{"id":26632,"date":"2016-05-19T10:33:24","date_gmt":"2016-05-19T15:33:24","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=26632"},"modified":"2016-05-19T10:37:15","modified_gmt":"2016-05-19T15:37:15","slug":"small-oil-and-gas-producers-urge-lawmakers-to-keep-or-amend-rebate-for-unprofitable-wells","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2016\/05\/19\/small-oil-and-gas-producers-urge-lawmakers-to-keep-or-amend-rebate-for-unprofitable-wells\/","title":{"rendered":"Small Oil and Gas Producers Urge Lawmakers to Keep or Amend Rebate for Unprofitable Wells"},"content":{"rendered":"<div id=\"attachment_26634\"  class=\"wp-caption module image right\" style=\"max-width: 620px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-26634\" alt=\"Columbus Oil Company owner Darlene Wallace in the field with a &quot;stripper well,&quot; which produces two-and-a-half barrels of oil a day. \" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics007_WEB.jpg\" width=\"620\" height=\"413\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics007_WEB.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics007_WEB-500x333.jpg 500w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics007_WEB-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics007_WEB-300x200.jpg 300w\" sizes=\"(max-width: 620px) 100vw, 620px\" \/><\/p>\n<p class=\"wp-media-credit\">Joe Wertz \/ StateImpact Oklahoma<\/p>\n<p class=\"wp-caption-text\">Columbus Oil Company owner Darlene Wallace in the field with a &quot;stripper well,&quot; which produces two-and-a-half barrels of oil a day.<\/p>\n<\/div><p>The deadline to fund state government is rapidly approaching, and legislators are struggling to bridge a $1.3 billion budget gap. One idea is to end a tax rebate for unprofitable oil and gas wells, but small oil and gas producers say their safety net shouldn\u2019t be used to plug the state\u2019s budget hole.<\/p><p><iframe loading=\"lazy\" src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/264905773&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&visual=false\" height=\"150\" width=\"100%\" frameborder=\"no\" scrolling=\"no\"><\/iframe><\/p>\n<h3><b><!--more--><\/b>Revenue, rebates<\/h3><p>The Oklahoma House of Representatives is in session, and Darlene Wallace is blocking the ornate entrance to the main floor. She\u2019s an obstacle, an oil producer \u2014 and she\u2019s clutching a clipboard with the names of lawmakers.<\/p><p>She wants a word with them.<\/p><p>\u201cI think we had some success speaking with the different representatives about our issue,\u201d she says, \u201cand some of them will see it as a tax increase.\u201d<\/p><p>Wallace is talking about <a href=\"http:\/\/www.oklegislature.gov\/BillInfo.aspx?Bill=SB1577&Session=1600\">Senate Bill 1577<\/a>, which would eliminate a tax rebate for \u201ceconomically at-risk\u201d oil and gas wells. The legislation was authored by Republican Senate President Pro Tempore Brian Bingman. He&#8217;s an oilman himself, not the usual suspect for writing a bill that lets the state keep tax money from the pockets of small oil companies, which shows the scale of the state\u2019s budget problems.<\/p><p>\u201cWe said from day one, everything is going to be on the table this year,\u201d Bingman said at the Capitol as his bill sailed through a Senate vote. \u201cWe\u2019re going to get more money in the general revenue fund so we can make funding of our core services \u2014 that\u2019s our main responsibility, funding government properly.\u201d<\/p><p>As oil prices crashed, <a href=\"http:\/\/oklahomawatch.org\/2016\/03\/30\/unprofitable-wells-now-a-big-tax-break\/\">the cost of the unprofitable well rebate ballooned<\/a>. Before the downturn, producers claimed $11 million. In estimates prepared for legislators, tax officials estimate producers will claim about $133 million in rebates in the upcoming fiscal year.<\/p><p>Wallace, who also chairs the National Stripper Well Association, says the bulk of that money will go back to large oil and gas companies that aren\u2019t as vulnerable.<\/p><p>\u201cYou know I\u2019m up here doing this for \u2014 not me \u2014 but for the small producer,\u201d she says.<\/p>\n<div id=\"attachment_26633\"  class=\"wp-caption module image right\" style=\"max-width: 620px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-26633\" alt=\"Columbus Oil's office in Seminole, Okla.\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics032_WEB.jpg\" width=\"620\" height=\"413\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics032_WEB.