Oklahoma’s largest oil and gas advocacy group is concerned that energy legislation is pending with less than three weeks remaining in the state’s 2016 legislative session.
House Bill 2177 was introduced in February 2015 by House Speaker Jeff Hickman (R-Fairview). A carryover from last year’s session, HB 2177 provides for an alternate development method to creating a new unit or changing an existing drilling and spacing unit for horizontal development from the 2011 Shale Reservoir Development Act. Prior to last year’s legislative adjournment, the state Senate submitted amendments for House approval. Since the amendments were never adopted or rejected before sine die adjournment, the bill remains alive despite no further activity since that time.
“In 2015, the OIPA board of directors voted to oppose the drafted legislation citing concerns over the impact on historic oil and natural gas producers in non-shale formations,” said Mike Terry, President of the Oklahoma Independent Petroleum Association.
Terry also vehemently defended the economics of tax rebates for at-risk wells that are no longer profitable due to current market conditions. The tax rebate provides temporary relief when crude oil prices are low while extending production from wells that otherwise would be shut down on a temporary or permanent basis.
“Elimination of the provision would force producers to shut down wells across the state, jeopardizing future oil and natural gas production and the 7 percent gross production tax associated with it. At greatest risk are the more than 80,000 wells in Oklahoma that produce a marginal amount of oil and natural gas,” said Terry.
The OIPA board of directors will hold a special meeting on Wednesday to consider solutions to matters that directly impact Oklahoma’s oil and gas industry.