{"id":28179,"date":"2017-04-13T13:11:17","date_gmt":"2017-04-13T18:11:17","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=28179"},"modified":"2017-04-13T13:11:17","modified_gmt":"2017-04-13T18:11:17","slug":"energy-industry-divided-as-public-calls-to-increase-oil-and-gas-taxes-grow-louder","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2017\/04\/13\/energy-industry-divided-as-public-calls-to-increase-oil-and-gas-taxes-grow-louder\/","title":{"rendered":"Energy Industry Divided as Public Calls to Increase Oil and Gas Taxes Grow Louder"},"content":{"rendered":"<div id=\"attachment_28180\"  class=\"wp-caption module image right\" style=\"max-width: 620px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-28180\" alt=\"Lights from a drilling rig near Watonga, Okla.\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/04\/20170315-guthrie-fire-station042_WEB.jpg\" width=\"620\" height=\"413\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/04\/20170315-guthrie-fire-station042_WEB.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/04\/20170315-guthrie-fire-station042_WEB-500x333.jpg 500w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/04\/20170315-guthrie-fire-station042_WEB-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2017\/04\/20170315-guthrie-fire-station042_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\">Lights from a drilling rig near Watonga, Okla.<\/p>\n<\/div><p>The 2017 legislative session is beyond the halfway point and the clock is ticking on lawmakers who have until the end of May to set the state\u2019s budget and plug an $870 million funding hole. Legislators say every option is on the table, including one with growing public support: Increasing taxes on oil and gas.<\/p><p><iframe loading=\"lazy\" src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/317536288&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><!--more--><\/p><p>First, it was state Democrats like minority leader Scott Inman, who have long argued Oklahoma\u2019s taxes are too generous for oil and gas companies.<\/p><p>Next, educators like retired principal Debbie Lobdell-Brooks rallied to rescue cash-strapped schools and underpaid teachers. Traveling to the state capitol in March, Brooks pushed lawmakers to end a three-year discount on taxes levied on oil and gas production at newly drilled wells.<\/p><p>\u201cIt brings us more in line with other states across the country,\u201d she said. \u201cWhy does Oklahoma have to have the best deal in the land?\u201d<\/p><p>Then came Republican State Auditor and Inspector Gary Jones, who is considering a run for Governor. He called for ending the tax on new wells and installing an across-the-board 5 percent rate that amounts to an overall increase in taxes many energy companies pay.<\/p><p>\u201cThey\u2019re drilling in other states that have higher rates,\u201d Jones says. \u201cThis allows us to stabilize that revenue over a long period of time and do what\u2019s in the best interest of all Oklahomans, not just a handful.\u201d<\/p><p>And, in a twist, oil and gas executives themselves rallied at the Capitol to tell lawmakers they, too, want to end the discount period and an even higher 7 percent tax on all energy production.<\/p><p>\u201cI\u2019d like to see other people pay their fair share,\u201d said Darlene Wallace of Columbus Oil in Seminole, Oklahoma.<\/p>\n<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>\n<h3>Public support, protecting investments<\/h3><p>The public line among leaders of both Oklahoma\u2019s Republican-dominated House and Senate is: They\u2019re listening. Any idea is worth considering, they say, including raising gross production taxes on oil and gas.<\/p><p>It\u2019s hard to know how serious they are. While Republican leaders aren\u2019t openly championing specific legislation to raise oil and gas taxes, they\u2019re not dismissing the idea outright \u2014 which isn\u2019t insignificant in oil-rich Oklahoma.<\/p><p>Right now, Oklahoma has four different rate structures for oil and gas taxes, but new wells are taxed at 2 percent for three years and 7 percent after that.<\/p><p>Conventional wisdom suggests Republicans won\u2019t touch the tax rates. Oklahoma legislators also need a three-fourths supermajority in both chambers to pass a tax increase of any kind.<\/p><p>There are political pitfalls to any type of tax hike in Republican-led Oklahoma; at this point, lawmakers haven\u2019t even agreed to raise taxes on cigarettes. It\u2019s unclear if Republican leaders are really entertaining the thought of higher oil and gas taxes \u2014 and if it\u2019s enough to force a compromise on oil industry in-fighting.