While the state’s oil and gas production has nose-dived along with the number of rigs drilling, the Colorado Oil and Gas Conservation Commission has decided it’s time to increase the mill-levy rate on producing wells.
The Commission, in a meeting on Tuesday adopted the increase and announced that it has reduced its spending “to balance its finances and to be able to meet its statutory requirements to protect public health and safety in oil and gas development,” according to a commission news release.
The commission has increased its levy rate from 1.1 to 1.5 mills. Mill levies are COGCC’s main source of revenue and the rate is calculated based on the amount of oil and gas produced in Colorado and the price at which it is sold reported the Greeley Tribune.
“COGCC relies on collaboration and current data to develop solutions to many complex issues, such as the mill levy rate change,” COGCC director Julie Murphy said in a prepared statement. “In fact, after staff updated its oil and gas price and production projections, staff recommended that the original recommended change to 1.7 mills be reduced to 1.5 mills, which revision was well received by stakeholders.”
COGCC will monitor production and pricing to accommodate any changes in the marketplace, the release said.
Oil and gas industry groups have voiced concerns over the mill levy rate increase.
“We strongly support the need to fully fund the Colorado Oil and Gas Conservation Commission. This funding ensures the commission’s ability to properly regulate the responsible development, production and utilization of the state’s natural gas and oil resources, and to ensure the protection of public health, safety, welfare and the environment,” API Colorado executive director Lynn Granger said in a statement.
“With that said, we have concerns about the impact of this increase during these challenging economic times. Our industry, like so many others, faces unprecedented headwinds amid the COVID-19 pandemic and the pursuant drop in commodity prices. These challenges coincide with the industry facing a complete overhaul of its regulatory framework in Colorado. As such, we hope that the conversation surrounding the mill levy remains fluid and reactive to future changes in the economic and regulatory landscape. We look forward to playing an active role in those discussions.”
Source: Greeley Tribune