INHOFE BILL CREATES TAX CREDIT FOR

WASHINGTON-U.S. Senator James M. Inhofe (R-Okla.) introduced legislation to add “deep-gas” to the list of qualifying fuels eligible for an IRS tax credit for natural gas produced by onshore well from formations more than 15,000 feet deep. Sen. Inhofe’s Natural Gas Production Tax Credit Act (S. 926) was introduced earlier today.

“Today President Bush reminded this nation that in order to preserve our national security and combat the high cost of energy we must continue to develop America’s domestic supply,” Inhofe said. “Today I have introduced legislation that aims to incentivize the production of natural gas from onshore wells at depths greater than 15,000 feet, known as ‘deep-gas.’

“Studies show that the potential reserves below this depth are great, however very little production is occurring from these depths due to the money and time required for production. This legislation would make production at these depths a more financially viable option for decreasing our dependence on foreign sources of energy.

“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 states. That same office estimates that 16 trillion or a little over 8 percent of that is in Oklahoma’s Anadarko basin that stretches through Western part of the state.

“This legislation will allow us to further recover reserves which will create jobs in both Oklahoma and across America, all the while decreasing our dependence on foreign sources of energy and further securing our nation.”

Senator Inhofe’s Natural Gas Production Tax Credit Act would amend Section 29 of the Internal Revenue Service Code to add “deep-gas” to the list of qualifying fuels for the Section 29 “Non-Conventional Tax Credit” to permit taxpayers to claim the section 29 credit for natural gas produced by onshore wells from formations more than 15,000 feet deep.

On average, deep wells cost more than $6.1 million and for wells deeper than 20,000 feet cost can exceed $16 million. Add to that the minimum one-year drilling time and it quickly becomes clear as to why federal drilling incentives are needed to help promote and speed production of this enormous potential resource.

This legislation was sponsored by Congressman Cole in the House and enjoys broad support