blame game: Was BP entirely at fault for the blowout of the well it operated in the Gulf of Mexico until April of last year? Pretty much, at least according to the court of public opinion and, thus far, the actions of authorities. But at Bloomberg BusinessWeek, Paul Barrett has a cover story next week laying out the case that Transocean, BP's rig contractor, is ducking what should be shared responsibility. Of the 126 workers aboard the Deepwater Horizon when it blew up, 79 were on Transocean's payroll, Barrett reports. These Transocean workers were carrying out the drilling operation. BP was ultimately in charge -- it called the shots and made the big decisions -- but it was Transocean's practices and expertise that made the rig go. The undertone of piece is the appearance of unseemliness in Transocean's rejection of any responsibility for the blowout, which killed 9 of its employees; a week ago Transocean issued a report laying blame squarely on BP's shoulders. Barrett draws a portrait of a company whose strategy in this case is driven by the bottom line -- if it isn't found absolutely inculpable, it could be driven out of business by the cost of the billions in payouts owed to victims. Therefore, it is shedding all blame onto BP's shoulders.

Russian election clues?   A couple of weeks ago, I ventured a bet that, contrary to the conventional wisdom, Russian President Dmitry Medvedev will run and win re-election in next year's elections; his mentor, Prime Minister Vladimir Putin, will opt to keep his protégé in place, I wrote. While for a variety of reasons I still think that is the case, it's understandable why many think otherwise: Putin is throwing up a lot of conflicting signals. Take his decision to eradicate much-hated and bribe-laden car inspections for the remainder of the year, worth up to $300, writes Will Englund at the Washington Post. And what about Putin's announcement of a $285 billion program to rebuild Russia's ramshackle roads, another bane of the country (that's Moscow traffic pictured above)? Is Putin announcing such programs from a simple sense of good governance? According to Robert Coalson of RFE-RL, the way Russia's strongman is presiding over the affairs of the ruling United Russia party, he is sending "the strongest signals yet that he intends to return to the presidency in 2012."

This is entertaining -- and convincing -- to be sure. But that's the point. Putin doesn't need to convince anyone -- all of Russia and the rest of the world know that the job of president is his for the taking. So why the show? Because he wants the accolades, the hero-worship, the pleading crowds and so on, but while pushing matters to the brink, in the end he will, for the good of the nation of course, step aside (technically, that is) and maintain the status quo. The system works the way it is. Ask yourself this question: why in the last month (as the Moscow Times rounds up in an editorial) have the killers of Stanislav Markelov been imprisoned; has imprisoned oligarch Mikhail Khodorkovsky, while not released, been permitted a fair hearing on state-run NTV television while announcing a decision to appeal; and has the alleged triggerman of murdered journalist Anna Politkovskaya been captured and charged? Is it because Medvedev is acting against Putin's wishes?

This is where it's possible to lose one's way. What seems dissonant in the tandem in fact isn't. It happens because Putin wants the balance that Medvedev provides. Not incidentally, Medvedev is content with this state of affairs as well. One way to understand Medvedev is as simply another expression of Putin -- that is, even if Putin stepped completely out of the picture, Medvedev would not turn Russia into bastion of liberalness. Rather, when Medvedev's Russia undoes some of the injustices in the country, "what might appear to be the dismantling of Putin's legacy is not a dismantling at all," the Moscow Times editorial board writes. It said:

Khodorkovsky, even if given parole for good behavior, will not be acquitted. Investigators might have found Politkovskaya's killer, but we are unlikely to ever know who ordered the murder. Ultra-nationalism is still not being fought outside the courtroom. And thousands of other murky cases -- such as the death of lawyer Sergei Magnitsky or the beating of Kommersant reporter Oleg Kashin -- have not been properly investigated. Most important, the power vertical, along with its creator, is as strong as ever. Medvedev may stay in the Kremlin without tackling these issues. But if a handful of high-profile cases is all that he has to offer in terms of political reforms, his second term in office will differ little from Putin's policy of status quo. A second Medvedev term might then be best described as 'modernized stagnation.'

