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It is the belief of NSWA that producers and operators of marginally producing wells have a unique set of needs and concerns regarding federal legislation and regulation. NSWA’s sole responsibility is advocacy on behalf of these small producers.
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President’s 2016 budget proposal is ‘worst-case scenario’ for small oil and gas producers

03 FEB 2015

Just like the movie Groundhog Day, where actor Bill Murray is caught in a never-ending loop of the same day, the national budget proposal released by the White House on Groundhog Day, February 2, 2015, again calls for the repeal of all oil and natural gas industry tax provisions, which came as no surprise to domestic oil and natural gas producers.

 “I have to say we expected this,” said National Stripper Well Association (NSWA) Chairman Mike Cantrell. However, when combined with the crude oil price slump, the President’s budget proposal is the “absolute worst-case scenario” for small independent oil and natural gas producers.

“As the small businesses of America’s oil and gas industry, we rely on percentage depletion for capital formation to drill new wells and rework old wells,” Cantrell said. “Once again, President Obama is targeting America’s independent energy producers and workers with the equivalent of a devastating tax increase on mostly small producers and royalty owners.”

Cantrell said that the President’s budget proposal is a “killer of the small businesses of the U.S. energy sector” and that NSWA and IHS Global released an economic impact report in October 2014 which showed that eliminating the percentage depletion tax provision for oil and gas producers would not be a net revenue raiser, and instead would cost the U.S. economy an average of 178,000 jobs per year during the forecast decade. The cost to the federal government will be $2.5 billion in tax revenue by 2025, with another $1.1 billion lost in royalty revenue.

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NSWA Releases Percentage Depletion Study

NSWA Releases Percentage Depletion Study

IHS Report: Removal of the percentage depletion tax provision has unintended consequences for U.S. economy, small energy producers and royalty owners

National Stripper Well Association Chairman Mike Cantrell said removing the percentage depletion deduction from the tax code would have unintended consequences for the nation’s economy by harming domestic energy small businesses and royalty owners.

Eliminating the percentage depletion tax provision for U.S. oil and gas producers would cut into economic growth, cost jobs and labor income, and cost the federal government a net $2.5 billion in tax revenue by 2025, and another $1.1 billion in royalty revenue from oil and gas produced on federal land, according to an economic impact assessment released today by the National Stripper Well Association (NSWA). The assessment was produced for NSWA by IHS, a leading global source of critical information and insight.

Percentage depletion is a tax provision used by oil and natural gas producers that allows them to recoup some of the costs involved in exploring for and developing fossil fuel sources.

Over the next decade (2015-2025), the economic impact of eliminating the percentage depletion deduction from the tax code would cost the United States economy $184.5 billion in gross value-added, an average of 178,000 jobs per year and $115 billion in earned labor income, the report said. More