Oil industry gets $1B tax tweak in GOP's Senate bill

Senate Republicans included a tax break estimated to be worth more than $1 billion for oil and gas producers in their version of President Donald Trump's sprawling fiscal package. 

The provision would allow energy companies subject to a 15% corporate alternative minimum tax to deduct certain drilling costs when calculating their taxable income. Companies including ConocoPhillips, Ovintiv Inc. and Civitas Resources, Inc. lobbied in favor of it.

The change, included in the legislation released Monday by Republicans on the Senate tax writing committee, is nearly identical to a bill by Republican Senator James Lankford. His home state of Oklahoma is among the top oil and gas producing states.  

Lankford's bill, called the Promoting Domestic Energy Production Act, would cost the US government $1.1 billion over 10 years, according to the non-profit Tax Foundation, which cited an estimate from the non-partisan Joint Committee on Taxation. 

A representative for Lankford declined to comment. 

Earlier this year, Lankford told CNBC that his bill was necessary to prevent independent oil and gas producers from being squeezed by the Corporate Alternative Minimum Tax, enacted under former President Joe Biden to prevent corporations from using deductions and credits to pay little or no taxes.

"If we can't get rid of that entirely we at least need to give some relief to those folks who are independent producers," Lankford said. "We need to be able to get some relief to them so they're not constantly worried about it."

Environmental and watchdog groups including Friends of the Earth and Public Citizen panned the provision included in the Senate bill as a giveaway to fossil fuel companies. 

"This proposal would introduce a massive new loophole for oil and gas companies," said Lukas Shankar-Ross, deputy director for climate for Friends of the Earth.