Daily Archives: December 16, 2011

Buccaneer Signs Gas Sales Deal with ConocoPhillips to Supply Kenai LNG Plant in Alaska


Buccaneer Energy Limited today said that it has executed a gas sales contract with ConocoPhillips, to supply natural gas to ConocoPhillips’ LNG facility located on the Kenai Peninsula approximately 10 miles north-west of Buccaneer’s 100% owned Kenai Loop project.

The contract with ConocoPhillips commences when Kenai Loop # 1 starts production in December 2011. The contract is expected to conclude on 30 April 2012, with the potential to end earlier, if construction of the Cook Inlet Natural Gas Storage (CINGSA) facility is completed prior to this date.

Once the CINGSA facility is on line, Buccaneer has a gas sales contract in place with ENSTAR – the largest gas utility in Alaska. ENSTAR will purchase the Kenai Loop gas and inject into CINGSA for storage and use at a later date.

Buccaneer said in a statement that is not obligated to sell any gas under the ConocoPhillips contract, however it gives the Company both flexibility and surety as it will allow the Kenai Loop # 1 well to flow continuously from the commencement of production, while being able to sell gas either into the ConocoPhillips gas contract or the daily auction to supply local peak demand requirements during the Northern Hemisphere winter. The daily auction to supply gas does not provide guaranteed daily volumes.

Buccaneer has the ability to sell up to 2.5 BCF to ConocoPhillips under the contract. The pricing as part of the gas sales contract is consistent with recently executed gas contracts.

Buccaneer Director Dean Gallegos said:

This gas sales contract with ConocoPhillips is another milestone for Buccaneer. With secured contracts for the gas produced at Kenai Loop #1 from the time of first production, and the flexibility to be able to sell into the peak demand daily auction market, places Buccaneer in a strong position with substantial cash flows from December 2011 rather than April 2012.

Further, the ability to flow the well continuously will give us the opportunity of assessing the reservoir performance prior to the commencement of the ENSTAR gas contract in April 2012. If the reservoir performs as testing has indicated, it will give us the ability to increase the production rate from the anticipated minimum of 5.0 MMCFD.”


Social Security in violent transition?


Posted by Bruce Krasting

Jackie Calmes at the NYT has a good summary regarding the last minute effort to get an extension of the 2% payroll tax reduction for 2012. (There is consideration this morning for a two month extension) There are some subtleties of the debate that are worth noting. Both sides agree that an extension should happen, but within both parties there is surprising opposition. The lovers of Social Security see the handwriting on the wall. They fear that a second year of a payroll tax break may be the last step leading to significant changes in America’s biggest social program.
However, that the payroll reduction hurts SS is a common misperception. That’s not correct. Every month, the Treasury transfers cash to SS in order to make up for the shortfall. I follow this stuff; if these transfers had not been made, I (and a bunch of others) would have blown the whistle months ago.
As a result of these transfers, SS ends up unharmed by the tax break. Other taxpayers foot the bill.  But since we have a deficit to begin with, this just adds to the countries red ink. Uncle Sam is digging into one pocket and transferring wealth to SS. This is the socialization of Social Security. What does it mean if SS becomes a ward of the state?  Charles Blahous, an ex Bush advisor had this to say:

“The payroll-tax cut would take a major step toward transforming Social Security from what it has long been — an earned benefit, funded by separate worker payroll taxes — into an income-tax based system more akin to welfare.”

For years the SS defenders have pointed out that SS is self-funding and does not contribute to the deficit. That was not true in 2011 (to the tune of $115b). The on-budget expense/increase to public debt will be $120b in 2012. That’s real money.
It’s an unfortunate fact that the US economy will flounder if workers pay only 2/3rd of the statutory rate in 2012. That’s how fragile the economy is. It’s not likely that things will be much different a year from now. Another “one time only’ extension of the FICA tax breaks will be on the table twelve months from today. From the Times:

Robert Reischauer, Ex CBO and SSA.
“Imagine that next December the unemployment rate is 8 percent and a year later it’s 7.4 percent. We’ll still be trying to stimulate employment and terminating the payroll tax holiday will be a big hit on most families, one that will hurt job growth.”

