Tax threat looms for upstream operators

摘要

US upstream independents are bracing for a major tax battle that threatens their oil and gas operations. With a new Congress convening and President Barack Obama poised to begin a second term, policy makers are pledging to launch a long-promised effort to revamp the unwieldy US tax code. And producers fear that they will be on the defensive to protect a provision critical to their cash flow, the deductibility of intangible drilling costs (IDC). Industry concerns that the IDC and other tax benefits might get caught up in the negotiations over the govern- ment’s so-called fiscal cliff proved unwarranted. Instead, the American Taxpayer Relief Act of 2012 that Obama signed into law on 2 January extends a series of tax breaks for wind power, energy efficiency programmes and alternative fuels. The measure extends until the end of this year a $1.01/USG cellulosic biofuel producer tax credit, while broadening it to include fuel that uses cultivated algae. The act also renews $1/USG tax credits for biodiesel and renewable diesel.