Fears grow for US natural gas in Obama tax squeeze

Oil and gas executives and experts fear that President Barack Obama’s push for renewables could shrink U.S. output and drive drillers away from vast reserves of relatively clean-burning natural gas.

Obama’s budget proposal would remove tax breaks for oil and gas production and institute new fees in the Gulf of Mexico, moves that could unintentionally hurt the mid-sized companies focused heavily on the United States and push the largest companies to shift their investments to other countries.

Of particular concern is the loss of intangible drilling cost (IDC) tax deductions, which independent energy company Devon Energy Corp, a leading U.S. natural gas producer, said represents a quarter of its exploration budget.

“The elimination of the ability to expense drilling costs is just huge,” said Bill Whitsitt, vice president for public affairs at Devon, one of the top U.S. independents along with Apache Corp, XTO Energy and Anadarko.