Three senators from leading energy-producing states unveiled amajor legislative plan Tuesday aimed at shoring up the domestic oiland gas industry in the face of depressed crude oil prices. Themeasure, titled the National Oil and Gas Security Enhancement Plan,seeks to provide producers with regulatory, leasing and tax relief.
Sens. Frank Murkowski (R-AK), Don Nickles (R-OK) and Kay BaileyHutchinson (R-TX) are expected to introduce individually fourpieces of legislation, possibly later this week, to carry out theirenergy-friendly plan. Nickles will propose a bill that would allowproducers to pay their royalties “in kind” rather than “in value”for oil and gas produced on federal lands. It would be a companionto the House bill proposed by Rep. Mac Thornberry (R-TX).
Murkowski, chairman of the Senate Energy and Natural ResourcesCommittee, is expected to propose two pieces of legislation thatwill transfer authority over certain federal oil and gas leasemanagement functions on federal lands from the Bureau of LandManagement (BLM) to the states (i.e. authority over well drillingand production operations, well testing and well completions),require BLM and the Forest Service to hold competitive oil and gaslease sales within 90 days of lands being “nominated” byprospective lessees, and give the Interior Secretary permanentauthority to grant royalty rate reductions on federal stripper oiland gas wells.
Hutchinson will sponsor legislation addressing the tax-reliefportion of the plan. Her measure will offer a tax credit forexisting marginal wells, which produce less than 15 barrels per dayor produce heavy oil. It will call for a maximum $3 per barrel taxcredit for the first three barrels of daily production from anexisting well. In addition, marginal gas wells, which produce lessthan 90 Mcf/d, will receive 50 cents/Mcf for the first 18 Mcf/d ofnatural gas production.
Hutchinson’s legislation also is expected to offer incentives toindependent oil and gas producers to recover abandoned wells andput them back into production. It will permit producers to excludeincome attributable to oil and natural gas from a recoveredinactive well.
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