The petroleum industry can and will be able to provide the oil and gas supplies needed for America's economic stability, continued growth, and prosperity. However, to do so, the nation must address two critical issues. These are:
- Improved access to public lands.
- Fairer tax treatment to improve capital generation.
Public lands contain a substantial portion of the undeveloped oil and gas resources of this nation. They have been underdeveloped with respect to private, state and fee lands, and thus contain a disproportionate share of the remaining resource base.
There are essentially two types of restrictions on public lands:
Accessible with excessive restrictions.
The offshore East Coast, West Coast and Florida Gulf Coast are examples of non-accessible lands, and many of the Rocky Mountain basins are examples of accessible lands with excessive restrictions.
In addition to land and regulatory access issues, the role of taxation is critically important to the development of oil and gas resources. Petroleum exploration and production are extremely capital intensive.
The AAPG recommends the following:
- Restoration of the write-off of intangible drilling costs (IDC) for the passive investor.
- Elimination of the onerous Alternative Minimum Tax. This tax has also crippled new investment in petroleum exploration.
- Allow expensing of delay rentals in the year incurred, not capitalizing them as currently required.
- Allow expensing of geological and geophysical costs in the year when the costs are incurred.
- Make permanent the suspension of the net income limit for percentage depletion on marginal properties.
- Raise the depletion allowance provision to previous levels.
With proper consideration by appropriate government agencies and the Congress for those matters that need attention, the domestic petroleum exploration and production industry can deliver the oil and gas resources needed to help maintain this country on a course of continuing prosperity.
Absent attention to improved access to public lands and fairer tax and regulatory treatment to provide reasonable incentives and opportunities, we will continue to jeopardize our nation's economic stability, and thus our own national security.
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