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Tuesday, February 18, 2014

Ohio Oil & Gas Association Upset About Changes in Severance Tax Proposal

OOGA thought they had a deal
From the Youngstown Vindicator:
Tom Stewart, president of the Ohio Oil and Gas Association, which represents drillers throughout the state, took exception to the substitute bill that would raise the top tax rate on the net value of natural gas produced from horizontally fractured wells from 2 percent to 2.25 percent. 
But the most significant change, he said, was a provision that would enforce that rate after two years of production, instead of five. 
“That’s a huge issue,” he said in an interview. 
The shorter window would give producers less time to recover the cost of drilling and overburden them with tax obligations, he said. 
“On average, five years probably gives level playing ground across the state of Ohio,” Stewart said. A two-year window before the higher rate kicks in “is not reality.” 
The initial severance tax bill, introduced in December and sponsored by House Speaker Pro Tempore Matt Huffman of Lima, R-4th, proposed a 1 percent tax on the gross value of oil and natural gas from fracked wells for the first five years of production. After that, the rate would have risen to 2 percent for high-producing wells and then dropped back to 1 percent when production declined. 
The OOGA was heavily involved in the crafting of that proposal, and the industry group publicly endorsed the bill on the day it was introduced with the backing of House leadership.
Read the entire article here. 

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