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For the Third Straight Year, Obama Looks to Increase Taxes on

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					2/25/2011

For the Third Straight Year, Obama Looks to Increase Taxes on Small
Business, Domestic Oil and Natural Gas Production
Staff Contact: Nicole Daigle

Washington, DC - With rising gas prices, a permitting process on the rocks and protests emerging
throughout the Middle East, it doesn't take much to recognize that America is cruising down a path
towards steeper energy prices and additional uncertainty. Add to that the President's desire to increase
taxes on domestic oil and natural gas production, and the picture gets worse: increased costs for
consumer goods and services, an increase in unemployment and an almost certain decline in domestic
energy production.

In the Administration's quest for "easy" money, it has targeted "Big Oil" - for a third straight year, no less -
- citing that the last time he's checked, "they're doing quite well." However, what the Administration fails
to recognize is that the average independent producer is hardly "Big Oil;" they are mostly small, even
mom-and-pop-like businesses. On average, independents employ about 11 people, but develop 90
percent of U.S. wells, produce 72 percent of U.S. natural gas and 44 percent of U.S. oil. These small
businesses are an economic engine that if given the opportunity, will reduce our dependence on foreign
energy sources, put Americans back to work and assist in getting our economy back on track.

Barry Russell, president and CEO of the Independent Petroleum Association of America (IPAA) had this
to say about the President's budget earlier this week:

"Contrary to the president's belief, his budget proposal does not target so-called "Big Oil", but
instead goes after the thousands of small businesses, America's independent oil and natural gas
producers, who on average employ only 11 workers. These small business producers are
dedicated to finding and producing America's energy resources, creating jobs, generating
revenues and supplying reliable and affordable energy all across the United States."

At the end of the day, whether it's Big Oil, Small Oil, or something in between, the impact that these
proposed tax hikes will have on the overall economy and domestic energy production is unmistakable.
Jobs will be lost, the price at the pump will rise and our dependence on foreign energy sources will
remain.

What They’re Saying About Obama’s $44 Billion Tax Increase on Domestic Energy Production:
·     Obama keeps pledge to end oil tax incentives in 2012 budget request. The White House
followed through on US President Barack Obama’s promise to eliminate oil and gas incentives and
preferences with a fiscal 2012 federal budget request that would increase direct taxes on the industry by
an estimate $3.472 billion next year and $43.612 billion over 10 years. US producers and refiners
operating internationally also would pay an additional $532 million in fiscal 2012 and $10.758 billion
during 2012-21 under modified rules for dual-capacity taxpayers under the foreign tax credit. “Virtually no
industry in the United States pays more in taxes, royalties, and revenues than America’s oil and gas
producers,” [Barry] Russell stated, adding, “The industry pays federal taxes at a rate of 48%, as well as
substantial state and local taxes to drive local communities.” (Oil & Gas Journal, 2/14/11)

·      White House proposes new oil and gas taxes. The White House is hoping the third time is the
charm as it again asks Congress to raise tens of billions of dollars for federal coffers by slashing a raft of
tax incentives long enjoyed by oil and gas companies. But just as in the past two years, President Barack
Obama’s appeal is almost certainly dead on arrival on Capitol Hill. Oil and gas industry leaders today
said the administration’s plan is shortsighted, because any immediate gains in tax revenue would be
offset by longer-term losses, as the changes make more wells uneconomic to produce and discourage
exploration. Barry Russell, president and CEO of the Independent Petroleum Association of America,
said that “lost capital investment due to increased taxes will reduce these tax payments over time, not
increase them.” Although Obama has cast his proposal as a way to cut tax breaks for “Big Oil,” Russell
said “small, independent energy producers” would bear a big burden. He said the administration’s budget
plan “goes after the thousands of small businesses (that are) America’s independent oil and natural gas
producers.” (FuelFix, 2/14/11)

·      Energy industry reps slam Obama budget. The oil and gas industry is not happy with President
Barack Obama’s fiscal year 2012 federal budget outline released Monday, especially the proposals to
end tax exemptions for domestic production. The $3.7 trillion budget, released Monday, includes major
reductions in spending and a number of targeted tax increases that include the elimination of tax breaks
for the energy industry. Barry Russell, president and CEO of the Independent Petroleum Association of
America, said in a statement that the cuts do not target so-called “Big Oil,” but rather small, independent
producers who on average employ about 11 workers. “Despite what you’ll read in today’s budget plan,
here are the facts: Virtually no industry in the United States pays more in taxes, royalties and revenues
than America’s natural gas and oil producers,” Russell said. “The industry pays federal taxes at a rate of
48 percent, as well as substantial state and local taxes to drive local communities... Simply put, lost
capital investment due to increased taxes will reduce these tax payments over time, not increase them.”
(Houston Business Journal, 2/14/11)

