According to Dan Naatz, executive vice president at Independent Petroleum Association of America, despite the praises of CEOs of companies such as Occidental Petroleum ( OXY) and Exxon Mobil ( XOM), smaller producers aren’t finding much in the legislation they love.
Bloomberg reported that Bloomberg’s bill would “reduce investments” and “long-lasting industry changes, and long-lasting improvements to our guys’ ability to get there.”
Exxon ( XOM) and Occidental( XY) are large oil companies that could reap the benefits of the bill’s expansion in tax credits for carbon capture and storage from industrial operations. Both companies are planning major carbon capture projects. They would be eligible for a greater credit of up to $180/ton and more time to claim the incentive.
These credits will not be available to smaller oil companies that concentrate on crude production.
Instead, they are planning for new taxes and fees to target fossil fuels. These include penalties for leaking methane and higher payments for drilling on federal lands.
Scott Sheffield, Chief Executive Officer of Pioneer Natural Resources (: ), believes that the U.S. climate bill could have a negative effect on the 15K small-sized oil explorers. This could lead to fewer wells being drilled in the future.
Sheffield said that small independents will be more under pressure from the legislation, especially the new methane emissions fees and the minimum tax for corporations. Many of them may be forced out-of-business.
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Sheffield said that U.S. WTI crude oil prices will remain at $100/bbl over the next five years due to rising demand and limited supply.