[Congressional Record Volume 151, Number 53 (Wednesday, April 27, 2005)]
[Senate]
[Pages S4421-S4422]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. INHOFE (for himself, Mr. Vitter, and Mr. Enzi):
  S. 926. A bill to amend the Internal Revenue Code of 1986 to provide 
that the credit for producing fuel from a nonconventional source shall 
apply to gas produced onshore from a formation more than 15,000 feet 
deep; to the Committee on Finance.

[[Page S4422]]

  Mr. INHOFE. Mr. President, today I proudly rise to introduce The 
Natural Gas Production Act of 2005.
  One of the challenges facing our economy is increasing energy prices. 
Take, for example, natural gas that accounts for 22 percent of American 
energy consumption. According to the Energy Information Administration, 
over the next 20 years, U.S. natural gas consumption will increase by 
over 50 percent. At the same time, U.S. natural gas production will 
only grow by 14 percent. At a time when natural gas prices are already 
at an all time high, it is critical that we increase our supply by 
developing our domestic natural gas.
  This legislation will provide an incentive to increase the supply of 
domestically produced natural gas, which in turn will help alleviate 
high natural gas prices.
  The Natural Gas Production Act of 2005 will add natural gas produced 
from formations more than 15,000 feet deep (Deep Gas), to the list of 
qualifying fuels for the Section 29 non-conventional tax credit. 
Experts consider deep gas drilling at more than 15,000 feet to be a 
non-conventional source of energy production.
  Studies show the resource potential below 15,000 feet for natural gas 
is great. The Department of Energy's Strategic Center for Natural Gas 
has estimated there to be 130 trillion cubic feet below 15,000 feet in 
the lower 48. In comparison, that is equal to the proven and potential 
reserves on the Alaskan North Slope.
  While these vast reserves remain, very little production is occurring 
from depths greater than 15,000. Deep gas wells require a considerable 
amount of time and money. On average these wells cost more than $6.1 
million, and for wells deeper than 20,000 feet costs can exceed $16 
million. Add to that the minimum one-year and longer drilling time and 
you can clearly see that Federal drilling incentives are needed to help 
promote and speed production of this enormous potential resource.
  To drill a deep well, a drilling rig will employ about 25 people 
directly. In 1979, 128 deep well completions in Oklahoma created 2,630 
jobs. In addition to direct jobs, economists estimate that 60 to 75 
indirect jobs will be created as well.
  Due to changes in the regulatory governance of the industry and 
cyclical market conditions over the next two and one-half decades, deep 
drilling activity all across the country has declined substantially.
  I am introducing this legislation, along with Senator Vitter, today 
to encourage more domestic production in an area of proven reserves 
that will increase our supply. I thank Senator Vitter for his work and 
I urge members to support us in this effort. I ask consent that the 
text of the bill be printed in the Record.
  If you have any questions, please contact Mike Ference on my Staff at 
224-1036.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 926

       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 ``Natural Gas Production Act 
     of 2005''.

     SEC. 2. CREDIT FOR PRODUCING FUEL FROM NONCONVENTIONAL SOURCE 
                   TO APPLY TO GAS PRODUCED ONSHORE FROM 
                   FORMATIONS MORE THAN 15,000 FEET DEEP.

       (a) In General.--Subparagraph (B) of section 29(c)(1) of 
     the Internal Revenue Code of 1986 (defining qualified fuels) 
     is amended by striking ``or'' at the end of clause (i), by 
     striking ``and'' at the end of clause (ii) and inserting 
     ``or'', and by inserting after clause (ii) the following new 
     clause:
       ``(iii) an onshore well from a formation more than 15,000 
     feet deep, and''.
       (b) Eligible Wells.--Section 29 of such Code is amended by 
     adding at the end the following new subsection:
       ``(h) Eligible Deep Gas Wells.--In the case of a well 
     producing qualified fuel described in subsection (B)(iii)--
       ``(1) for purposes of subsection (f)(1)(A), such well shall 
     be treated as drilled before January 1, 1993, if such well is 
     drilled after the date of the enactment of this subsection, 
     and
       ``(2) subsection (f)(2) shall not apply.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
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