The House of Representatives unveiled a comprehensive tax reform bill that upon first blush appears friendly to fossil fuels, preserving three tax deductions that provide billions in savings to the oil and gas industry every year, but eliminating some smaller tax breaks.

On Thursday, the House Committee on Ways and Means released HR1 -- also known as The Tax Cuts and Jobs Act -- which if enacted would be the first overhaul of the nation's tax code since 1986. The central theme of the bill is to provide a tax cut of nearly $1,200 to middle-income families, while lowering the corporate tax rate to 20%.

For the oil and gas industry, the tax reform bill will continue to allow operators to deduct intangible drilling costs and the passive loss exception. But the legislation also calls for repealing credit for enhanced oil recovery (EOR) and production from marginal oil and gas wells.

Under the EOR provision, operators may claim a credit equal to 15% of EOR costs, but the credit is ratably reduced over a $6 phase-out range when the reference price for domestically-produced crude exceeds $28/bbl.

The marginal well provision allows producers to claim a credit of $3/bbl for domestic crude and 50 cents/Mcf for domestically-produced natural gas, but the credit is not available if the reference price for oil exceeds $18/bbl and $2/Mcf for gas. The credit is also reduced proportionately for reference prices between $15-18/bbl and $1.67-2/Mcf.

Currently, both the EOR credit and the marginal well credit are phased out due to the price of oil. According to Congress' Joint Committee on Taxation, repealing the EOR credit would cost the industry $200 million in revenues over the next decade, while repeal of the marginal well credit would have no effect on revenue.

The House Committee on Ways and Means is scheduled to begin marking up the bill on Monday.

Jack Gerard, CEO of the American Petroleum Institute (API), applauded the committee for its work so far.

"As this process continues and API and its members review in greater detail the 429-page bill, the oil and natural gas industry stands ready to work with Congress and the administration to enact strong, pro-growth tax legislation to ensure that our industry remains a major driver of economic growth, investing billions each year in the U.S. economy and supporting over 10 million U.S. jobs," Gerard said.