WASHINGTON | Mon Dec 31, 2012 9:12pm EST
The source said Democratic Senate Majority Leader Harry Reid and House of Representatives Minority Leader Nancy Pelosi had signed off on the deal.
The agreement includes a balance of spending cuts and revenue increases, the source said.
ANCHORAGE, Alaska | Tue Jan 1, 2013 5:31am EST
ANCHORAGE, Alaska Jan 1 (Reuters) - A large drill ship belonging to oil major Shell ran aground off Alaska on Monday night after drifting in stormy weather, company and government officials said.
The ship, the Kulluk, broke away from one of its tow lines on Monday afternoon and was driven, within hours, to rocks just off Kodiak Island, where it grounded at about 9 p.m. Alaska time, officials said.
The 18-member crew had been evacuated by the Coast Guard late Saturday because of risks from the ongoing storm.
With winds reported at up to 60 miles an hour and Gulf of Alaska seas of up to 35 feet, responders were unable to keep the ship from grounding, said Coast Guard Commander Shane Montoya, the leader of the incident command team.
"We are now entering into the salvage and possible spill-response phase of this event," Montoya told a news conference late on Monday night in Anchorage.
There is no known spill and no reports of damage yet, but the Kulluk has about 155,000 gallons of fuel on board, Montoya said.
The grounding of the Kulluk, a conical, Arctic-class drill ship weighing nearly 28,000 gross tons, is a blow to Shell's $4.5 billion offshore programme in Alaska.
Shell's plan to convert the area in to a major new oil frontier has alarmed environmentalists and many Alaska Natives but excited industry supporters.
Environmentalists and Native opponents say the drilling program threatens a fragile region that is already being battered by rapid climate change.
"Shell and its contractors are no match for Alaska's weather and sea conditions either during drilling operations or during transit," Lois Epstein, Arctic program director for The Wilderness Society, said in an email.
"Shell's costly drilling experiment in the Arctic Ocean needs to be stopped by the federal government or by Shell itself given the unacceptably high risks it poses to both humans and the environment."
BEDEVILLED
The Kulluk's woes began on Friday, when the Shell ship towing it south experienced a mechanical failure and lost its connection to the drill vessel.
That ship, the Aivik, was reattached to the Kulluk early on Monday morning, as was a tug sent to the scene by the operator of the Trans Alaska Pipeline System. But the Aivik lost its link Monday afternoon, and the tug's crew could only try to guide the drill ship to a position where, if it grounded, "it would have the least amount of impact to the environment," Montoya said.
The Kulluk was used by Shell in September and October to drill a prospect in the Beaufort Sea. It was being taken to Seattle for the off-season when the problems began on Friday.
Susan Childs, emergency incident commander for Shell, held out hope that a significant spill from the drill ship was unlikely.
"The unique design of the Kulluk means the diesel fuel tanks are isolated in the center in the vessel and encased in very heavy steel," she told the news conference.
Shell is waiting for weather to moderate "to begin a complete assessment of the Kulluk," she said. "We hope to ultimately recover the Kulluk with minimal or no damage to the environment."
The Kulluk was built in 1983 and had been slated to be scrapped before Shell bought it in 2005. The company has spent $292 million since then to upgrade the vessel.
Shell's Arctic campaign has been bedevilled by problems. A second drill ship, the Discoverer, was briefly detained in December by the Coast Guard in Seward, Alaska, because of safety concerns. A mandatory oil-containment barge, the Arctic Challenger, failed for months to meet Coast Guard requirements for seaworthiness and a ship mishap resulted in damage to a critical piece of equipment intended to cap a blown well.
WASHINGTON Dec 31 (Reuters) - The White House and congressional lawmakers have reached a deal to avoid the "fiscal cliff" that would delay harsh spending cuts by two months, Obama administration officials said on Monday.
President Barack Obama called Democratic Senate Majority Leader Harry Reid and House of Representatives Minority Leader Nancy Pelosi, who both signed off on the deal, one source said.
The agreement includes a balance of spending cuts and revenue increases to pay for the delay in the automatic spending cuts that would go into effect without a deal by lawmakers.
Of those spending cuts, 50 percent would come from defense and 50 percent from non-defense areas, the sources said. The White House viewed that as a victory, one source said, and sees it as a model for future deficit reduction pacts.
Vice President Joe Biden traveled to Capitol Hill to discuss the deal.
WASHINGTON Dec 31 (Reuters) - President Barack Obama said on Monday that a deal with Congress to avoid the U.S. "fiscal cliff," with its tax increases looming at midnight, was close, but he warned that it was not yet complete.
"Today it appears that an agreement to prevent this New Year's tax hike is within sight, but it is not done," Obama said during remarks at the White House complex.
"There are still issues left to resolve, but we're hopeful that Congress can get it done, but it's not done."
The president made his remarks surrounded by cheering supporters identified as "middle class Americans."
Obama, who won re-election in November partially on a promise to raise tax rates for the top two percent of U.S. earners, said the deal would ensure that taxes do not go up for middle income families.
