DOI Secretary: Open To Scaling Back Planned Oil Tax Hikes
25 Marzo 2009 - 12:38PM
Noticias Dow Jones
U9.S. Interior Secretary Ken Salazar expressed flexibility on
scaling back an Obama administration proposal for $31.5 billion in
new revenue from the oil and gas industry.
"We're willing to listen," Salazar said in an interview on
Wednesday with Dow Jones Newswires. "If it is going to have a
disproportionate impact on a mom-and-pop kind of operation I do
think that's something that should be taken into
consideration."
Small, independent producers have warned about two tax breaks in
particular that the Obama administration has proposed repealing:
one that allows firms to write-off intangible drilling costs such
as renting rigs, and another allows companies to take the depleting
value of oil and gas reserves off their tax bills.
Repealing both of these, says head of the Stripper Well
Association Dewey Bartlett, Jr., cuts so drastically into the slim
profit margins his members make, that the impact will be immediate.
He says not only will the small firms not drill more wells, but if
any well parts break, they're a lot less likely to be replaced.
The Interior Secretary said that in general, "the oil and gas
companies have all the incentives they already need in terms of
moving forward with exploration and production."
Despite the major change in policy stance toward the oil
industry under the Obama Administration, Salazar earlier this month
told top oil company officials that he wasn't conducting "a war on
the oil and gas industry."
Salazar also said that he was pleased with the $703 million in
bids that were received for the right to drill on 1.9 million acres
offshore of Louisiana, Mississippi, and Alabama.
While developers offered less money for each block of land than
in the past two years amid a slump in oil and gas prices, "I don't
think that we ought to allow this temporary lull in prices dictate
what our policies are going to be," Salazar said.
"Any kind of oil and gas play from the time that it is leased
out to the time that it's developed takes many years," he said,
adding that prices wouldn't be depreseed "for very long." Crude oil
prices have fallen precipitously since last summer, when they hit
all-time highs north of $145 a barrel. They dipped below $40 a
barrel in February but have since risen to the mid-$50s due to
production cuts made by the Organization of Petroleum Exporting
Countries as well as signs of stabilizing demand.
"I think we need to move forward with our conventional oil and
gas program and not be confined essentially because of the current
depressed prices of oil and gas," Salazar said. "Any kind of oil
and gas play from the time that it is leased out to the time that
it's developed takes many years. I don't expect that we're going to
be at $40 a barrel oil for very long."
Salazar spoke before he headed to a hastily arranged White House
energy-policy meeting. He said that the talks with White House
staff would include a discussion of energy development in the U.S.
coastal waters, and renewable-energy development, both offshore and
onshore.
The Obama administration is making a big push to develop the
country's renewable energy resources by establishing
renewable-energy zones, both offshore and onshore. The
administration is also attempting to develop a nationwide
electricity system to ship renewable energy around the country and
reduce the use of fossil fuels.
The Interior Department "is moving forward with business as
usual with the exception of those areas where we think that the
Bush administration overreached," Salazar said. He cited a recent
decision to cancel 77 leases to drill for oil and gas in wilderness
areas of Utah, leases that were offered in the waning days of the
Bush administration.
The Interior Department is reviewing whether to put some or all
of the 77 parcels back up for lease, and "I would expect that by
the end of May we will have a plan on how we're going to move
forward."
As with other parts of the Obama administration, the Interior
Department faces a staffing shortage as it struggles to win Senate
confirmation for key appointees. The No. 2 spot remains unfilled as
U.S. Sen. Bob Bennett, R-Utah, tries to derail the confirmation of
nominee David Hayes as a way to protest the decision to cancel the
77 leases.
In the meantime, the Interior Department has yet to fill a
position leading the Office of Surface Mining, something which is
slowing down its review of a last-minute mountaintop mining rule
approved under the Bush administration.
Under the rule, companies that blow off mountaintops to get at
the coal underneath won't have to maintain a 100-foot buffer zone
between nearby waters if it isn't reasonably possible to do so. It
took effect on Jan. 12.
"We are looking at our own rule" to determine "whether or not
that rule needs to be changed," Salazar said. "Once I have my
director on board it's going to be one of my priorities."
While the search has been narrowed down to leading contenders,
"the vetting process is very extensive," Salazar said. "It will
hopefully happen sooner rather than later."
-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654;
siobhan.hughes@dowjones.com
-By Ian Talley, Dow Jones Newswires, 202-862-9285;
ian.talley@dowjones.com