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Oil and Gas Roundup — Dec. 16

December 16, 2013
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

The curious case of the oil and gas engineer who really wasn’t

Every journalist’s nightmare is to use a quote from somebody who is not really who they say they are. And something like that has now come to the fracking debate.

The Telegram, a newspaper based in St. John’s, Newfoundland, last week ran a letter from a Syd Peters. He claimed to be an engineer based in Alberta who had worked with fracking, and oh, he can talk some trash.

According to the energy view of Syd, jobs produced by fracking are far less than claimed; damage to groundwater supplies is extensive; methane leakage is rampant. It’s the usual litany brought up by fracking critics.

You can see the letter here. That particular instance of the letter includes The Telegram being forced to admit that it hadn’t gone through its normal procedures to determine the identity of a letter writer. The statement was not much more than “mistakes were made.”

It took a column in The Telegram by a writer named Ezra Levant to declare what the paper itself seems loath to admit: there is no Syd Peters.

“Except there is no oil and gas engineer from Calgary named Syd Peters,” Levant wrote. “APEGA, Alberta’s professional association of engineers, has no record of him. He’s not in the Calgary phone book. His stories were fake, just like he is.”

The site of this debate is particularly notable, because last month, the government of Newfoundland and Labrador put a temporary moratorium on granting fracking permits. The province has granted exploration permits to drill in a shale formation in the western part of the province, but had not yet received any fracking applications. Now if there are any, they must await the end of the moratorium, which will be dependent upon a government review.

The irony in the name of the apparently fictional letter-writer is that it’s awfully close to that of Sidd Finch. Baseball fans will remember him as a phenomenal pitcher who ultimately did not exist.

Neither, apparently, does Syd Peters.

— John Kingston, Platts

Industry groups criticize Baucus' tax proposal

The American Petroleum Institute (API) and other energy industry groups expressed concern Friday over Sen. Max Baucus (D-Montana)’s discussion draft on cost recovery and tax accounting, calling for a “pro-growth tax code” that promotes oil and natural gas production, investment and job creation.

On Nov. 21, Baucus unveiled the third package in a series of proposals to overall the tax code, which he called bloated and outdated in a Nov. 21 press release.

“The last major overhaul of our country’s tax code occurred in 1986,” Baucus stated. “Since then, there have been more than 15,000 changes to the tax code, and the law has become increasingly complex. More must be done to simplify tax rules, lessen the burden on small businesses and jumpstart job growth.”

The discussion draft focuses on reforming cost recovery and tax accounting rules, including a repeal of accounting methods such as LIFO (last in, first out). The discussion draft would require businesses to deduct the cost of research and development, natural resource extraction, and 50 percent of advertising expenses over 5 years.

Like research and experimental costs for other industries, intangible drilling costs (IDC) can be fully deducted in the first year for most independent U.S. oil and gas companies under current law. Integrated oil and gas companies are limited to deducting 70 percent in the first year, an API spokesperson told Rigzone.

Under the proposed changes, independents and integrated companies would only be able to recover 20 percent of IDCs in the first year, and would have to amortize the remaining costs over the following five years, Brian Johnson, tax lobbyist with API, told Rigzone.

Read more:

U.S. crude export ban may be outdated, but SPR won't change, Moniz says

U.S. Energy Secretary Ernest Moniz Thursday said with the U.S. awash in domestically produced oil, it may be time to review the country's ban on crude exports.

But the Department of Energy has no immediate plans to change the composition of or sell off any part of the key Strategic Petroleum Reserve, he said.

"There certainly is a need for a reserve," Moniz told reporters in a briefing at the Platts Global Energy Outlook Forum in New York. "In general terms, I do think that a re-look at how the reserve is managed could be relevant, [but] going forward, nothing imminent."

Moniz acknowledged that the U.S. energy landscape is considerably different than when the SPR — and the U.S. ban on crude exports — were created in the 1970s, in the wake of the Arab oil embargoes, and he said both may be outdated.

The U.S. has experienced a boom in crude production in places like North Dakota, and pipelines that once took crude from the Gulf of Mexico up to the Midcontinent have now been reversed to bring Bakken crude south, leading to questions about whether the SPR can effectively and efficiently deliver oil to where it's needed most in a crisis.

And declining U.S. crude imports have caused some to question whether a national reserve is needed at all.

Read more:

The Weekly Oil & Gas Follies

Each week, Forbes and Energy In Depth columnist David Blackmon will “briefly chronicle the week’s silliness, foibles, fake news and real news related to the oil and natural gas industry.”

Check out this week’s here:
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