04-23-2012, 09:09 PM
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Registered User
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Join Date: Aug 2009
Location: San Antonio, TX
Posts: 1,711
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And before saying taxing gas production is a bad idea, read up on how the taxes are structured in OK, and the impact on the current (and recent) budget issues:
http://okpolicy.org/files/GPT2011.pdf
http://okpolicy.org/blog/taxes/stand-back-we-dont-know-how-big-these-things-may-get/
Quote:
The exemptions, in most cases, are equal to 6/7ths of the gross production tax, which means that exempt production is taxed at 1 percent. Beginning July 1, 2011, deep wells below 15,000 feet will be taxed at 4 percent. Enhanced recovery pro-jects are fully exempt from the gross production tax.
However, these drilling exemptions may be limited in three ways:
By price – most drilling exemptions are suspended when the average annual index price of oil or gas is above a floor of $5.00 per MCF of gas or $30.00 per barrel of oil. The only exemptions not subject to a price trigger are those for enhanced recovery projects, horizontally drilled wells, and deep wells below 15,000 feet spudded af-ter July 1, 2005. With passage of HB 2432 in 2010, the price floors will rise annually based on the Consumer Price Index.
By duration – all oil and gas exemptions can be claimed only for a set length of time following a project’s initia-tion or completion. For most drilling, exemptions can be claimed for 28 months from the date of first sales. The exceptions are for:
Horizontal wells—the exemption is for 48 months or until project payback. HB 2432 passed in 2010 removed the project payback limit for production after July 1, 2011.
Deep wells - the exemption is for 48 months from the date of first sales for wells between 15,000 and 17,499 feet and 60 months for wells 17,500 feet and deeper; and
Enhanced recovery projects—the exemption is for five years or termination of the secondary recovery project.
By amount – For deep wells of 15,000 feet and greater, the total amount of exemptions claimed was capped at $25 million per fiscal year as of FY ‘09. In 2010, HB 2432 removed the cap and instead set the tax on all deep wells below 15,000 feet at 4 percent effective July 1, 2011. No other exemptions are capped as to their total amount.
Overall, the most generous exemption is for horizontally drilled wells, which can be claimed in an unlimited amount regard-less of the price of oil and gas and for a duration of 48 months.
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