Slow relief

Nearly 3 months ago, when West Texas intermediate prices dropped to $15/bbl, members of the Congressional Oil and Gas Forum promised to push legislation to give the industry regulatory, leasing, and tax relief. Not all of the congressmen were sanguine that all the measures could be passed. Time is running out for this session of Congress, and many of the measures are controversial (OGJ, Apr. 6, 1998, p. 36). Still, the legislators were confident that the bills would at least be considered,

June 22, 1998

3 min read

Patrick Crow
Washington, D.C.
[email protected]

Not all of the congressmen were sanguine that all the measures could be passed. Time is running out for this session of Congress, and many of the measures are controversial (OGJ, Apr. 6, 1998, p. 36).

Still, the legislators were confident that the bills would at least be considered, since oil-state congressmen chair most of the key committees.

Frank Murkowski (R-Alas.) heads the Senate Energy Committee and Don Young (R-Alas.) the House Resources Committee-the two panels that oversee leasing laws.

Bill Archer (R-Tex.) heads the House Ways and Means Committee, the source of tax legislation. Pete Domenici (R-N.M.) heads the Senate Budget Committee.

Inaction

In early April, the full package of bills was introduced in the Senate and some were filed in the House.

Since then, they all have gathered dust while WTI has slid to $12/bbl.

Congress did pass two measures helping the industry, but neither was part of the relief package (OGJ, May 11, 1998, p. 34).

It amended an appropriations bill to block the sale of oil from the Strategic Petroleum Reserve this fiscal year. The Energy Department opposed further sales, and independent producers didn't want more crude dumped into a depressed market.

Another amendment postponed until Oct. 1 an impossibly complex Minerals Management Service rule overhauling the valuation of federal royalty oil. The Senate Energy Committee recently held an oversight hearing on that rule.

In the House, the Resources subcommittee has been working on a bill to permit producers to pay oil royalties "in-kind," but it predated the relief package (see related story, p. 23).

Options

Blame for congressional inaction on the relief package is hard to fix.

Murkowski had pledged, "We're going to move the legislation and get it out" of the energy committee. Hearings still had not been scheduled as of last week.

Theoretically, some measures could bypass the hearing stage and be attached to must-pass legislation, as were the provisions blocking the SPR sale and the MMS rule.

The industry would benefit most from the tax provisions like marginal well relief and the expensing of geological and geophysical costs. These fall under the jurisdiction of the Finance Committee, which would have to attach them to a major bill and find offsetting revenues.

Lee Fuller, the Independent Petroleum Association of America's government relations vice-president, explained that the Senate committees have been busy with other issues. He said industry representatives are working to get cosponsors for the oil relief bills and updated cost estimates for the tax provisions.

"These are all important bills, and we need to move forward on them as quickly as possible," he said.

Still, it is amazing that the oil industry hasn't been able to get a timely hearing on emergency legislation, before friendly committees, during a period when prices have fallen another 20%.