Newspaper article THE JOURNAL RECORD

Tax Break Gives Hope to Producers

Newspaper article THE JOURNAL RECORD

Tax Break Gives Hope to Producers

Article excerpt

The most positive aspect in 1994 for the Oklahoma oil and gas industry was passage of a bill to provide tax relief on certain types of drilling, industry officials say.

The Oklahoma Legislature's passage of Senate Bill 841 _ by a unanimous vote in both houses _ brought some hope to the state's oil and gas industry while it is trying to survive a time of low prices.

The bill established a 28-month window in which producers can apply for gross production tax credits if they: Return wells to production that have been inactive for as long as two years. Conduct qualifying rework or recompletion techniques that increase current production. Drill new wells to depths greater than 15,000 feet.

New rules adopted by the Oklahoma Corporation Commission implementing the incentives were signed by Gov. David Walters in mid-December and will become effective Jan. 1.

However, industry representatives and members of the Commission on Natural Gas Policy _ where the bill originated _ are expected to ask legislators to amend the statute during the next legislative session by changing the tax "credit" to a tax "refund." They are hoping to have it amended early in the year since producers cannot apply for the credit (or refund) until July 1.

"Oklahoma's passage of the tax incentive package was a positive thing. While it doesn't provide a significant amount of financial relief, it is a demonstration that the state is concerned about the status of the domestic industry and recognizes its importance to the state," said Dr. Charles Mankin, director of the Oklahoma Geological Survey in Norman.

"It indicates to the industry that they're not out there by themselves on this issue," Mankin said.

"Senate Bill 841 was not only a great start, it also indicated that the Legislature has recognized our industry needs help and it (the oil and gas industry) is vital to our economy," said Mike Smith, president of the Oklahoma Independent Petroleum Association. …

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