Senate energy debate expected to generate more controversy

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, Mar. 11 --New tax incentives designed to spur US oil and gas production are expected to be one of the last items the Senate tackles this spring as it moves to pass sweeping energy legislation, according to congressional sources and industry lobbyists.
Part of the Senate bill includes a bipartisan $14 billion energy tax proposal that includes about $4 billion in credits and incentives for the oil and gas industry.

When the Republican-led House of Representatives last August passed its own comprehensive energy bill, it included oil and gas provisions that congressional budget-makers estimated would cost $8 billion over a 10-year period. Lawmakers from oil-producing states say the expanded incentives could ultimately save taxpayers money by improving the economy and adding jobs in the oil sector.
Critics of the House bill, which include most Democrats, say the provisions are "corporate welfare" that help make energy companies more profitable but do little to improve energy security (OGJ Online, Feb. 13, 2002).
But what the Democratic-led Senate will ultimately pass with regard to tax provisions is still largely unclear, lobbyists say.

Nontax amendments expected this week
The Senate resumes debate today with possible votes on provisions to tighten motor vehicle fuel efficiency standards and expand government oversight of energy derivatives.

Hundreds of other amendments could be proposed, but Senate Majority Leader Tom Daschle (D-SD) last week threatened to temporarily pull the energy bill from the floor if debate stalls.

Daschle also has suggested that the bill may still be under construction past the spring recess during Mar. 25 ?Apr 5.

Fuel efficiency
Amendments designed to improve automobile fuel efficiency standards are expected to dominate the debate in the meantime.

Sens. John McCain (R-Ariz). and John Kerry (D-Mass.) are sponsoring an amendment that would raise the fuel efficiency standard for cars and sport utility vehicles to 36 mpg by 2015. Environmental groups say that by enacting the measure, America would save 2 million b/d of oil by 2020, which they contend eclipses any oil that might be available from the Arctic National Wildlife Refuge coastal plain. There is also expected to be a competing proposal by Sens. Carl Levin (D-Mich.) and Senator Kit Bond (R-Mo.) that would not be as stringent, although details are still pending.

Following that, a long-anticipated debate over leasing a portion of ANWR could occur, as well as debate on updating electricity laws, followed by discussion of taxes under energy policy, according to lawmakers and lobbyists.
Sen. Frank Murkowksi (R-Alas.), the Senate's most ardent ANWR leasing supporter, in an interview Mar. 8 did not reveal what strategy he may use to bring up the leasing proposal. But he denied rumors that he would automatically try to stall an energy bill that did not contain an ANWR provision.

"I'd like to vote for an energy bill," he said. He also declined to speculate on whether the White House would veto a bill that did not contain ANWR. Congressional and administration sources have suggested the White House is willing to accept a bill without ANWR; however, some members of President George W. Bush's cabinet, including Sec. of Commerce Don Evans, have reportedly urged the president to reject any bill that does not have an ANWR leasing component. Those who oppose ANWR leasing, such as Kerry, have threatened to talk the energy bill to death if Murkowski or another proleasing lawmaker attempts to include it for discussion.

Amendments approved
So far the Senate has approved several amendments that are much less incendiary than ANWR. Of interest to the oil and gas industry are the following:

-- An amendment designed to block North Slope producers from building the line mostly in Canada via a shorter, northern route instead of a southern route through Alaska paralleling the oil pipeline to Fairbanks and then the Alaska Highway to British Columbia. The amendment also clarifies Alaska will have regulatory authority over gas delivered from a southern pipeline to state customers.

-- A bipartisan plan supported by Daschle and Murkowski to give North Slope producers a floor price for gas when market conditions are poor is still being mulled and will likely be considered later when the tax portions of the bill are debated; some smaller producers in the Lower 48 are unhappy about this plan because they say a floor price gives Alaska producers an unfair advantage. However, pipeline proponents say the Senate bill already includes provisions to encourage marginal production outside Alaska. Both the House and Senate versions include a new $3/bbl credit for the production of oil and 50¢/Mcf for gas from marginal wells. The maximum amount of production on which credits could be claimed would be 1,095 boe/year. The credits would phase in when prices fell below $18/bbl or $2/Mcf.

-- An amendment approved by the Senate Mar. 8 directs the Environmental Protection Agency to study whether there is a need to regulate hydraulic fracturing.

-- The Senate also included in the energy bill the modified text of S. 235, the Pipeline Safety Act passed by the Senate in February 2001 (OGJ Online, Dec. 21, 2001). Two new provisions address security concerns: Sec. 781 authorizes the secretary of transportation to withhold information if it is deemed to be in the interest of national defense or foreign policy; Sec. 782 authorizes the secretary to provide technical assistance to pipeline operators or to state and local officials to prevent or respond to acts of terrorism.

Related Articles

Statoil reduces capital budget by $2 billion following 4Q losses

02/06/2015 Statoil ASA has reduced its organic capital expenditure to $18 billion in 2015 from $20 billion in 2014. The move comes on the heels of a fourth qu...

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

Oil production begins at Nasr Phase-1 offshore Abu Dhabi

02/05/2015 The first phase of Nasr oil field offshore Abu Dhabi will be producing 22,000 b/d by yearend, according to United Arab Emirates news agency WAM.

Woodside lets FEED contract for Greater Western Flank project

02/05/2015 Woodside Petroleum Ltd. has let a contract to Wood Group Kenny for the front-end engineering and design for the flowline system and associated proc...

Deloitte studies oil supply growth for 2015-16

02/04/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply...

BG’s 2015 budget ‘significantly lower than 2014’

02/03/2015 BG Group plans capital expenditures on a cash basis of $6-7 billion in 2015, a range it says is “significantly lower than 2014” due to “a lower oil...

BP trims capital budget by $4-6 billion

02/03/2015 BP PLC plans an organic capital expenditure of $20 billion in 2015, down from the previous guidance $24-26 billion. Total organic capital expenditu...

IHS sees second-half end of US output surge

02/03/2015

Expectations are moderating about growth of oil production in the US this year.

Gazprom Neft starts shale oil production in western Siberian field

02/03/2015 JSC Gazprom Neft reported start of shale oil production from the Bazhenov formation during tests of two wells in southern Priobskoye field in centr...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected