IPAA: House energy bill would hurt small producers

Oct. 17, 2007
IPAA testified Oct. 17 that certain provisions in HR 3221, energy legislation that was passed earlier this year by the House, would seriously harm operators of marginal oil and gas wells.

Nick Snow
Washington Editor

WASHINGTON, DC, Oct. 17 -- Small building and contracting businesses potentially would benefit from energy efficiency provisions in legislation that the US House passed earlier this year, three witnesses told the Small Business Committee on Oct. 17. But a fourth warned that other provisions in HR 3221 would seriously harm other small businesses, namely marginal oil and gas well operators.

"The overwhelming number of wells in the United States falls into this [marginal] category," said Lee O. Fuller, vice-president, government relations, for Independent Petroleum Association of America. Fuller said about 85% of the nation's oil wells and 70% of its natural gas wells are classified as marginal. "Equally significant, while each marginal well is a small producer, collectively they provide about 19% of America's oil production and 10% of its natural gas production," he said.

Most of IPAA's members are independent producers with fewer than 20 employees, he told the committee. Like larger upstream companies, they would like more access to federally controlled resources, tax policies which allow producers to retain their cash flow and re-invest it, reasonable environmental regulations and more federal support of universities' programs to develop new exploration and production technologies and train geologists and petroleum engineers, Fuller said.

"Not only does HR 3221 fail to advance the need to develop more oil and natural gas, it reverses progress that has already been made. No bill can be considered a down payment on global climate policy that has, as one of its key objectives, curtailing the development of natural gas," he said.

The bill contains nine sections, dealing with drilling permit applications, surface owner rights, onshore oil and gas reclamation and bonding, water resource protection and other issues, which would reduce US oil and gas production, according to Fuller.

"The effect on small businesses would be twofold. For those small business oil and gas producers, investment dollars would be taken away. For small business consumers, the availability of American oil and gas would be diminished," he said.

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