<\/p><p>While a small number of oil and gas companies say they support gross production tax increases, other major industry players are out to protect taxes at rates they <a href=\"https:\/\/stateimpact.npr.org\/oklahoma\/2014\/05\/28\/gov-mary-fallin-signs-controversial-tax-incentive-for-new-oil-and-gas-wells\/\">fiercely negotiated for<\/a> in 2014.<\/p><p>Crude oil prices are trending upward and the state has two booming oilfields drawing investment from around the country, representatives for these energy firms say.<\/p><p>\u201cI just don&#8217;t think it&#8217;s a wise business or financial policy move to change that at this point in time,\u201d Tim Wigley, vice president of government affairs for the Oklahoma Independent Petroleum Association, told reporters at the capitol. \u201cWe just went through layoffs and bankruptcies and so forth in this industry. It impacted Oklahoma pretty pretty significantly. We want to protect the investment that&#8217;s coming here and encourage it.\u201d<\/p><p>Many of the oil and gas companies that are backing higher production taxes are already paying them. They are often operating older, vertical wells taxed at 7 percent.<\/p><p>These operators, who have splintered off and created their own industry group, the Oklahoma Energy Producers Alliance \u2014 spearheaded by former Tulsa Mayor Dewey Bartlett Jr. \u2014 want to tie the tax issue to proposed legislation they say could do a lot more damage to their bottom lines.<\/p>\n<h3>Lateral moves<\/h3><p>Many large oil and gas companies are backing legislation that allows them to drill longer horizontal wells in non-shale rock layers. Joe Warren, a partner of Cimarron Production Company, and other members of the Producers Alliance say these \u201clong laterals,\u201d as they\u2019re called, can be drilled through regions that supply oil and gas to vertical wells and reduce the flow.<\/p><p>\u201cWe had one particular area where our production is probably off 70 to 80 percent from what it was prior to the horizontal development,\u201d Warren says.<\/p><p>The Producers Alliance also says the horizontal wells are completed with fracking, which damages their vertical wells and other equipment. Longer laterals, they say, will lead to more fracking and costly problems at their vertical wells.<\/p><p>There are a couple of different Senate bills to permit long laterals, <a href=\"http:\/\/www.oklegislature.gov\/BillInfo.aspx?Bill=SB284&Session=1700\">SB 284<\/a> and <a href=\"http:\/\/www.oklegislature.gov\/BillInfo.aspx?Bill=SB%20669\">SB 669<\/a>, and while the final language is still in play, members of the Producers Alliance say they won\u2019t support the legislation unless it requires 50 percent approval of nearby vertical owners. That would force horizontal drillers to make deals to get their sign off.<\/p><p>Wigley, with the pro-lateral OIPA, told reporters the vertical producers are publicly supporting oil and gas tax increases to win political leverage on the long lateral legislation.<\/p><p>\u201cI appreciate that wonderful history behind vertical drillers here in Oklahoma, they are a rich part of our history. But the future of the industry is horizontal drilling, and most of the investment you&#8217;re seeing coming into the state is because of horizontal drilling,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The 2017 legislative session is beyond the halfway point and the clock is ticking on lawmakers who have until the end of May to set the state\u2019s budget and plug an $870 million funding hole. Legislators say every option is on the table, including one with growing public support: Increasing taxes on oil and gas.<\/p>\n","protected":false},"author":36,"featured_media":28180,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[490],"tags":[679,238,178,481],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28179"}],"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=28179"}],"version-history":[{"count":4,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28179\/revisions"}],"predecessor-version":[{"id":28184,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/28179\/revisions\/28184"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media\/28180"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media?parent=28179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/categories?post=28179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/tags?post=28179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}