U.S. oil production would need to increase by several million b/d over the next 10 years to meet Republican lawmakers’ goals of reducing foreign imports to 50 percent of domestic supplies, according to draft legislation.
A Senate bill to be introduced the week of February 5th aims to slash U.S. dependence on oil and product imports to 50 percent by 2010 through a combination of tax credits, royalty reductions and exploration incentives, as well as opening the Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling to boost domestic production.
The draft bill would grant reductions in royalty payments on oil discoveries to companies operating in the deepwater Gulf of Mexico.
The companies could turn over a greater portion of oil production to the government, rather than paying cash royalties, with the oil supplies funneled into the Strategic Petroleum Reserve.
The legislation would also reduce royalty payments by major oil companies when crude prices dip below $18 a barrel for 90 consecutive days and would provide a tax credit to owners of low-volume oil and gas wells to keep them operating when prices fall below set levels.
Other provisions of the bill include incentives to boost production of renewable fuels, increased fuel standards for government vehicles and more assistance to aid poor families with their energy bills.
Reducing oil imports to 50 percent will likely prove a daunting task. The Department of Energy (DOE) estimated that U.S. oil imports of crude, gasoline and heating oil totaled 55 percent in 2000, and that number is expected to increase to 61 percent in 2010.
The Energy Information Administration (EIA), the statistical arm of the DOE, has forecast that the U.S. will consume 22.7 million b/d of oil and products in 2010, 13.9 million b/d of which will be imported.
Under the bill, petroleum imports would have to be reduced to 11.4 million b/d by 2010, requiring a surge in domestic production of about 2.5 million b/d.
© 2001 Mena Report (www.menareport.com)