He stressed that it would include an extension of unemployment benefits for the long-term jobless and extension of popular tax credits.
Obama said the agreement being worked out with Republican leaders in Congress would not include a long-term solution to the government's debt problem.
"My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it that solves our deficit problems in a balanced and responsible way," he said.
"But with this Congress that was obviously a little too much to hope for at this time. Maybe we can do it in stages. We're going to solve this problem instead in several steps."
The outlines of a deal in the U.S. Senate include raising income tax rates for individuals making more than $400,000 a year and households making more than $450,000 a year, but a sticking point remains on how long to delay automatic spending cuts to defense and domestic programs, known as a "sequester."
Obama stressed that a deal over those spending cuts had to include revenue.
"Any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced," he said.
"That means that revenues have to be part of the equation in turning off the sequester, in eliminating these automatic spending cuts, as well as spending cuts."
The same would be true for any future deficit-cutting agreement, he said.
As he often stresses, Obama said deficit reduction would have to follow the principle of not hurting senior citizens, students, or middle class families.
"If we're going to be serious about deficit reduction and debt reduction, then it's going to have to be a matter of shared sacrifice, at least as long as I'm president, and I'm going to be president for the next four years," he said.
* Oil prices boosted by signs of fiscal cliff deal
* Brent crude oil heads for record annual average over $111/bbl
* Brent prices to post 4th straight full-year gain
* Coming up: API oil data 4:30 p.m. EST Thursday (Updates throughout)
By Robert Gibbons and Matthew Robinson
NEW YORK, Dec 31 (Reuters) - Brent crude rose on Monday, headed to close a record year and the fourth straight year prices have climbed, bolstered by geopolitical threats to production that offset worries about flagging oil demand.
As oil prices edged higher on optimism about a positive outcome to the U.S. budget negotiations, Brent was set to average over $111 a barrel for 2012, the highest annual average on record. The international benchmark was on target to gain nearly 3 percent for the year, adding to gains of 13.3 percent in 2011.
Prices found support throughout the year from unrest in the Middle East that threatened supplies, including Western efforts to halt Iran's nuclear ambitions through sanctions against the OPEC nation.
But the euro zone crisis and the U.S. fiscal cliff standoff have added to ongoing concerns about fuel demand in developed economies and helped balance out production worries throughout 2012. Market players expect these factors will continue to influence prices next year.
"Oil is going to be attached to the Middle East issues, I don't think Iran is going away, they have been quiet of late," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
"We're finding a base in that $76 to $80 a barrel area (for U.S. crude), I don't know if we're going to go much lower than that for a while, even with all the potential oil coming on line in the United States, I think it's going to be geopolitical risk."
While Brent headed toward annual gains, U.S. crude was on tap to end the year more than 7 percent lower from its 2011 finish, after three straight yearly gains, pressured by surging production in the United States -- which hit a 19-year high -- and Canada.
Amid signs on Monday afternoon of an emerging deal to avoid the U.S. budget crisis that could send the world's top oil consumer into recession, both Brent and U.S. crude prices pushed higher.
Brent February crude erased early losses to trade up 26 cents to $110.88 a barrel at 1:05 p.m. EST (1805 GMT). Brent was on track to average $111.66 for 2012, on track to eclipse the previous record daily average of $110.91 in 2011.
U.S. February crude rose 67 cents to trade at $91.47 a barrel, having fallen to $90.00 before recovering back above the 100-day moving average of $90.61.
Trading volume remained thinned by the year-end holiday season. Total Brent volume was 58 percent under the 30-day average, with U.S. turnover 70 percent below the 30-day average.
Commodities also found some support from economic data in China, the world's second-largest economy and No. 2 crude oil consumer, where factory activity in December expanded at its fastest rate since May 2011, reinforcing hopes for revived growth.
EXCEPTIONAL YEAR
The record high average oil price for 2012 was a windfall for many producers, with OPEC's oil export revenues hitting a peak of $1.05 trillion, up 2.5 per cent from last year, U.S. government data showed.
Top oil exporter Saudi Arabia expects production increases by other oil producers to weigh on energy prices in 2013, however, potentially cutting into its fiscal surplus.
Saudi Finance Minister Ibrahim Alassaf said on Saturday the kingdom ran a budget surplus of 387 billion riyals ($103.2 billion) in 2012 as high energy prices and strong output levels generated revenue of 1.24 trillion riyals.
"The results of this year are exceptional," Alassaf told Al-Arabiya television, but added, "The international conditions and the increase in production by some states (in 2013) will have negative effects on prices." (Reporting by Robert Gibbons and Matthew Robinson in New York, Christopher Johnson in London and Florence Tan in Singapore; Editing by Nick Zieminski and David Gregorio)
WASHINGTON | Mon Dec 31, 2012 1:57pm EST
"Today it appears that an agreement to prevent this New Year's tax hike is within sight, but it is not done," Obama said at the White House. "There are still issues left to resolve, but we're hopeful that Congress can get it done, but it's not done."
