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17 J. Energy & Dev. 1 (1991-1992)

handle is hein.journals/jeldv17 and id is 1 raw text is: THE EFFECTS OF SECTION 29 TAX CREDIT ON
ENERGY AND THE ENVIRONMENT: A COST-
BENEFIT ANALYSIS
Edward D. LaFehr*
Introduction
T he Section 29 tax credit, controversial since its inception in 1980, was
initiated at a time when world petroleum sources were unreliable and
expensive, energy consumption levels in the United States were escalating, and
when environmental awareness heightened.) Thus it was urgent to develop
cost-effective and clean-burning alternate energy sources within the United
States.
Many regional producing companies such as those in Kansas and the
Appalachian area assert that drilling would halt if the tax credit were not
extended.2 They argue that the amendment stimulated the development of oth-
erwise uneconomic gas wells. The most profound argument in favor of the tax
credit is that several new resources have been quickly converted to reserve
additions, adding dozens of years to future supplies.3 For example, approxi-
mately 200 to 450 trillion cubic feet (tcf) of coalbed methane resources have
been added, which is equivalent to 10 to 20 years of consumption. Total
unconventional gas production has increased 50 percent in the past five years
*Edward D. LaFehr received a B.S. in geophysics from the University of Utah, an M.S. in
exploration geophysics from Stanford University, and an M.S. in mineral economics from the
Colorado School of Mines (CSM). He joined Amoco International Oil Company in 1981, was
with the Worldwide Exploration Business Group in Houston, and is now with Amoco's Strategic
Planning Group in Chicago. The author's areas of professional interest include integrated
geoscientific exploration, reservoir description, the U.S. natural gas market and economics,
strategic planning and prioritization, and management practices. The helpful comments of Tom
Kaufmann, Wade Martin, Dorothea El Mallakh, Bill Hanson, Mark Haas, and my classmates in
the CSM Executive Program are gratefully acknowledged. Any opinions expressed in this article
are solely the responsibility of the author while studying at CSM and do not reflect views of
Amoco Production Company.
The Journal of Energy and Development, Vol. 17, No.1
Copyright © 1993 by the International Research Center for Energy and Economic Development
(ICEED). All rights reserved.

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