OIPA calls for Campaign for 2% rate

As posted below, the OIPA has a new call to their membership to fund a campaign to make sure they keep the “special 2% “ rate on new wells. They say they want to raise money to put a new face on the industry!

They’ve put a ” new” face of the industry in Oklahoma alright – one of destruction of property and greed.

It is disheartening to see so much of the work so many of us have done over the last 30 years to improve our relationship with the Oklahoma public goes down the drain so fast.

The OIPA we belonged to put our state’s interest at least on par with our own.

Setting the priority of protecting a 2% tax rate that is so obviously low, especially in light of our states serious budget deficits, simply is an indefensible position – even more so when considering that the historical rate of 7% is lower than in any other horizontal drilling state in the US.

Our industry should lead by example, relinquish the special 2% rate, and ask that other tax give always be abolished as well.

Government should stick to funding it’s core functions. The marketplace should pick winners and losers in business.

Oil and gas industry Leadership should put civic responsibility ahead of our own special interest, especially when we have become a big part of our funding problems by getting the legislature to approve the lowest -in – the-nation- Gross Production tax at the expense of our children, our state’s infrastructure, healthcare, and safety net.

Join with us at the Oklahoma Energy Producers Alliance ( okenergyproducers.org).

Let’s put on “our Oklahoma hat” and lead by example, return our state to fiscal sanity and start by restoring the Gross Production Tax from 2% on new wells to the historical rate of 7% that 86% of producers and royalty owners already pay. Only then will our states largest industry have the moral standing required of civic leadership.

Read the OIPA Newsletter…

ANOTHER BATTLE IS LOOMING AND WE NEED YOUR CONTINUED SUPPORT

In the past week, I’ve had the privilege to meet with Oklahoma’s legislative leadership to discuss current trends in the state’s oil and natural gas industry as well as the upcoming 2018 legislative session AND the potential special session this fall.

With the Oklahoma Supreme Court rejecting the 2017 tobacco “fee,” it’s becoming clear that there will likely be a special session sometime this fall to deal with the budget shortfall. The court has yet to rule on the excise tax issue, but if they rule it as unconstitutional, the budget hole will be even greater.

What does this mean? Once again there will be cries to raise the gross production tax on oil and natural gas development. Our legislative team fought all session long to protect our drilling tax incentive on new wells which places the incentive rate at 2 percent for three years. After the three years, these wells go to 7 percent. This tax incentive has helped Oklahoma companies stay competitive and attract additional capital investment.

In recent weeks, you should have received your membership renewal invoice for the 2017-18 year. I respectfully request that you consider continuing your generous support of OIPA’s efforts to protect you and your business. I would also like you to consider an additional commitment for a new and aggressive public education campaign that will help put a “face” on our great industry.

Your OIPA team works hard every single day to ensure that the interests of our great industry are protected and promoted among policy makers at both the state and federal level. The more resources we have – the more effective we can be for you!

This past spring, OIPA led the way to pass historic legislation to allow for long lateral drilling. This will lead to incredible investment in Oklahoma production. We also led the way in protecting your gross production tax rate to incentivize new drilling in Oklahoma.

There is no other group in Oklahoma that represents the oil and natural gas industry better than OIPA. We like to call ourselves THE ASSOCIATION!

So please consider completing your membership renewal and send it in so that we can continue to fight for you. If you can add an additional amount to your membership dues, your efforts and commitment will be greatly appreciated.

I deeply appreciate your support of our efforts and we look forward to another great year in your service.

Tim Wigley
President OIPA

OEPA:
This is a message from one of the 3000+ small Oklahoma oil and gas producers that we are trying to protect. He asked to remain anonymous because he doesn’t want to offend the handful of companies doing this work that will even consider negotiations to pay for the damage they have done. Most say “sue us”.

AUTHOR:

I am a Small oil and gas producer from Kingfisher County. I would like to respond to the recent Journal record article where one of the horizontal fracking associations tried to gloss over the damage they are doing in the stack and scoop plays talking about all their “so-called” community service.

