[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incentives be repealed.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U.S.C. 15904, 15905) are repealed.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.
______