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Are we to believe President Dmitry Medvedev, who says that the collapse of BP's blockbuster oil deal in Russia is all a simple matter of the rule of law -- that CEO Bob Dudley was violating a contract, and that isn't done in Russia? One might reply, Since when? But this is what is baffling about the latest turn in BP's long saga of suffering -- one does not know whether Russia has suddenly gone legal, or whether we are watching a dimension of the run-up to the country's 2012 presidential election.

For BP, this was all about recovering its mettle from last year's disastrous Gulf of Mexico oil spill. Earning street cred in Big Oil isn't the same as a lot of other businesses -- there is comparatively little in the way of razzamatazz, branding, or product breakthroughs. Instead, it's all about being quick off the mark in acquiring property and finding hydrocarbons. Yet even there, as BP has learned, the going isn't what it used to be: Dudley was plenty fast pivoting off the spill, and obtaining a superlatively rich new deal to help develop Russia's Arctic. The details were tantalizing -- already the most active Big Oil company on the Russia patch, BP would double-down by forming a marriage-type arrangement with state-owned Rosneft. The two companies would swap a significant number of shares, and then explore the extravagantly rich oil fields of the Arctic. Tens of billions of barrels of oil were at stake, and at once BP seemed to be back in the game.

Only, BP already had a Russian spouse -- four oligarchs collectively known as AAR -- with which it had an exclusive, first-right-of refusal agreement for any dealings on Russian soil. AAR obtained European injunctions against the deal, so Dudley had to scrape and grovel in order to try to persuade AAR to be bought out, and Rosneft to help provide the funds (one reason being that Prime Minister Vladimir Putin -- superior in rank to Medvedev -- would never allow a foreigner to own 100 percent of a Russian oil company; the other reason being that, even if Putin would, BP didn't have $30 billion in cash at its disposal, apart from the $30 billion and more that it's collecting to pay off victims of the spill).

As of Monday night, BP and AAR had agreed on a $32 billion buyout (Sylvia Pfeifer and Catherine Belton of the Financial Times have assembled a good chronology). But in the end, the deal was upended by deep-seated mistrust between the Russians -- those at Rosneft, and the four oligarchs. In terms of the sequence of events, AAR wanted its cash first, before BP and Rosneft proceeded with their tie-up; Rosneft rejected that idea, and wanted the oligarchs to be paid only after the rest of the deal went through. They failed to bridge the gap, and the deal died.

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As we begin another week of turmoil in the Middle East, and countries further afield batten down the hatches in an effort to preclude being next, here are some of the things we don't know:

-- Whether oil prices are going up to $220 a barrel (and $5 at the pump), or down to $70 a barrel and more like $2.50 for a gallon of gasoline in the United States;

-- Whether Saudi Arabia really increased its oil production last week, or if the truth is a bit different;

-- And, finally, whether Russia's gentleman president, Dmitry Medvedev, has been rummaging through Vladimir Putin's archive of paranoid off-the-cuff remarks, and truly does not grasp what is happening around him.

It was Nomura Securities that, in the Goldman Sachs style of hype-as-part-of-corporate-promotion, last week forecast oil prices of $220 a barrel. Nomura predicated its forecast on Algeria devolving into chaos, and shutting down its 1.8 million-barrels-a-day of oil production. Since that would be on top of Libya's current cutoff of around 1 million barrels a day, the combined loss to the market would rub right up against the industry's total spare production capacity of 4 million barrels a day. Hence, prices would rise steeply because at once we would be back to 2008, with almost no margin for error for any other mishap like a hurricane, a Nigerian pipeline explosion -- or more Middle East unrest.

Yet, why the figure $220? Do we go up in fifths now? We side with the cooler-headed Dave Kansas at the Wall Street Journal, who calls Nomura's projection "fraught."

But are we headed as low as $70 a barrel either? That's what Almir Barbassa, the CFO of PetroBras, the Brazilian oil giant, told MarketWatch. For the reason he says that, read on.

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