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Tax deduction repeal would hurt gas industry, ANGA says

Keywords: Tags  indirect drilling costs, America's Natural Gas Alliance, ANGA, Greg Pensabe, natural gas, Jeffrey Zients, Thorsten Schier

NEW YORK — The proposed repeal of a tax deduction on intangible drilling costs could significantly reduce the number of new natural gas wells being drilled, according to America’s Natural Gas Alliance (ANGA), an organization representing 26 natural gas producers.

These intangible costs make up about 60 to 80 percent of the cost of drilling a well, and natural gas producers might suspend the development of new projects, "particularly at today’s low natural gas prices," were the deduction removed, according to ANGA interim president and chief executive officer Greg Pensabene.

Removal of the deduction might slash new wells being drilled by as much as 4,000 "in the first year alone—roughly a quarter of total wells drilled annually in the U.S. today," he wrote in a letter to Jeffrey Zients, acting director at the Office of Management and Budget.

In asking the administration to reconsider its proposal, Pensabene highlighted the importance of the natural gas industry to the economy, pointing to the roughly 2.8 million jobs and the $930 billion in federal, state and local revenue tied to the sector.

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