Congress passed the Tax Relief and Health Care Act before closing the session in December, allowing the government to offer 8.3 million acres for lease in the central Gulf of Mexico. The area is estimated to contain some 1.26 billion barrels of oil and 5.8 trillion cubic feet of gas.
Barry Russell, president of the IPAA (Independent Petroleum Association of America), says, "While Congressional and presidential moratoria still exist in the majority of the federal Outer Continental Shelf, this legislation is a good first step that will showcase the industry's exemplary environmental and safety record."
The National Association of Manufacturers applauded the approval, calling it "historic legislation to boost economic and energy security, and strengthen our standing in the global marketplace."
NAM president John Engler reacted by saying, "This legislation breaks new ground in providing relief to America's consumers and industry."
Russell says, "While most of the industry's attention to the tax bill focused on the provisions opening additional areas of the Gulf of Mexico, the primary driving force for the bill was its tax-extenders title."
The law extends the suspension of the net-income limitation on percentage depletion for marginal wells through 2006 and 2007, and IPAA has supported this since the suspension began in 1997.
"In 2007, we will face many attacks on our industry," Russell says. New House Speaker Nancy Pelosi (D-California) has proposed to end all E&P tax incentives that are in the Energy Policy Act of 2005. She proposes this in her first-100-hours agenda for the new Congressional session, which begins January 4.
Engler says of the December legislation, "Exploring the OCS is an important step toward a more abundant, flexible and affordable energy supply that is critical to a strong U.S. economy."
Recommended Reading
CGG to Change Name to Viridien
2024-05-17 - The company’s new ticker symbol will be “VIRI” and listed on Euronext Paris, effective May 21.
Sector’s Appetite for Capital Remains Amid Consolidation Frenzy, Panelists Say
2024-05-17 - There’s still an appetite for capital in the oil and gas sector—companies just need to think creatively to find it, a number of panelists said during SUPER DUG in Fort Worth, Texas.
SilverBow Resets Shareholder Meeting After $2.1B Crescent Deal
2024-05-16 - SilverBow Resources said it will adjourn its May 21 shareholders’ meeting until May 29 following Crescent Energy’s agreement to buy the Eagle Ford operator.
Blue Racer Midstream Prices Senior Notes Offering
2024-05-15 - Net proceeds from the sale of senior notes will be used to pay off debt and other general corporate purposes.
Petrobras CEO Prates to Step Down
2024-05-15 - Brazil’s President Luiz Inácio Lula da Silva has requested that Petrobras CEO Jean Paul Prates resign following a dispute over dividend payments.