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 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 EPAct, redirecting the funds for the development of renewable fuels, such as wind, solar and geothermal power. The White House 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 both Pelosi and Senate Majority Leader Harry Reid (D-NV) last week gave up on plans for a formal conference this fall to reconcile their vastly different energy bills, which were passed earlier this year. Instead the Democrat leaders intend to work out the differences informally, which has drawn strong objections from Republicans (see Daily GPI, Oct. 12).

Energy committee staffers from both houses and parties began negotiating a compromise bill Monday, but Democrat leaders have taken three of the most controversial energy issues off the table — raising vehicle fuel economy standards, setting nationwide mandates for renewable fuels and electricity. These issues are expected to be worked on behind closed doors by Pelosi and Reid (see Daily GPI, Oct. 16).

Energy analyst Christine Tezak of Stanford Group Co. shares the doubts about an energy bill this year. “One cannot call the energy bill dead yet, as it continues to linger about stinking more every day. The unreconciled House and Senate packages lie around drawing criticism from various corners, with the Bush administration weighing in negatively [Monday],” she said.

“If Democratic leadership can get a [formal] conference started, we’d be more optimistic about the prospects for a legislative compromise between the very different bills being struck and perhaps even passing muster with the White House. We remain very pessimistic if the path to passage consists of a partisan ‘cram down’ and a circumvention of the conference process. So we watch and wait.”

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