Democratic News

Today, in a gratifying win for Sen. Bingaman (a corporate tax bill conferee), his provision to establish a tax credit for marginal oil and natural gas wells during times of low oil and gas prices was approved as part of a package of amendments to the HR 4520 conference report. "Enacting a safety net for marginal oil and gas wells has been a priority of mine since joining the Finance Committee," Bingaman said. "It’s an important backstop to ensure that we will not lose existing domestic production in the future simply because of the boom-and-bust nature of the industry." There are about 400,000 marginal oil wells and nearly 250,000 marginal gas wells in the United States. These wells are produced and maintained not by the major oil and natural gas companies, but by (for the most part) small independent operators – "mom and pop" operations not that different from small family farms. Marginal oil wells are those that operate on the lower edge of profitability. These low-volume “stripper wells” -- generally defined as having an average production of not more than 15 barrels per day – fall into this category. Marginal gas wells are those producing not more than 90 thousand cubic feet (Mcf) a day. Bingaman’s provision will allow a $3 a barrel tax credit for the first 3 barrels of daily production from an existing marginal oil well and a $0.50 per Mcf tax credit for the first 18 Mcf of natural gas production from a marginal well. The tax credit would be phased in and out in equal increments as prices for oil and natural gas fall and rise. Bingaman’s provision that was added to the corporate tax bill is identical to the text that House and Senate conferees agreed to in the HR 6 (energy bill) conference report.

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