US Senate panel's energy tax draft encourages refinery expansion

Washington (Platts)--14Jun2005

Refiners that increase capacity by at least 5% or throughput of certain fuels
by at least 25% would be eligible to immediately deduct their expenses under
the energy tax package US Senate Finance Committee Chairman Chuck Grassley
(Republican-Iowa) unveiled Tuesday. 

Refining assets are currently depreciated for regular tax purposes over a
10-year recovery period. The change in tax treatment would be a "meaningful
incentive" and would encourage refiners to increase capacity, said Bob
Slaughter, president of the National Petrochemical & Refiners Association.
Only refiners that execute a binding construction contract before Jan 1, 2008,
and has the expansion placed in service before Jan 1, 2012, would be eligible
for the favorable tax treatment.

Ed Murphy, downstream manager for the American Petroleum Institute, said both
the timetable and the capacity increase requirement outlined in the bill
would be challenging for refiners, but called the proposal "a good step" that
could provide "real incentives" for companies to boost refining capacity. 

The tax bill is to be taken up by the Finance Committee on Thursday and, if
passed, would be added to the energy bill currently being debated on the
Senate floor. It also includes an expansion of the Enhanced Oil Recovery tax
credit program. Grassley's proposal would allow companies to claim a credit
equal to 20% of EOR costs, up from the current law allowing a credit equal to
15% of the costs. Grassley also proposed to extend from December 2006 to
December 2010 expiration date for excise tax provisions and income tax credit
for biodiesel.

This story was originally published in Platts Global Alert
http://www.globalalert.platts.com

Copyright © 2005 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.