Reischauer is right, we will not revert to the statutory rates,  much less the 1% increase that is require to stabilize SSA.  I think he’s also correct with his projection of a huge fight:

“The nightmare that I have is that when it comes time to raise the tax back up to 6.2 percent, conservatives are going to propose that these two percentage points of payroll tax be devoted to individual accounts. That will precipitate a huge fight and could change Social Security in a fundamental way.”

There is a huge brawl in front of the country on this issue. Folks on both sides are deeply entrenched. The following is an exchange I saw on Angry Bear blog. It’s an example of the rhetoric we will get,  The fellow who wrote this, Dale Coberly, is a fairly well-know contributor to the SS debate. Dale loves SS and hates anyone who thinks that changes are required. If you have any doubts how visceral a fight we’re in for, consider this bit of fluff:


just a heads up…

Bruce Krasting says Social Security 2011 – Another Bad Year…he concludes: The current thinking is that SS is a problem that can be worried about in another ten years or so. That’s simply not true.

12/08/2011, 13:00:51

– Reply

there are bigger liars than Krasting writing about SS. I can’t keep up with them all, and with Obama killing SS outright with the permanent payroll tax holiday, and the Democrats and Progressives rallying behind him, there is nothing more I can do.

Maybe Krasting will be out of a job soon.

The stalwarts of SS recognize that the program is now vulnerable. They want bad things to happen to those who believe changes are essential. We’re going to have a fight. A big one. Think, “Age Warfare”.


U.S. Knew Of Downed Drones Vulnerabilities And Iran Says It Did Too


Robert Johnson

One day after Iran claimed to have brought down an advanced U.S. RQ-170 Sentinel drone, Public Intelligence received an Air Force report saying the drone suffers from many electronic vulnerabilities (via Jeffrey Carr at Digital Dao).

The report, Operating Next-Generation Remotely Piloted Aircraft for Irregular Warfare was published “For Official Use Only” (FOUO) in April 2011 by the U.S. Air Force Scientific Advisory Board, and addresses electronic threats to the American drone fleet.

The board found a list of problems, including communications vulnerabilities and lost communication events.

From Digital Dao:

Section 2.4.3 “Threat to Communication Links” expands on the state of vulnerabilities for [drones]:

  1. Jamming of commercial satellite communications (SATCOM) links is a widely available technology. It can provide an effective tool for adversaries against data links or as a way for command and control (C2) denial.
  2. Operational needs may require the use of unencrypted data links to provide broadcast services to ground troops without security clearances. Eavesdropping on these links is a known exploit that is available to adversaries for extremely low cost.
  3. Spoofing or hijacking links can lead to damaging missions, or even to platform loss.

Section 2.4.4 “Threat to Position, Navigation, and Guidance”:

  1. Small, simple GPS noise jammers can be easily constructed and employed by an unsophisticated adversary and would be effective over a limited RPA operating area.
  2. GPS repeaters are also available for corrupting navigation capabilities of RPAs.
  3. Cyber threats represent a major challenge for future RPA operations. Cyber attacks can affect both on-board and ground systems, and exploits may range from asymmetric CNO attacks to highly sophisticated electronic systems and software attacks.

This information is particularly interesting given the exclusive interview of an Iranian engineer by Scott Peterson and Payam Faramarzi at the Christian Science Monitor.

The CSM story says an Iranian electronic warfare specialist, and his team, overrode the drones communications systems based on information gleaned from the previously downed U.S. drones in Iran.

Once in control of the Sentinel, Iran reprogrammed the craft’s GPS coordinates to make the drone think it was landing at its home base, when actually it was setting down deep in Iran.

“The GPS navigation is the weakest point,” the Iranian engineer told the Monitor, giving the most detailed description yet published of Iran’s “electronic ambush” of the highly classified US drone. “By putting noise [jamming] on the communications, you force the bird into autopilot. This is where the bird loses its brain.”

The “spoofing” technique that the Iranians used – which took into account precise landing altitudes, as well as latitudinal and longitudinal data – made the drone “land on its own where we wanted it to, without having to crack the remote-control signals and communications” from the US control center, says the engineer.

