Senate OKs Producer Relief; Clinton Veto Likely
The Senate unanimously passed two economic relief measures for
independent oil and gas producers on Tuesday. The bad news,
however, is that the initiatives are part of a supplemental
spending bill that President Clinton has threatened to veto because
the expenditures - mostly for foreign aid efforts - would cut into
spending for domestic programs that he supports.
One short-term relief initiative, sponsored by Sen. Jeff
Bingaman (D-NM), would permit producers operating marginal wells to
reduce their federal royalty payments by an amount commensurate
with their investment in the expansion of oil and natural gas
production on federal lands.
About $125 million would be authorized for the royalty-reduction
program, which would expire when either the benchmark price of
crude oil reaches or exceeds $18 per barrel on the New York
Mercantile Exchange for 30 days; the money is completely spent; or
on Sept. 30, 2000.
The relief is targeted at operators of marginal wells on
onshore, non-Indian federal lands who then would pass along the
royalty deductions to others in their community in the form of
additional work to boost production on federal lands.
Also approved as part of the spending package was an amendment,
sponsored by Sen. Pete Domenici (R-NM), that would establish a
$500-million federal Emergency Oil and Gas Guaranteed Loan Program
and a special guarantee board to oversee the initiative. The
program, which would sunset in five years, would allow producers
and servicing firms to borrow up to $10 million at "reasonable"
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