[Congressional Record Volume 154, Number 68 (Monday, April 28, 2008)]
[Senate]
[Pages S3444-S3445]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (by request):
  S. 2922. A bill to repeal certain oil and gas incentives established 
in the Energy Policy Act of 2005, and for other purposes; to the 
Committee on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, I rise to introduce by request a bill 
transmitted by the Administration that would eliminate mandatory 
royalty relief incentives for the oil and gas industry on the Outer 
Continental Shelf, OCS, in the Gulf of Mexico. I share the 
administration's position that these royalty incentives should not 
apply to future OCS oil and gas lease sales on a mandatory basis.
  Section 344 of the Energy Policy Act of 2005, EPAct, requires the 
Secretary of the Interior to provide for royalty relief for the 
production of deep gas from the OCS. Section 345 of EPAct requires the 
Secretary to extend royalty relief for oil and gas produced from deep 
water of the OCS. Under these provisions, at certain prices a set 
quantity of federally-owned oil and gas is allowed to be produced 
without any royalty payment by industry to the United States. Similar 
royalty relief language, included in legislation enacted in 1995, has 
given rise to circumstances that may expose the Treasury to up to an 
estimated $60 billion in forgone royalty revenues.
  Neither deep gas nor deep water royalty relief is warranted in this 
price climate. Last year, the administration requested that these 
incentives be repealed. The President's proposed budget for fiscal year 
2009 renews this request. I hope that my colleagues will join me in 
supporting this legislation.
  Mr. President, I ask unanimous consent that the text of the bill and 
a letter of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2922

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

     SECTION 1. REPEAL OF CERTAIN OIL AND GAS INCENTIVES.

       Sections 344 and 345 of the Energy Policy Act of 2005 (42 
     U.S.C. 15904, 15905) are repealed.
                                  ____

                                       Department of the Interior,


                                      Office of the Secretary,

                                    Washington, DC, April 7, 2008.
     Hon. Jeff Bingaman,
     Chairman, Committee on Energy and Natural Resources, U.S. 
         Senate, Washington, DC.
       Dear Mr. Chairman: Enclosed is a copy of the letter sent to 
     the President of the Senate on August 20, 2007, urging the 
     Senate to consider legislation ``to repeal certain oil and 
     gas incentives contained in the Energy Policy Act of 2005.'' 
     This legislative proposal would end the mandatory royalty 
     relief incentives for future OCS lease sales.
       I want to make sure that you are aware of the significance 
     and time sensitivity of this legislative proposal. The next 
     Gulf of Mexico lease sale is scheduled in August of 2008. By 
     law, the Minerals Management Service (MMS) must publish a 
     final notice of sale with final terms and conditions, 
     including royalty relief incentives, at least 30 days prior 
     to the sale. To ensure that any legislative changes are 
     reflected in the final notice of sale for the August sale, 
     this issue must be resolved by July 1.
       Please note that an immediate repeal of the mandatory 
     royalty relief is supported by the Administration. Provisions 
     to support the repeal are included in the President's Fiscal 
     Year 2008 budget and cleared by the Office of Management and 
     Budget. Prompt action is now needed by Congress if the repeal 
     of the mandatory royalty relief is to be included in the fast 
     approaching Gulf of Mexico sale.
       Your immediate attention would be greatly appreciated. I am 
     personally available to discuss this legislation with you and 
     answer any questions you or your staff may have.
           Sincerely,

                                            C. Stephen Allred,

                                             Assistance Secretary,
     Land and Minerals Management.
                                  ____

                                       Department of the Interior,


                                      Office of the Secretary,

                                   Washington, DC, April 20, 2007.
     Hon. Richard B. Cheney,
     President of the Senate,
     Washington, DC.
       Dear Mr. President: Enclosed is a draft bill, ``to repeal 
     certain oil and gas incentives contained in the Energy Policy 
     Act of 2005 and for other purposes.''
       I recommend that the draft bill be introduced, referred to 
     the appropriate committee for consideration, and enacted.
       The repeal of sections 344 and 345 of the Energy Policy Act 
     of 2005 (Energy Policy Act) has been proposed in the 
     President's Fiscal Year 2008 budget. Section 344 of the 
     Energy Policy Act extended existing deep gas incentives by 
     mandating a royalty suspension volume of at least 35 billion 
     cubic feet of natural gas for certain wells completed at 
     depths greater than 20,000 feet sub-sea on leases located in 
     0-400 meters of water. Section 344 also directed that the 
     same methodology used to calculate suspension volumes in the 
     Minerals Management Service's 2004 rule for wells completed 
     between 15,000 feet and 20,000 feet sub-sea on leases in 0-
     200 meters of water be applied to leases in 200-400 meters of 
     water. Section 345 of the Energy Policy Act provided 
     mandatory royalty suspension volumes for leases in water 
     depths greater than 400 meters issued in the first five years 
     after the Energy Policy Act's enactment (August 8, 2005-
     August 8, 2010).
       Repeal of Sections 344 and 345 of the Energy Policy Act 
     would eliminate incentives and royalty relief that we believe 
     are unwarranted in today's price environment.
       The Office of Management and Budget has advised that the 
     enactment of this draft bill would be in accord with the 
     program of the President.
       An identical letter is being sent to the Honorable Nancy 
     Pelosi, Speaker of the House of Representatives.
           Sincerely,

                                            C. Stephen Allred,

                                              Assistant Secretary,
     Land and Minerals Management.
                                  ____


                                 A Bill

       To repeal certain oil and gas incentives contained in the 
     Energy Policy Act of 2005 and fur other purposes.

[[Page S3445]]

       Be it enacted by the Senate and the House of 
     Representatives of the United States of America in Congress 
     assembled, That sections 344 and 345 of the Energy Policy Act 
     of 2005 (42 U.S.C. 15904 and 15905) are repealed.
                                  ____


                       Section by Section Summary

       A bill to repeal certain oil and gas incentives contained 
     in the Energy Policy Act of 2005 and for other purposes.
       This bill would repeal incentives for natural gas 
     production from deep wells in shallow waters of the Gulf of 
     Mexico and royalty relief for deep water production in the 
     Gulf of Mexico.
                                 ______