Intangible Drilling Costs (IDCs)

IDCs represent a critical tax incentive that facilitates energy exploration and production.

• What Are IDCs? These are ordinary business expenses incurred in the exploration, development, and drilling of new wells — including wages, repairs, supplies, fuel, surveying
• Encouraging Investment: Like other industries’ ordinary business expenses, IDCs enable independent producers to reinvest in new projects and production, driving innovation and ensuring a steady supply of affordable, domestically produced energy.
• Driving Jobs: The largest share of IDCs consists of jobs and labor-related costs. That’s American men and women in the fields, including roughnecks, floor hands, motormen, derrickmen, and drillers.
• Supporting Independent Producers: Up to 80% of an independent producer’s costs are IDCs, which when deducted and reinvested translate to more jobs, new wells, and new production of American-made oil and natural gas.

AXPC advocates for the fair and equitable tax treatment of IDCs under U.S. tax laws, meaning they should be preserved and treated just like any other ordinary business expense in capital-intensive industries. IDCs should be subject to accelerated cost-recovery deductions and expensed within the year incurred to enable the timely redeployment and reinvestment of capital. Eliminating, reducing, or applying disparate treatment:

Discourages investment in domestic energy projects, particularly in high-cost or marginal areas.

• Places U.S. producers at a competitive disadvantage in global markets.
• Threatens the jobs and economic benefits that energy production brings to local communities.