To start this off with I would like to state that I am part of a small family owned oil and gas company in the middle of the stack play. I have no problem with horizontal drilling, in fact, I believe it is a great tool to unlock reserves on the “tight” shale and lime stone zones. I have seen many wells drilled in these “tighter” formation and coexist and just fine with existing vertical wells and be “good neighbors” Where the problem lies is drilling these wells in the very loose, or porous, zones. This is where the good neighbor issue comes to play, in my opinion, with in the oil and gas industry.

I am going to start off with what I am seeing from a community side first then transition to the oil and gas side.

So, from the article, it appears that the major oil companies and the cronies in the OKOGA got together and put on a pig show for kids in Kingfisher. That is 20 miles from me and I heard 0 about this event. Granted, I don’t run in those circles but you would think word would get out about some “huge” pig show 20 miles away.

I want to start this good neighbor debate by comparing the Horizontal industry to the Wind Industry that is also active in my area. The wind company came into our area and rocked all the roads they plan on using to build the farms. They run water trucks up and down the roads all day to cut down on dust. The wind farm company is also very strict on their drivers when it comes to driving the county roads. They don’t tolerate the nonsense that happens on county roads. You get caught messing up, you’re fired. The company that is putting in the wind farm even donated to the town for their fireworks show this year.

Contrast that to the big oil companies drilling around here. They leave these roads in much worse shape than they were before they were drilling. Sure, they might put a little rock down in some spots but the pot holes in those roads are awful. The rock, sand, and water haulers fly up and down these county roads. They are giving any warm body with a CDL a truck to drive and letting them run free. They are constantly running people off the road and tearing up the county roads. Good luck getting them to fix it, too. The only way you get them to fix it is if it is too muddy to get an oil truck in. I know several roads around here that are almost impassable because of the holes beat in them from the truck traffic.

As far as financial help the major oil companies drilling around here have yet, to my knowledge, to donate to the town or school. There is a local Frac company that is donating to the town and school but that is it. The actual companies doing the drilling have not given anything financially to the local community. If you were to get the donor list from the local, school, church, or town event, you not see any major horizontal companies that are drilling in the area but countless local companies, many of them being the mom and pop oil companies that are getting ran out of business because of the number of wells that are being ruined by the horizontal drilling in porous lime stone formations. Because of this, the donor list will soon be shrinking at the local level and people will begin to wonder what happened, by then it will be too late. The majors will have come, filled their pockets, and left; leaving us to once again fend for ourselves and pick up the pieces.

The next part of “being a good neighbor” is not coming into a community and getting family, neighbors, and old friends to sue each other over minerals and stripper wells holding up leases so the majors can get their leases cheaper and easier and not have to worry about protest at the commission from the small producers already here. When I first started out in this industry 10 years I had countless mineral owners thank me for keeping their wells going while all the majors were leaving so they could still have a little “mailbox money”. I have even had a couple older ladies thank me for trying to fix their wells while in tears when I was plugging the wells on their lands because the old well was just too far gone to repair. Fast forward to the last 3 years and those same people are suing the small companies, being pushed to do this by the leasing agents of the majors with the promise of a “large” lease bonus when in reality it is actually less than they would have to pay the small producer that already bought the lease years ago.

Finally, being a “good neighbor” would be to right the wrong and fairly compensate your neighbor when you ruin their property. The small producers have been through the ups and down of the industry and kept that little stripper well going so you can drill the horizontal well, that in most cases the small producers were forced into through force pooling. When the major companies Frac that horizontal well it waters out the stripper well essentially killing it. When this happens, the small producer is left with nothing but a hefty plugging bill. When they approach the larger companies they are basically told, not our problem – sue us. This is very rare and option since the small producers most likely Don’t have the money to spend on 1 attorney, much the less multiple attorneys it would take to take on the big oil companies and their team of lawyers. Occasionally you hear of companies working out these differences but they are settling for pennies on the dollar for the same reason I mentioned above.

All of that being said, once again, I am not slamming horizontal drilling as a whole, I believe it is a great thing when applied in the proper place. I do believe that drilling these wells in depleted zones already being produced by vertical wells for 30-50 years prior is an awful idea and that is where the problems are lying.

Thank you for listening…

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