Arkansas state Rep. Tommy Lee Baker (D-Osceola) has withdrawn legislation (HB 1992) that would have ended severance tax exemptions for natural gas drillers due to a lack of support in the House Insurance and Commerce Committee.
On Friday when the bill came before the committee, the hearing room was filled with gas industry supporters opposed to the bill, according to the Associated Press. HB 1992 did not come to a vote.
Producers in the state's Fayetteville Shale still face the prospect of higher severance taxes from a ballot initiative by former gas industry executive Sheffield Nelson (see Shale Daily, Feb. 11; Jan. 4). Earlier this month he resubmitted his proposal to the attorney general for the Natural Gas Severance Tax Act of 2012.
Nelson predicted that raising the state's severance tax to 7% could raise $200 million annually to fund road maintenance in the state.
Nelson, a lawyer and former politician, was the CEO of CenterPoint Energy predecessor company Arkansas Louisiana Gas Co. Three years ago he proposed raising the state's severance tax to 7% of market value before deferring to Gov. Mike Beebe, who succeeded in April 2008 in getting lawmakers to approve a more modest increase (see Daily GPI, April 3, 2008; March 12, 2008). That marked the first hike in the tax in more than 50 years, to 5% of the market value of gas extracted from three-tenths of a cent per 1 Mcf.