Nick Snow
Washington Editor
WASHINGTON, DC, Aug. 25 -- Opening limited areas of the Outer Continental Shelf while enacting so-called "Use it or lose it" legislation and other counter-productive measures would be a mistake, said National Petrochemical and Refining Association Pres. Charles T. Drevna on Aug. 22.
"NPRA applauds Congress for initiating a serious dialogue about expanding domestic energy production. Unfortunately, recent statements indicate Congress may soon consider legislation that would only open limited portions of the [OCS] for domestic production and tie that policy to measures which could ultimately counteract the very supply increases our nation is hoping to achieve," he said in a letter to US House Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio).
"Such contradictory policies have the likely potential to threaten American energy supplies and security," he observed.
In addition to the "Use it or lose it" proposal, which many congressional Democrats say will pressure oil and gas producers to move faster on leases they already hold, Drevna also criticized calls to release crude oil from the Strategic Petroleum Reserve to bring prices down, to make oil and gas companies ineligible for the federal tax code Section 199 manufacturing deduction, and to change existing Gulf of Mexico lease contracts.
"Unilaterally changing existing contracts would establish a dangerous precedent regarding confidence in the government to honor its contractual obligations. This could open the door for foreign state-owned companies to gain a foothold on US OCS energy production and cost American jobs," he warned.
He urged the House's Democratic and Republican leaders to fully consider the adverse impacts of such proposals as legislation develops. "Congress should not only open the entire OCS to energy exploration and production with no strings attached, but should also look to open portions of the Arctic National Wildlife Refuge legally singled out for future oil and gas exploration," Drevna said.
"The question of domestic energy production is particularly important considering the fact that nationally-owned foreign oil companies control over 80% of global oil production, with public investor-owned companies in control of only about 13%," he continued.
Drevna's letter followed one that American Petroleum Institute Pres. Red Cavaney wrote US senators on Aug. 13 criticizing a proposal by a bipartisan group of 10 senators to open more of the OCS while imposing at least $30 billion in new taxes on oil and gas producers. Cavaney has said the so-called "Gang of 10's" plan was "light on new production and heavy on new taxes."
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