WATCHING WASHINGTON O`LEARY'S PLAN TO BOOST PRODUCTION

Next month Energy Sec. Hazel O'Leary plans to present President Clinton a strategy to help increase U.S. oil and gas production.

This summer she began to work with other federal agencies and the industry to develop a plan to expand opportunities for domestic oil and gas producers (OGJ, May 3, p. 38).

IPAA'S VIEW

At a Houston conference, the Independent Petroleum Association of America said O'Leary's plan should cover three areas: capital formation, regulatory certainty, and access to resources and technology.

It said an oil floor price, or "tanker security" fee, is needed to prevent oil imports from undercutting U.S. oil and gas production. It also said industry needs investment incentives to expand domestic production.

IPAA urged the government to use an interagency process to insure that new environmental rules are scientifically sound, equitable, cost effective, and address documented harm. And it said the government should develop reasonable land use policies to allow increased, environmentally sound exploration.

Meanwhile, the Domestic Petroleum Council, representing the 24 largest independent oil and gas companies, sent O'Leary its recommendations.

It said U.S. oilmen desperately need price stability to facilitate investments needed to produce more oil. It urged the administration to impose a "tanker transportation fee" on imported oil and products to recover costs attributable to imports such as exposure to tanker spills and for filling the Strategic Petroleum Reserve.

Or the fee could "equalize the embedded environmental costs of U.S. crude oil production and refined petroleum products with those of foreign producers and refiners."

It urged the Interior secretary to exercise his authority to reduce or suspend royalties on oil and gas production, onshore and offshore.

It said the administration should exclude marginal production from the 1,000 b/d depletion limitation for independents and provide alternative minimum tax and regular tax credits for certain enhanced oil recovery and new exploration and production credits.

And it said the ban on exporting Alaskan crude should be lifted, reducing the pressure on West Coast oil prices.

SLIM CHANCE

O'Leary's effort and industry's recommendations are commendable. But no one should get their hopes up.

In the current economy, it's hard to imagine the administration backing an oil import fee of any kind.

With the pressure on the budget, it's difficult to expect the Clinton team to offer the industry any tax relief.

And the administration's focus on environmental protection points toward less, not more, drilling on federal land.

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