The big players are not on board with small oil and gas companies’ request to increase Oklahoma’s gross production taxes.
The Oklahoma Energy Producers Alliance said restoring the tax to 7 percent would bring in up to $250 million a year. Members visited the state capitol Wednesday to drum up support for the increase.
Speaking at the Pipeline + Energy Expo, Oklahoma Oil and Gas Association President Chad Warmington said the rate is fine where it is.
"We have a very fair gross production tax rate. We pay an average of about 3 percent versus about 3.7 percent in Texas," Warmington said.
The gross production tax rate varies depending on when a well was started and how many years it's been producing, but the effective gross production tax rate is 3.2 percent.
The Oklahoma Energy Producers Alliance is made up of small, privately owned oil and gas firms. Keener Oil is among them. Former Tulsa Mayor Dewey Bartlett is Keener's president.
Warmington said he recently brokered a meeting between lawmakers and the heads of Devon Energy and Chesapeake Energy.
"They said, 'Look. Let us be clear. At the end of the day, we love Oklahoma and we want to be here, but if you guys change the regulatory tax scheme, we have an obligation to our shareholders to move our money where it can get the best return,'" Warmington said.
Warmington said recent oil production hotbed North Dakota’s tax is 11 percent, but the number of rigs and the price of oil are the more important considerations.
"If you look at where North Dakota is today with 42 rigs running and where Oklahoma is, 118, I'd say that our tax policy and our regulatory environment is definitely a more favorable investment," Warmington said.
OKGOA said a handful of big companies stand to invest $5.5 billion in their Oklahoma operations this year.
The energy producers alliance and OKGOA are also butting heads over a potential expansion of long horizontal drilling. It's currently prohibited in non-shale formations. Big energy companies want that prohibition lifted.
