UPI Energy Watch

Lawmakers, oil companies oppose Obama's tax plans

Legislators from oil- and gas-producing states joined oil and gas companies and industry groups in opposing President Barack Obama's proposal to eliminate tax breaks for oil and gas producers worth $31.5 billion.

Representatives from those oil-producing states have pledged to block the tax increases from passing through Congress, the Houston Chronicle reports.

Obama's proposed budget would impose new taxes and fees, get rid of existing tax breaks and change accounting rules for the oil and gas industry.

The proposal contains "punitive provisions" that would hurt the nation's energy security, Sen. Lisa Murkowski, R-Alaska, said.

The changes could also prevent new domestic oil and gas production, Rep. Gene Green, D-Texas, said.

Under the proposal, tax deductions for costs such as repairs, site preparation and hauling supplies would be banned, as would deductions for domestic manufacturing income.

The plan also would impose a new excise tax on Gulf of Mexico drilling leases and set up a "use it or lose it" fee for non-producing leases in the Gulf of Mexico. There also would be new fees for processing drilling permits on federal lands.

An oil and gas research and development program for ultra-deep waters would be canceled, and taxes on oil and chemical producers would be reinstated.

The money from the taxes would go to backing a cap-and-trade system for managing greenhouse gas emissions, which some industry leaders, including ConocoPhillips, BP America and Shell Oil Co., have supported.

Other companies, like Exxon Mobil Corp., support a direct tax on carbon emissions.

The new revenue also would go to supporting clean energy alternatives.

GE partners with ATP on oil storage

U.S.-based General Electric's Energy Financial Services signed a $150 million deal to partner with ATP Oil and Gas Corp. to produce oil and gas in the Gulf of Mexico.

GE will invest in ATP's floating oil and natural gas production unit that will be operated in the deep waters of the Gulf of Mexico, the International Business Times reports.

It is GE's first investment in a floating oil and gas production facility, the company said, and it will own a 49 percent limited partnership stake. Houston-based ATP Oil and Gas Corp. will hold the remaining 51 percent.

"Our partnership with GE Energy Financial Services, especially in today's troubled economic times, will ensure continued production of much-needed domestic oil and natural gas, and will allow ATP to maintain our development program," said T. Paul Bulmahn, chairman and chief executive of ATP.

Circle Oil confirms Egyptian oil production

British-based Circle Oil announced its first commercial oil production in Egypt. The well is producing oil at about 1,450 barrels per day.

After reaching an agreement with the Egyptian General Petroleum Corp., Circle Oil set up the necessary production and engineering facilities and then started production at its Al Amir development area, part of its NW Gemsa permit, OilVoice reports.

Once the well is fully developed, it is expected to reach an average production rate of about 3,000 bpd.

"Today's announcement is a very significant step forward for Circle, as we now have become both an oil and a gas producer. The Circle share of this initial production marks the start of significant earnings and cash flow for the company," said David Hough, chief executive officer of Circle Oil.

The well, Al Amir SE-1X, and Circle's first appraisal well, Al Amir SE-2X, are the first to be brought into commercial production on Circle Oil's 20-year NW Gemsa permit.

The initial oil produced from the appraisal well was transported by truck to the Gazwarina facilities, but now the oil is being piped to Gazwarina via a 7-kilometer pipeline.

Circle has plans to bring additional wells online on its Gemsa permit and recently announced another oil discovery in another area of its NW Gemsa permit, which covers 400 square kilometers.

The company also wants to increase its daily production at its Al Amir SE wells.

The exploration area is about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin.

Circle's partners are Vegas Oil and Gas with 50 percent interest and Premier Oil with 10 percent interest.

--

Closing oil prices, March 2, 3 p.m., London

Brent Crude oil: $42.72

West Texas Intermediate crude oil: $40.77

--

(e-mail: energy@upi.com)