I don't really have good insight on this issue, other than with the lower price of gas, these producers are already under pressure, so even a small change could mean closing some wells. I wrote a post on the general subject back in February. The organization that has been most upset is the IPAA, the Independent Petroleum Association of America, which is the association of small producers. This is a link to one of its publications about the legislation.

the part of the drilling costs that are sometimes refered to as intangibles are also known as dry hole costs. driller's are allowed to expense dry hole costs on an actual dry hole. is there any reason why dhc shouldn't be expensed ? tangible costs, anything that has a salvage value, is depreciated over a period of yrs.