Oil Group Encourages Legislature to Pass Bill to Increase Oil/Gas Revenue for the State



A bill awaiting a vote in the Oklahoma House is being pushed by the Oklahoma Oil and Gas Association, a group that says would add more oil and gas revenue to the state treasury.

“House Bill 2177 is the single biggest economic development legislation before lawmakers this session, and it doesn’t cost the state anything,” said Chad Warmington, President of the Association. “In April, the state recorded a 17-year low in gross production tax collections. This legislation will add millions of dollars of gross production revenue to the state, if lawmakers will pass it.”

The bill is co-sponsored by House Speaker Jeff Hickman, R-Fairview and Senate President Pro Tempore Brian Bingman, R-Sapulpa. It passed the Senate last year by a 37-7 vote and awaits consideration in the House.

HB 2177 modernizes Oklahoma laws governing the drilling of long horizontal wells in non-shale formations, stalled in the legislature last year. But Warmington says it expands the successful Shale Reservoir Development Act, a collaborative effort in 2011 that modernized horizontal drilling laws in shale formations.

He said the bill gives unprecedented protections to small, non-operating interest owners by providing them subsequent well elections, meaning that after an operator participates in the first horizontal well, it can make a well-by-well election instead of what exists now that requires an operator to keep participating in order not to relinquish rights under the unit.

The bill also protects the up-hole rights of those who opt out of participation in a horizontal well, according to Warmington. This was language that was desired by those owners who feared losing their ability to continue to drill vertical and other horizontal wells.

“Removing unnecessary regulatory impediments is essential to promote the continued exploration and development of Oklahoma’s important natural resources,” added Warmington.

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