·     Obama proposes $90 billion in energy taxes. Instead of confronting Washington’s over-
spending problem, President Obama looks to punish America’s most productive job creators—energy
producers. By repealing tax credits and deductions regularly employed by America’s oil, natural gas, and
coal producers, the President is effectively advocating for higher energy costs, fewer jobs, and slower
growth. (Washington Examiner, 2/16/11)
·      [President’s] Budget plan draws jeers, cheers. Reaction to U.S. President Barack Obama's
$3.7 trillion budget blueprint was mixed, depending on how an interest was affected by the proposal. The
Independent Petroleum Association of America said the budget proposal would resurrect punitive tax
hikes against U.S. oil and gas producers. The plan calls for elimination of some tax loopholes favoring
the oil-and-gas industry. "Contrary to the president's belief, his budget proposal does not target so-called
'Big Oil,' but instead goes after the thousands of small businesses, America's independent oil and natural
gas producers, who on average employ only 11 workers," the organization said in a statement. (UPI,
2/14/11)




NAPE® Expo a Success Again in 2011
Staff Contact: Fred Lawrence & Therese McCafferty

Well over 15,000 attended NAPE in held in Houston last Thursday and Friday, setting a record for the
prospect expo that began in 1993 with only 800 attendees.

This year’s NAPE was highlighted by the positive mood for oil and by the additions and growth to the
NAPE program that have been included over the past several years, as a day before the actual NAPE
show began, the NAPE Conference and International Forum were held.

The NAPE Conference delivered “insights from leading industry executives focused on ‘Hot Prospecting
in Unconventional Times.’” The Conference featured an afternoon panel session on U.S. Energy Policy
& Regulatory Changes that was led by IPAA Director of Government Relations and Industry Affairs Joel
Noyes and included Tisha Schuller, president of the Colorado Oil & Gas Association, David Blackmon,
director of government affairs for El Paso, and Duane Zavadil, senior vice president of government and
regulatory Affairs for Bill Barrett Corporation.

The NAPE Conference also included a presentation by "The Color of Oil" author, Michael Economides.

Held concurrently with the NAPE Conference, the International Forum featured morning presentations
from Mike Bahorich of Apache, Ivan Sandrea from Statoil, Carlos Macellari with Repsol, Jeffrey Collins
from Gran Tierra, Jim Demarest of Noble Energy, and Steve DeVito, senior director of IHS. IPAA Vice
President of Economics and International Affairs Fred Lawrence served as a moderator during the
afternoon presentations at the forum.

During the NAPE Heroes Luncheon held on the first day of the expo, country star LeAnn Rimes
performed for attendees and assisted during a live auction during the event that raised more than
$300,000 to assist America’s severely wounded veterans. During the show, NAPE Executive Vice
President Robin Forte also announced the surprise grant of $100,000 to Canine Companions for
Independence for service dogs for veterans.

Overall, NAPE was a tremendous success and IPAA and its staff would like to thank everyone who
stopped by the IPAA booth on the NAPE floor. Particularly, thank you to those who joined the
Association last week and welcome!

Please visit www.napeexpo.com for more information.



Slow Offshore Permitting Blasted as Oil Prices Rise and Libya
Deteriorates
Staff Contact: Brendan Bradley

In Washington, lawmakers are beginning to push harder to move offshore permitting along as recent
stalls have created a “defacto moratorium” on offshore drilling. Underscoring the issue, over the past
week oil prices have risen sharply to over $100 a barrel for the first time since 2008, as turmoil in the
Middle East has turned increasingly violent in Libya.

House Natural Resources Committee Chairman Doc Hastings and Energy and Minerals Subcommittee
Chairman Doug Lamborn sent a letter to Gulf State Committee Members on Wednesday notifying them
of the Committee’s intention to hold upcoming hearings on the Obama Administration’s current holding
pattern on offshore production.

“It is very evident that real economic pain is being felt by families, businesses and communities in the
Gulf as a result of the President’s de facto moratorium,” read the letter. “The Natural Resources
Committee will be actively addressing this issue as it directly relates to our top priorities of economic
growth, job creation, national security and oversight.”

The Committee is planning to hold a hearing on March 3, with Secretary of the Interior Ken Salazar to
discuss the FY 2012 budget and other policies, including the “de facto moratorium.” Another hearing is
scheduled for March 16 to hear directly from impacted States, communities, and local businesses. And
on March 30, 20011, the Committee will conduct a hearing with Michael Bromwich, director of the Bureau
of Ocean Energy Management (BOEM), to discuss the BOEM budget and permitting policies. A
Committee field hearing and site visit in Louisiana is also scheduled for April.

With the Middle East continuing to boil over from political unrest, highlighted now by the deteriorating
situation in Libya, according to The Hill, Hastings’ office has indicated that Libya will be a major topic of
discussion at the hearings.
“I think that whenever Chairman Hastings talks about increased domestic oil production in general, he
talks about it in the framework of national security, and that’s highlighted by what’s happening in North
Africa,” said Spencer Pederson, a spokesman for Hastings. “I think that will be a strong backdrop to the
conversation.”

