Dec. 27 (UPI) -- Without key provisions in the Republican-led tax act, a Texas oil and gas trade group said the 20 percent of oil produced by smaller companies would be at risk.
U.S. President Donald Trump signed the Tax Cuts and Jobs Act before leaving for his Christmas holiday. The measure, which extends permanent tax cuts to corporations, passed out of the House and Senate along party lines.
In a statement emailed late Tuesday to UPI, the Texas Alliance of Energy Producers said two provisions -- the percentage depletion allowance and the expensing of intangible drilling costs - meant small and independent producers could stay competitive.
"Instituted in 1926, the percentage depletion tax deduction recognizes the unique nature of extraction industries in the United States, and can only be claimed by small, independent producers and royalty owners whose total daily production is less than 1,000 barrels per day," the trade group explained. "These types of wells comprise roughly 20 percent of U.S. crude oil production and 12 percent of U.S. natural gas production, which is no small share."
Reports last week from the Federal Reserve Bank of Dallas said there were already signs of steady progress in the state oil and gas sector now that crude oil prices are holding near the $60 per barrel range. Rig counts in the Permian shale basin, the most prolific in Texas, are at two-year highs and related payrolls are responding in kind.
Without the tax provisions, the oil and gas trade group said estimated oil and gas related activity would drop by as much as 30 percent, leading to a decline in employment. The Dallas Fed said Texas accounts for 54 percent of total U.S. oil and gas employment.
U.S. Sens. Lisa Murkowski and Dan Sullivan, both Alaska Republicans, voted in favor of the tax measure. Murkowski inserted language that calls for two lease sales for oil and gas drillers over the next 10 year in the so-called 1002 Area of the Arctic National Wildlife Refuge in Alaska.
In Texas, House Ways and Means Chairman Kevin Brady, R-Texas, and Sen. John Cornyn, R-Texas, met with the Texas Alliance of Energy Producers and other industry trade groups before the vote.
"When we went to D.C., both Republican and Democratic leaders from the Texas congressional delegation were extremely receptive to our message," Bill Stevens, the group's chief lobbyist, said in a statement. "Most especially, we have to thank our Texas leaders - House Ways and Means Chairman Kevin Brady, Ways and Means member Kenny Marchant, and Senator John Cornyn - who were instrumental in preserving these vital measures."
No Democrat voted for the tax act.