Loss of Favorable Taxation of Intangible Drilling Costs and Manufacturing Deduction Could Cost $17 Billion per Year in Lost Investment, Says API; Natural Gas Projects Are Most at Risk

摘要

On 8/17/10 the American Petroleum Institute (API) released a report prepared by Wood Mackenzie, entitled Evaluation of Proposed Tax Changes on the U.S. Oil & Gas Industry, accompanied by a conference call with reporters (see adjacent article). If Congress eliminates intangible drilling cost (IDC) expensing and the domestic production activities (Section 199) deduction - the two changes that would have the most impact on the oil and gas industry - total production "at-risk volumes" could be as high as 250,000 b/d and 9 Bcf/d by 2017, or more than 10% of U.S. productive capacity, API said. In some regions of the country, the higher tax burden would affect smaller operators disproportionately, and gas producers (as a whole) would be most affected.