The U.S. must retain tax breaks that help independent oil and gas producers, said Harold Hamm, chairman and chief executive officer of Continental Resources Inc.
Companies should continue to be able to expense intangible drilling costs rather than deduct them over time, said Hamm, who also is an energy adviser to Republican presidential candidate Mitt Romney.
“If we do away with those, we’ll start to stop this march to energy independence that we’ve begun,” Hamm told the Senate Finance Committee today in Washington, adding that he wasn’t speaking for Continental or Romney.
In his prepared testimony, Hamm said he didn’t have an opinion on tax provisions that benefit major oil and gas companies’ extraction and global activities.
“These are not the tax provisions providing the capital that is fueling America’s march to energy independence,” he said.
Republicans and Democrats in Congress disagree on the broad strokes of energy tax policy, with Republicans emphasizing the domestic oil and gas production that has reduced dependence on foreign oil over the past few years.
Democrats along with President Barack Obama support incentives for renewable energy and urge repeal of tax breaks that benefit oil and gas companies. Obama’s proposals would raise more than $40 billion over the next decade.
Continental, which says it is the largest leaseholder in the Bakken formation in North Dakota and Montana, would drill about one-third less oil without the ability to expense drilling costs, Hamm said.
Senator Max Baucus, a Montana Democrat and chairman of the committee, said the U.S. is still too reliant on fossil fuels. He said energy tax incentives should perhaps be changed to be more neutral regarding technology.
“Tax reform is an opportunity for the energy sector to make real progress,” Baucus said. “It can move us further from foreign oil.”
The administration’s efforts to change foreign tax rules affecting U.S. oil companies are misguided, said former Senator Don Nickles, an Oklahoma Republican who is a director of Chesapeake Energy Corp.
“Other foreign countries are going to be winning all the international deals, and that would be a dumb thing for us to do,” said Nickles, now a lobbyist who represents companies including Exxon Mobil Corp. and Anadarko Petroleum Corp.