The Wise Report
Henry M. Wise, P.G.March 26, 2010
The Memorandum of Understanding (MOU) between the Railroad Commission of Texas and the Texas Commission on Environmental Quality is being updated. This update will reflect changes brought about due to legislation passed during the last two sessions. The revisions deal with NORM, solid waste, disposal wells, enhanced recovery wells, brine mining, geologic storage of carbon dioxide, hydrocarbon storage, geothermal energy, in situ tar sands, and uranium exploration and mining. The proposed MOU can be found at: http://www.rrc.state.tx.us/rules/prop-amend-3-30-MOU.pdf
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Justin McNamee of Rowlett is replacing Ben Harris of Plano, who resigned, on the Texas Board of Professional Geoscientists for a term to expire February 1, 2015. We thank Mr. Harris for his service and wish Mr. McNamee the best of luck.
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The Railroad Commission of Texas proposes new Chapter 5, relating to carbon dioxide, to implement Senate Bill (SB) 1387, 81st Legislature (Regular Session, 2009), which was effective September 1, 2009. SB 1387 amended the Texas Water Code and the Texas Natural Resources Code to provide for the implementation of projects involving the capture, injection, sequestration, or geologic storage of carbon dioxide. The purpose of the proposed rules is to protect underground sources of drinking water while promoting the capture and storage of anthropogenic carbon dioxide. The proposed chapter can be found at: http://www.sos.state.tx.us/texreg/sos/PROPOSED/16.ECONOMIC%20REGULATION.html#163
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I recieved a copy of a February 26, 2010 letter from US Representative Pete Sessions to the Texas Board of Professional Geoscientists. Representative Sessions is seeking input regarding how the Administration’s 2011 Budget and associated spending priorities may impact energy exploration and production. A few budget provisions that he discussed were:
- Intangible Drilling Costs - The President's budget calls fro the repeal of the intangible drilling cost expensing. This will cost companies $5.6 billion over the next five years.
- Marginal Well Tax Credit - This tax credit will be repealed. According to the Independent Petroleum Association of America, marginal wells account for 20% of American Oil and 12% of natural gas production.
- Repeal Enhanced Oil Recovery Credit
- Repeal Deduction for Tertiary Injectants
- Repeal Exception to Passive Loss Limitations for Working Interests in Oil and Nagural Gas Properties
- Repeal Percentage Depletion for Oil and Nagural Gas Wells
- Repeal Domestic Manufacturing Tax deduction for Oil and Natural Gas Companies
- Increas Geological and Geophysical Amortization Period for Independent Producers to Seven Years
The bottom line for the above is an increase in taxes for Oil and Gas Companies of an estimated $18.2 billion over five years and $36.6 billion over 10 years.
Oil and gas isn't the only industry under the gun. Coal is also going to see an increase in taxes:
- Repeal Expensing of Exploration and Development Costs
- Repeal Percentage Depletion for Hard Mineral Fossil Fuels
- Repeal Capital Gains Treatment for Royalties
These will result in an increase in coal company taxes of approximately $1 billion over five years and $2.3 billion over ten years.
Reprentative Sessions is a member of the Rules Committee and is responsible for handling the Rule for energy bills that will come to the House floor for a vote. If you have questions or would like to make comments to Representative Sessions, He requests that you contact his Legislative Assistant, Evan Shoop at 202-225-2231 or email her at Evan.ShoopWmail.house.gov.Henry M. Wise, P.G.The Wise Report3/26/2010