Washington (Platts)--7Sep2010/703 pm EDT/2303 GMT

An Obama administration proposal to eliminate US oil and gas industry tax credits to pay for a new program to build roads, railroads and runways may have a tough time finding support in the few weeks Congress has left to consider it, analysts said Tuesday. But the administration could sway votes if it tailors its efforts to proposals that target the biggest oil companies, already feeling vulnerable from the political fallout of the oil spill from BP's Macondo well in the Gulf of Mexico. "In general, repealing tax breaks for oil and gas companies will be a heavy lift and we think if the administration is successful it will have to focus its pay fors on the large integrated 'supermajors' and other multinational oil companies vs. independent drillers and smaller, domestically oriented oil and gas businesses," analysts at Concept Capital, a Washington-based research group, said in a report Tuesday. President Barack Obama is to announce the details of his plan, which would also include tax incentives for the purchase of new equipment, in a speech set for Wednesday. Some details of how to pay for the plan have surfaced, however, including the elimination of about $36 billion in oil and gas tax credits. In a call with reporters on Monday, senior White House officials, who asked not to be named, referred to Obama's proposed 2010-2011 budget, unveiled in February, that included the repeal of a number of energy-related tax credits over a 10-year period. The single largest item was repeal of the domestic manufacturing tax deduction for oil and gas companies, which totals $17.314 billion. The proposed budget also would repeal expensing of intangible drilling costs ($7.83 billion), repeal the deduction for tertiary injectants ($67 million), repeal percentage depletion for oil and gas wells ($10.026 billion), increase the geological and geophysical amortization period from five to seven years ($1.1 billion), and repeal exception to passive loss limitations for working interests in oil and gas properties ($180 million). The administration has also floated the possibility of targeting other tax breaks, including the Section 199 manufacturing deduction for keeping most of a company's operations in the United States. Obama failed to win support for the elimination of oil tax breaks when he first proposed it last year. And an amendment proposed in June to ax $36.5 billion in industry tax breaks to help pay down the deficit failed by a resounding 36-61 vote in the US Senate. Still, the devil is in the details, analysts say, and in the ability to muster political support for projects that appeal to a legislator's constituents. That kind of wrangling for compromise will take on added significance given the upcoming mid-term elections. "They think they've got a campaign theme that also has policy heft," said Tyson Slocum, director of Public Citizen's energy program. "The question is how aggressively Obama will campaign on this and use the bully pulpit." The American Petroleum Institute said it is concerned about the proposal, but needs to see more detail. "They've clearly identified the $36 billion, plus some other things that would substantially impact the oil and gas industry to a total of about $80 billion," Stephen Comstock, manager of tax policy for the API, said. "We're hoping that tomorrow there will be a little more clarification." --Gary Gentile, gary_gentile@platts.com Similar stories appear in Oilgram News. See more information at http://www.platts.com/Products/oilgramnews/