OKLAHOMA CITY -The Oklahoma Legislature is making good on its promise to deliver targeted tax incentives to the state's energy industry, reaching final agreement on legislation that will help preserve Oklahoma's existing oil and gas infrastructure.
"We've made a concerted effort to keep one of Oklahoma's most important industries alive and profitable," said Senator Stratton Taylor, President Pro Tempore of the Oklahoma Senate. "We don't want to see any more energy jobs lost or another well plugged because of an unrealistic tax code."
"This is consistent with our policy of tying targeted tax incentives directly to economic development," added House Speaker Glen D. Johnson. "The energy industry has been the backbone of the Oklahoma economy for so many years, and can continue to be a contributor if we give it the tools to grow."
SB 911, dubbed "Project ALARM" (Adding Life to At-Risk Marginal wells) by its supporters, would provide tax incentives to marginal or low-producing oil wells. It would involve gross production tax refunds and other tax changes that would assist owners of marginal wells. The incentives will total $14 million annually.
"The gross production tax should not be responsible for the plugging of a single well," said Senator Kevin Easley, author of SB 911. "Plugged wells mean lost jobs and lost revenue. If we can keep those wells operating by offering a few tax incentives, both the state and the energy industry will benefit. "
"I view this legislation as an investment that will pay numerous dividends in the years to come, not just for the energy industry but for the state as a whole," said Representative Larry Rice, House author of SB 911. "If we can maintain a strong oil and gas infrastructure, we can preserve thousands of jobs and millions of dollars in revenue for future generations in Oklahoma."
Some 2,000 oil and gas wells were abandoned in Oklahoma in 1994 alone. If those wells had remained active, according to the Interstate Oil and Gas Compact Commission, Oklahoma would have reaped a number of economic benefits including:
-1.4 million more barrels of oil production;
-$28 million in product revenues;
-$2 million in gross production taxes;
-More than 250 jobs or the equivalent of a $3 million a year payroll.
According to the Oklahoma Independent Petroleum Association, the oil and gas industry accounts for about 12 percent of the state gross product with an overall economic impact of $8 billion. More than 35,000 Oklahomans work in the industry.