Republicans have not been alone this week in pushing for increased offshore production against the
Administrations halting permitting process. Earlier this week, a bipartisan group of Gulf Coast lawmakers
pushed leaders of the House Energy and Commerce Committee to convene a hearing on the permitting
issue, citing rising fuel prices, jobs threatened by the delays.

The group, led by Rep. Gene Green (D-TX) sent a letter to House Energy and Commerce Committee
leaders Rep. Fred Upton (R-MI), and Henry Waxman (D-CA) asking for a review of whether federal
regulators are moving too slowly in vetting proposals for offshore oil and gas production

“The Gulf of Mexico holds the largest and most productive oil resources in the United States,” the
lawmakers said in the letter. “Further delays to safely producing these domestic resources will severely
jeopardize our energy security and leave us more dependent on the Middle East for our energy
supplies.”

Gulf Coast lawmakers are also appealing to the Administration directly on the permitting issue.

Last week, a bipartisan group of eight members from Louisiana’s congressional delegation, led by Sen.
Mary Landrieu (R-LA) and Sen. David Vitter (R-LA) sent President Obama a letter seeking a meeting
with White House Chief of Staff Bill Daley to discuss the matter.

"The current decision to limit [outer continental shelf] drilling has paralyzed an important domestic
industry, cut thousands of jobs, and stifled economic investment and growth at a time when job creation
is paramount,” read the letter.

IPAA will continue to update its membership as the permitting issue moves forward in Congress in the
weeks ahead.




Upcoming Events Schedule
Staff Contact: Nikki McDermott




            Make Plans to Attend IPAA’s Upcoming Meetings/Events
The Independent Petroleum Association of America (IPAA) offers a variety of programs each
year. Please see the brief descriptions below and visit the meetings website for more information.

OGIS®: IPAA's Oil and Gas Investment Symposia (OGIS) series has become the premier outlet for
publicly traded independent exploration and production and service and supply company CEOs to
present their company profiles to the investment community.

OGIS New York
Sheraton New York Hotel & Towers | New York, NY
April 11-13, 2011

   •   Register online, or by fax
   •   Book your hotel reservations at the Sheraton New York before March 18 and IPAA guests will
       receive an extra 1,000 SPG (Starwood Preferred Guest) points
   •   All renovated rooms are equipped with modern cooling and heating systems with in-room controls

Texas Wildcatters' Open
BlackHorse Country Club | Cypress, TX
March 24, 2011

This excellent networking opportunity is a guaranteed good time while providing ROI for your company.
Sponsorship is the only way to guarantee your spot in the tournament. Secure your foursome(s) and
invite your preferred customers today!

Midyear Meeting
The Ritz-Carlton, Amelia Island | Amelia Island, FL
June 20-21, 2011

This year's Midyear Meeting will take place the day after Father's Day. Consider arriving to The Ritz-
Carlton, Amelia Island early to enjoy the weekend activities. Call The Ritz-Carlton, Amelia Island at (800)
241-3333 to secure your reservation and reference IPAA.


For questions regarding registration for IPAA programs, contact Jennifer Upchurch or for sponsorship
questions, contact Tina Hamlin.
Information Available Regarding EPA Mandatory Reporting of
Greenhouse Gas Emissions from Oil and Natural Gas Facilities
Staff Contact: Ryan Ullman

The Environmental Protection Agency (EPA) finalized the Mandatory Reporting of Greenhouse Gas
Emissions rule in November, 2010. Beginning in calendar year 2011, the rule requires petroleum and
natural gas facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year to
monitor annual emissions of nitrous oxide, methane and carbon dioxide from applicable operations and
activities ranging from flaring, portable combustion emissions, stationary sources and more. Reporting on
emissions will begin in 2012.

The EPA held a webinar on December 8, 2010 which discussed the rule in more detail. The webinar
included a slide presentation that addressed a number of details related to who would have to report,
when reports are due, and what operations qualify. Additionally, the EPA has a number of fact sheets
and technical documents on their website.

The EPA website offers an “Applicability Tool” as an aid to determine whether or not a facility qualifies to
report. It is important to note that the tool is not a definitive determination regarding reporting status,
rather it is to be used as a guide to answer questions.

The rule requires that covered facilities report emissions through the Electronic Greenhouse Gas
Reporting Tool (e-GGRT) (https://ghgreporting.epa.gov). The EPA offers a brief slide presentation
(http://www.epa.gov/climatechange/emissions/downloads10/E-GGRT_webinar.pdf ) on the use, form,
and function of e-GGRT as well as a companion support site (http://www.ccdsupport.com) to answer
questions and provide online help.

The EPA schedule for future webinars can be viewed at the EPA emissions training website.




Rig Count
Staff Contact: Fred Lawrence


                                              2/18/11              2/11/11               Year Ago
Land                                           1672                 1679                    1288
Inland Waters                                   16                   16                       12
Offshore                                        25                   26                       45
U.S. Total             1713   1721   1345
Gulf of Mexico         25     26     43
Oil                    798    805    440
Gas                    905    906    893
Miscellaneous          10     10     12

Source: Baker Hughes

				
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