Early last fall (2021) several members of the OEPA executive committee and lobbying team met with Senator Zack Taylor in his office in Seminole to discuss the draft language for a bill to restore economic incentives for new enhanced recovery projects and at-risk marginal wells. The incentives were deemed a priority by OEPA for the 2022 regular session of the legislature.
Working within the energy committees of both the House and the Senate, last week the OEPA economic incentive language was placed into HB 3568, which also includes additional energy incentives. A brief recap of key provisions of SB 3568 include:
* New enhanced recovery projects, start date after 07-01-2022, shall be exempt from gross production tax for working interest owners. The incentive runs for 5 years, with a cap of $15 million dollars per year. No entity may claim more than 20% of the GPT exemption. OEPA was adamant for the 20% limit so that no large company could claim the majority of the total incentive.
* Economically At-Risk oil or gas lease. Any oil or gas lease with one or more producing wells with an average production volume per well of ten (10) barrels of oil or sixty (60) MCF or less of natural gas per day operated at a net loss or at a net profit which is less than the total gross production tax remitted for such lease during the previous calendar year when oil is less than $50.00 per barrel monthly average, and gas gross value is less than $3 .50 per MMBtu, shall be exempt from 4/5 of the levied GPT. This incentive has a $10 million per year cap.
Additional provisions of the bill not drafted by OEPA but endorsed by our organization are:
* Recycled Water. Oil and gas from wells drilled but not completed as of July 1, 2021, which are completed with the use of recycled water on or after July 1, 2022, shall be exempt from GPT levied from the date of first sales for a period of twenty-four (24) months.
* Oklahoma Emission Reduction Technology Incentive Act. “The Legislature hereby finds that the reduction of emissions from upstream and midstream oil and gas production, exploration, completions, gatherings, storage, processing, and transmission activities serves the interests of the citizens of Oklahoma and such emission reduction activities with new and innovative technologies should be encouraged and incentivized.”
HB 3568 was passed by the House with a vote of 70-6 on Thursday, May 19th. The Senate passed the bill 43-0 on Friday, May 201h at 3: 19 pm, with the engrossed bill now sent to the Governor for his signature.
As legislative chairman, I want to express my thanks to the work of our lobbying team, Greg Piatt and Syndey Hill, the executive committee of OEPA, and additional members including Tom McCasland, III and Jacob Pasby the CPA for Mack Energy, for helping draft and re-work the language and provisions of the legislation. Everyone’s help was essential to the enacting of this energy bill.
Finally, the membership of OEPA owes deep gratitude to Senator Zack Taylor for his diligence to work through the many steps to see this vital legislation be addressed and approved by fellow members of our state legislature.
David A. Guest
Legislative Chair, OEPA