House energy bill provisions that would take away producer tax incentives and repeal parts of the Energy Policy Act of 2005 (EPAct) would be a disaster for the oil and natural gas industry, a top official of a producer group told a House committee last Wednesday.

"This bill will strip needed investment dollars from small entrepreneurial oil and gas producers," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), which represents independent producers. The House measure (HR 3221) "not only fails small American businesses, but [it] fails to recognize the critical role American oil and natural gas play in supplying America's energy needs and enhancing our security," he said during a hearing of the House Small Business Committee.

The legislation would strip oil and gas companies of an estimated $16 billion in tax incentives that were provided by Congress in EPAct, redirecting the funds instead for the development of renewable fuels, such as wind, solar and geothermal power. The White House last Monday, in a letter to House Speaker Nancy Pelosi (D-CA), threatened to veto any energy legislation that would curtail oil and gas production and increase taxes for a single industry.

"While IPAA encourages energy efficiency, conservation and the use of alternative energy resources, we reject the concept that increased taxes on oil and natural gas should fund the development of these additional resources," Fuller said.

"Independent oil and gas producers need access to America's resource base and access to the capital to develop it. However, HR 3221 not only fails to support these needs, it aggressively rejects them."

Some believe that the prospects for an energy bill this year are dim, given that Pelosi earlier this month said she planned to bypass a formal conference this fall to reconcile the vastly different House and Senate energy bills, which were passed earlier this year. Instead Pelosi wants to work out the differencesin the House and Senate bills informally, which has drawn strong objections from Republicans and even some Democrats (see NGI, Oct. 15).

Last Thursday, the top Republican energy policymakers in the Senate -- Pete Domenici of New Mexico, Ted Stevens of Alaska and James Inhofe of Oklahoma -- sent a letter to Reid and Minority Leader Mitch McConnell (R-KY), calling for a formal Senate-House conference committee to be held to finalize an energy bill this year.

The following day, energy analyst Christine Tezak of Standford Group Co. reported that Senate Majority Leader Harry Reid (D-NV) had offered a motion to go to conference on the energy bill. NGI confirmed that the report was true. "Although there will be no action today [Friday], we view this as an encouraging step toward enactment of energy legislation," she said.

"While we're not yet lifting our odds of enactment above our current 20-30% at this time, we consider the possibility of conference far more likely to result in enacted energy legislation than House Speaker Nancy Pelosi's...plan to attempt a legislative cram-down by crafting a new bill and trying to pass it without conference."

Protests of the leadership's decision to forego a conference could be heard as far away as Texas last week. The head of the Texas Alliance of Energy Producers accused Pelosi of trying to do an end-run around the conference committee process in order to pass energy legislation that doesn't have the necessary support.

"Speaker Pelosi is attempting to circumvent long-standing legislative procedures...The leadership of both parties should be allowed to appoint their members to [a] conference committee to work out the differences between the energy bills passed by the House and Senate," said Frank King, chairman of the board of the Texas Alliance.

"The speaker's manipulation of the legislative system is wrong...For someone who has said that energy legislation is a 'flagship issue' for her, the speaker's actions are more than a little inconsistent."

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