[Congressional Record Volume 147, Number 138 (Monday, October 15, 2001)]
[Senate]
[Pages S10702-S10703]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY:
  S. 1547. A bill amend the Internal Revenue Code of 1986 to extend and 
modify the credit for producing fuel from a nonconventional source, to 
the Committee on Finance.
  Mr. SHELBY. Mr. President, I rise today to introduce the 
Nonconventional Natural Gas Reliability Act. This body has moved 
forcefully and responsibly since the tragic events of September 11 to 
address the most pressing and immediate needs of the country. However, 
action on priorities such as comprehensive energy legislation, has been 
delayed but remains vitally important. As Congress moves forward to 
address this pressing issue, it is my belief that any comprehensive 
energy legislation must include provisions designed to increase access 
to North American natural gas supplies.
  Following the energy crisis of the 1970's, Section 29 of the Internal 
Revenue Code was enacted to provide a tax credit to encourage 
production of oil and gas from unconventional sources such as Coalbed 
Methane, Devonian Shale, Tight Rock Formations, and Tight Gas Sands. 
This credit has helped the industry invest in new technologies that 
allow us to recover large oil and gas deposits locked in various 
formations that are very expensive to develop.
  In 1998, the United States consumed 22 trillion cubic feet of natural 
gas. Over the next fifteen years that number is expected to exceed 31 
trillion cubic feet. Significant growth in consumption will be 
particularly evident in the area of electric generation, where 
environmental issues make natural gas the fuel of choice. The National 
Petroleum Council predicts that natural gas production by conventional 
means will remain relatively constant

[[Page S10703]]

over the next several years, ultimately falling 7 to 9 trillion cubic 
feet short of what is needed.
  The Gas Technology Institute and the National Petroleum Council 
estimate that economic incentives may allow nonconventional natural gas 
to bridge to gap by providing an annual addition of 7 to 9 trillion 
cubic feet of natural gas to our domestic supply. Section 29 of the 
Internal Revenue code was designed to provide this economic incentive. 
For current production, ``section 29'' benefits expire at the end of 
next year and there are no incentives for new production.
  Today I am introducing ``section 29'' legislation which is designed 
to keep current ``section 29'' wells in production and provide the 
incentive for new wells to be brought on line. Providing a ``clean'' 
alternative to conventional natural gas, and keeping all of our 
existing sources of energy online will continue to be a priority for 
this great nation in the years to come. My legislation would provide 
section 29 credits for qualifying new wells and facilities through 
2009, and for the continuation of benefits to wells and facilities 
currently in production through 2006.
  Whether it is artificial fracturing of gas bearing formations, 
extensive dewatering, gas clean-up issues, these nonconventional 
resources can be significant more expensive to drill, to maintain, and 
to produce. Thus, it is important to support continued production at 
existing wells and facilities.
  There are few instances where the facts are more compelling and the 
conclusion so clear. Giving section 29 a new lease on life is a wise 
investment of taxpayer dollars that will result in lower natural gas 
prices and greater domestic energy supply. I encourage my colleagues to 
join with me in support of the Nonconventional Natural Gas Reliability 
Act.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1547

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Nonconventional Natural Gas 
     Reliability Act''.

     SEC. 2. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
                   FUEL FROM A NONCONVENTIONAL SOURCE.

       (a) In General.--Section 29 of the Internal Revenue Code of 
     1986 (relating to credit for producing fuel from a 
     nonconventional source) is amended by adding at the end the 
     following new subsection:
       ``(h) Extension for Other Facilities.--
       ``(1) Extension for oil and certain gas.--In the case of a 
     well for producing qualified fuels described in subparagraph 
     (A) or (B)(i) of subsection (c)(1)--
       ``(A) Application of credit for new wells.--Notwithstanding 
     subsection (f), this section shall apply with respect to such 
     fuels--
       ``(i) which are produced from a well drilled after the date 
     of the enactment of this subsection and before January 1, 
     2007, and
       ``(ii) which are sold not later than the close of the 4-
     year period beginning on the date that such well is drilled, 
     or, if earlier, December 31, 2009.
       ``(B) Extension of credit for old wells.--Subsection (f)(2) 
     shall be applied by substituting `2007' for `2003' with 
     respect to wells described in subsection (f)(1)(A) with 
     respect to such fuels.
       ``(2) Extension period to commence with unadjusted credit 
     amount.--In determining the amount of credit allowable under 
     this section solely by reason of this subsection--
       ``(A) in the case of fuels sold during 2001 and 2002, the 
     dollar amount applicable under subsection (a)(1) shall be $3 
     (without regard to subsection (b)(2)), and
       ``(B) in the case of fuels sold after 2002, subparagraph 
     (B) of subsection (d)(2) shall be applied by substituting 
     `2002' for `1979'.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to fuel sold after the date of the enactment of 
     this Act.
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