US Senate wants excise tax on oil sands

OREANDA-NEWS. The US Senate easily approved a non-binding resolution yesterday that would subject crude from Canada's oil sands that is transported through a US pipeline to the 8?/bl excise tax paid to the Oil Spill Liability Trust Fund.

The Senate, debating on a bill to authorize Canadian midstream company TransCanada to build its proposed 830,000 b/d Keystone XL pipeline, voted 75-23 to attach an amendment expressing the sense of the Senate that "bitumen and synthetic crude oil derived from bitumen" should be subject to the excise tax.

Senate Energy and Natural Resources Committee chairman Lisa Murkowski (R-Alaska), who sponsored the amendment, said lawmakers were trying to address "what appears to be a legitimate and unintended loophole on the books."

While conventional crude is subject to the excise tax, the US Internal Revenue Service ruled in 2011 that oil sands crude is not.

The Senate addressed the excise tax issue with a non-binding resolution because of the constitutional requirement that all tax measures must originate in the US House of Representatives.

The House approved a similar Keystone XL bill on 9 January, although that legislation did not address the excise tax issue. Murkowski said Senate leaders will discuss the excise tax loophole with their House colleagues. "And it is my hope we will close it," she said.

The Senate is expected to pass the bill as early as Monday. President Barack Obama has threatened to veto any Keystone XL bill that reaches his desk.

The \$5.4bn Keystone XL project would transport crude from Alberta's oil sands and the US portion of the Bakken formation to the US midcontinent, where it would link up with an existing pipeline infrastructure feeding refineries along the US Gulf coast.

TransCanada noted that Keystone will be equipped to handle 40 different blends of crude. Shippers are responsible for paying the excise tax, while the carrier is responsible for responding to any accidents.

The State Department is reviewing the project to determine whether its construction would be in the US' national interest. The State Department is consulting with eight other federal agencies, which have until 2 February to provide input on the project.