NGI The Weekly Gas Market Report / NGI All News Access

Oklahoma Expected to Boost Oil, Gas Tax Exemptions

Oklahoma Expected to Boost Oil, Gas Tax Exemptions

In what state officials say would be a boon to the oil and gas industry in Oklahoma, oil and gas drillers are expected to add to their tax exemptions for certain types of activities under legislation now awaiting Gov. Frank Keating's signature. As of Friday afternoon, Keating had taken no action on the bill, but he has until June 10 to sign or veto it.

Senate Bill 1048 provides drillers with certain exemptions from the state's gross production tax (GPT) for enhanced recovery projects, horizontally drilled wells, re-establishing inactive wells, production enhancement from re-completions and workovers, drilling at 12,500 feet or deeper and new discovery wells. Oklahoma Sen. Kevin Easley (D-Broken Arrow) and Rep. Larry Rice (D-Pryor) authored the legislation, and the current tax exemptions would be extended through June 30, 2003.

"This is an important step to help restore drilling activity in the state," said Bruce M. Bell, chairman of the Mid-Continent Oil and Gas Association of Oklahoma. "We cannot stress too highly the value of these two authors and the legislative leadership in getting vital tax incentives extended."

The extended exemptions do not apply when the average price of crude oil exceeds $30 a barrel of oil and $3.50 per MMbtu for gas calculated on an annual calendar basis. Previously, the cut-off level was $25 for oil and $3 for gas.

Keating is more than likely to sign the legislation because some of the exemptions, which are currently on the books, will expire July 1. Bell said that if they don't continue, it will be a "terrible blow" to the industry and the state. "The types of projects included in these exemptions play a key role in continued industry involvement in Oklahoma and help maintain well servicing and supply operations, and thereby continued high paid employment."

Michael H. Bernard, president of the Mid-Continent Oil and Gas Association, said "It's not likely that he won't sign it. "We're very pleased with the legislation, and the governor has gotten signals from the business community that the state needs this legislation."

Most promising in the legislation, said Bernard, is a new exemption for wells drilled within the boundaries of a three-dimensional seismic shoot, and wells that are drilled based on the 3-D technology. The new advanced seismic technology is expensive, but has had remarkable success in finding producing formations, Bell said. Under the proposal, tax exemptions would be allowed for 18 months if the 3-D was shot before July 1, 2000. For shoots done after July 1, 2000, the proposed legislation would provide for a 28-month exemption.

Bell said that besides the work by the lawmakers, "another crucial factor" was the "unity within the industry. It is an excellent example of what can be accomplished when we work together." He said that the mutual cooperation between Mid-Continent and the Oklahoma Independent Petroleum Association "displays the true concern for the entire oil and gas producing industry in this state."

If you are interested in the status of Keating's decision on the proposed legislation, contact Dan Mahoney in the governor's office at (405) 523-4219.

Carolyn Davis, Houston

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus