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Louisiana Producer Group Protests Obama Tax Hike Plans

The Louisiana Oil & Gas Association (LOGA) has called on a House lawmaker representing the state to "work to defeat or amend" President Obama's fiscal year 2010 budget that proposes a $30 billion-plus tax hike on oil and natural gas producers.

The producer group also is asking producers to sign a petition on its website that calls on Congress to "refuse to repeal the current incentives or to place new taxes and fees on the oil and gas industry, as proposed by Obama." As of early Friday, the petition had received 30,163 signatures from Louisiana, Oklahoma, Texas, California, Arkansas and other states, according to LOGA.

"In the proposed budget, President Obama strips from the oil and gas industry incentives that have been the 'holy grail' of the industry for years, incentives that are critical in a high-risk investment industry," LOGA President Don Briggs said in a letter to Rep. Charles Boustany (R-LA), who sits on the House Ways and Means Committee, which has jurisdiction over tax issues.

"Our nation's oil and gas industry is not made up of the five or so major integrated oil companies, but of several thousand independent oil and natural gas producers. It is these American oil and gas companies that drill and produce the vast majority of oil and natural gas produced in the United States," he noted.

"Without economic investment incentives, exploration and production of oil and natural gas, as we know it, will drastically decline. Trillions of dollars will be lost, tens of thousands of jobs will be lost and our nation's energy security will be [severely] threatened."

The president's budget blueprint, which was released in late February, proposes to repeal the expensing of drilling costs (costing producers $3.34 billion over 10 years); repeal percentage depletion for oil and gas ($8.25 billion); repeal the marginal well tax credit; repeal the enhanced oil recovery credit; increase geological and geophysical amortization costs for independent producers to seven years ($1.18 billion); levy an excise tax on Gulf of Mexico production ($5.28 billion); and repeal the Section 29 manufacturing tax deduction ($13.29 billion) (see NGI, March 2).

The administration's budget also proposes to charge producers user fees for processing oil and gas drilling permits on federal lands, as well as increase the return from oil and gas production on federal lands by "reforming" royalties and adjusting rates (see NGI, March 9a).

Sen. Mary Landrieu (D-LA), a centrist and friend of oil and natural gas producers, reported that she is working with senators from other energy-producing states to map out a strategy to try to trim Obama's proposed tax hikes on producers when budget legislation comes to the Senate floor (see NGI, March 9b).

Landrieu "is having conversations with other oil and gas state senators to determine [the] course of action" to take, said the senator's spokesman, Aaron Saunders. "She has no specific approach or legislative language at this point. In the coming weeks Sen. Landrieu will work with her Senate colleagues to discuss how best to address some of President Obama's proposed changes to the oil and gas tax regime."

Landrieu and other senators from oil- and gas-producing states are considering offering amendments to the budget legislation. The Senate may take up budget legislation before the April recess.

Officials with the Washington, DC-based Independent Petroleum Association of America earlier this month blanketed Capitol Hill over a period of two days, meeting with House and Senate lawmakers and their staffs to discuss the president's proposed tax hike on producers.

Obama's announcement of a tax hike on producers came only weeks after the his administration placed a hold on a Bush-era leasing plan that would open previously banned offshore areas, and overturned the results of an oil and gas lease auction in Utah that was held in the final days of the Bush administration (see NGI, Feb. 16, Feb. 9).

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