Patrick Crow
OGJ Online
SAN FRANCISCO�The Independent Petroleum Association of America, meeting in San Francisco late last week, was told Friday that election-year politics in the US could provide an opportunity this summer for oil tax legislation in Congress.
IPAA Chairman Jerry Jordan noted that several pending bills would give US producers tax relief. "This is a unique opportunity to get a rifle-shot approach to tax legislation," Jordan said. "I'm not optimistic, because everybody [in Congress] is thinking about the election. But if we don't push it now, we'll have less chance in the future."
The pending bills would allow expensing of geological and geophysical costs and delay rental payments and would offer tax credits for marginal production if prices drop to levels that could cause production to be shut in.
Lee Fuller, IPAA government relations vice-president, said Congress and the Clinton administration are in agreement on some measures to help producers, but he is not optimistic legislation can be passed.
He noted that Senate republicans proposed an omnibus energy bill last week, but said, "The odds are very slim Congress could act on this." Still, said Fuller, "Some scenarios could create movement" on a bill. He believes rising oil and gas prices, or shortages, could create a window of opportunity.
He added that marginal-well tax relief faces a "sizable hurdle" due to congressional sentiment against more tax credits. John Swords, of PricewaterhouseCoopers LLP, said IPAA's tax committee is working on tax proposals that could be introduced next session. "We're trying to develop language on these proposals and have them ready."
Scott Espenshade, IPAA economics vice-president, said a recently passed law offering producers emergency loans is not working well. Some loans may finally be approved in mid-July. He said IPAA is "looking at ways to fix the program or repackage it."
IPAA staff said the association also would be working to pass legislation that would protect industry against federal regulation of hydraulic fracturing for coalbed methane production.
A lawsuit has forced the US Environmental Protection Agency to require Alabama to regulate fracturing under groundwater protection rules.
Bob Gallagher of the New Mexico Oil & Gas Association said a priority for his group would be getting a legislative �fix� for hydraulic fracturing rules, which, if applied to New Mexico, could hamper gas production there.