House Intelligence Committee Chairman Mike Rogers told CNN that Iran had no part in intercepting the RQ-170, insisting the drone suffered a technical problem and went down on its own.

Defense Secretary Leon Panetta refused, however, to say whether the drone could have been brought down by an electronic attack.

“You can make all kinds of guesses at this point. Obviously there’s nothing that you can rule out and nothing that you can rule in right now,” Panetta said Fox News (via CNN).


How Iran hacked super-secret CIA stealth drone


Undated picture shows member of Iran’s revolutionary guard pointing at U.S. RQ-170 unmanned spy plane as he speaks with Hajizadeh at unknown location in Iran ( REUTERS/Handout)

More damage is being dished out to the US intelligence community as sources in Iran admit to hacking the CIA’s lost drone and bringing it down with not much more than computer navigating know-how.

Engineers with the Iranian military are admitting to the Christian Science Monitor that the dramatic disappearance of a multi-million dollar stealth drone aircraft suffered by the United States two weeks ago was indeed a result of their own doing, claiming now that they managed to hijack the system inside the craft with ease and bring it to a safe landing without incident.

The United States originally denied they lost a drone over Iran before changing their story and insisting that they lost contact with the craft during a surveillance mission over neighboring Afghanistan. Iranian officials quickly corrected Americans by displaying footage of the spy-plane and revealing that it was apprehended over 100 miles from the country’s border with Afghanistan.

RT has reported throughout the ordeal that the downing of the drone could have resulted from a budding cyber war between American and Iranian intelligence. Now officials overseas are insisting that they did indeed hack the craft to quietly bring it down.

Speaking to the CSM, an engineer responsible for the interception speaking on condition of anonymity says that technicians managed to hack into the craft’s GPS navigation, which the official describes as “weak.”

“By putting noise [jamming] on the communications, you force the bird into autopilot. This is where the bird loses its brain,” says the source.

Less than two weeks after the RQ-170 Sentinel was lost over Iran, US officials cited a system malfunction as the culprit in another drone that crashed over the Indian Ocean on Tuesday this week.

In a report out of RT earlier this week, we rehashed an earlier incident at Nevada’s Creech Air Force base in the United States from months earlier that left a key logger-virus installed in the cockpits of the military’s drones. We added to the report on Wednesday this week, citing an investigation out of Univision that linked Iranian officials with Mexican hackers in an alleged cyber war plot to attack the American intelligence community, specifically the Central Intelligence Agency, Pentagon and Department of Defense.

The RQ-170 Sentinel recovered by Iran was flying for the CIA when it was apprehended.

The United States originally laughed at Iran’s interception of the craft, with one American official telling Defense News that the act was equivalent to “dropping a Ferrari into an ox-cart technology culture.” Now Tehran says that they were able to successfully reverse-engineer the craft by using less powerful drones that it has downed in the years prior. To the CSM, officials overseas say that the weaknesses in the GPS navigation of the craft were known by US officials, who did little to fix the patch.

Despite both losses in recent days, US Defense Department Secretary Leon Panetta said to Fox News this week that America will “absolutely” continue stealth jets missions over Iran.

Iranian authorities have hailed the recovery as a great success for the country since announcing that they had obtained the craft, much to the chagrin of the Obama administration. The US president has formally asked Tehran to return the craft to authorities, to which Iran shrugged off.


USA: Cheniere Plans Corpus Christi LNG Export Terminal


Cheniere Energy has proposed to construct a second LNG export terminal on the U.S. Gulf Coast, according to a filing this week with the federal energy regulator, Reuters reported.

The company plans to build the export terminal at Corpus Christi in Texas, originally the site for a planned liquefied natural gas import terminal with three 160,000 m3 LNG tanks.

The terminal would have the capacity to export 1.8 Bcm of gas per day and could start operations by 2017.

Corpus Christi site is located on 612 acres on the northern coast of the Corpus Christi Bay, along the La Quinta Ship Channel, a deepwater ship channel dredged to 45 feet.


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