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics032_WEB-500x333.jpg 500w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics032_WEB-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2016\/05\/20160517-darlene-wallace-pics032_WEB-300x200.jpg 300w\" sizes=\"(max-width: 620px) 100vw, 620px\" \/><\/p>\n<p class=\"wp-media-credit\">Joe Wertz \/ StateImpact Oklahoma<\/p>\n<p class=\"wp-caption-text\">Columbus Oil&#39;s office in Seminole, Okla.<\/p>\n<\/div>\n<h3>Strippers and salary cuts<\/h3><p>The next day, I meet Wallace at the Columbus Oil Company office in Seminole. The storied 1920s community was one of Oklahoma\u2019s earliest and biggest boomtowns and the nearby fields contain some of the state\u2019s oldest producing wells.<\/p><p>Many of the wells are stripper wells, also known as marginally producing wells, which pump out no more than 10 barrels of oil or 60,000 cubic feet of natural gas a day. Individually, these wells are small, but together they\u2019re mighty \u2014 roughly 80,000 wells that account for 40 percent of the state\u2019s production.<\/p><p>Wallace took the reins of Columbus Oil after her husband died in 2004. Today, she has four employees, 10 partners and 27 wells \u2014 all of them marginal. These wells are low-tech and cheap to run, but the payoff is small. Many of Wallace\u2019s wells produce just two or three barrels of oil a day.<\/p><p>\u201cCurrently, I am losing quite a bit of money every month,\u201d she says. \u201cI even took a 50 percent cut in salary myself just to keep the company afloat \u2014 I decided I could live on less.\u201d<\/p>\n<h3>Oil patch tax policy<\/h3><p>Industry groups like the Oklahoma Independent Petroleum Association are <a href=\"http:\/\/newsok.com\/oklahoma-senate-passes-bill-to-end-tax-break-for-at-risk-wells\/article\/5497693\">urging lawmakers<\/a> to keep the rebate \u2014 or <a href=\"http:\/\/kfor.com\/2016\/05\/18\/oil-executive-throws-support-behind-amendment-to-cap-at-risk-well-program\/\">amend it<\/a> by adding a $25 million cap and language that limits claims to small producers. Tax officials say 80 percent of pending rebate claims were made by large companies that operate 100 or more wells.<\/p><p>There\u2019s another concern: Newer oil and gas wells receive incentives that provide years of generous tax discounts. Those producers often pay just 1 or 2 percent tax on the oil and gas produced. Older wells and marginal wells usually pay the full 7 percent gross production tax.<\/p><p>Arguing against SB 1577 on the Senate floor, John Sparks, D-Norman, said eliminating the rebate could mean fewer wells paying the higher tax.<\/p><p>\u201cThese wells, once they\u2019re shut in, we all know it\u2019s not commercially viable to open them back up,\u201d he said. \u201cI think it\u2019s reckless at this time to pass this bill at this point. I would urge this body and these members to vote against this bill.\u201d<\/p><p>Back in the oil field near Seminole, Darlene Wallace says she\u2019s not eligible this year, but she\u2019s claimed the unprofitable well rebate during past downturns.<\/p><p>She says the rebate helps small producers in years when oil prices sink.<\/p><p>\u201cMore than half my wells are running negative this year,\u201d she says. \u201cIt costs as much to produce a $30 barrel as it does a $100 barrel.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The deadline to fund state government is rapidly approaching, and legislators are struggling to bridge a $1.3 billion budget gap. One idea is to end a tax rebate for unprofitable oil and gas wells, but small oil and gas producers say their safety net shouldn\u2019t be used to plug the state\u2019s budget hole.<\/p>\n","protected":false},"author":36,"featured_media":26634,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[490],"tags":[662,155,238,496,666],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/26632"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/comments?post=26632"}],"version-history":[{"count":9,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/26632\/revisions"}],"predecessor-version":[{"id":26642,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/26632\/revisions\/26642"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media\/26634"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media?parent=26632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/categories?post=26632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/tags?post=26632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}