Wyoming regulators look to stimulate oil production in the state with a new tax relief proposal that calls for a tax exemption until the price of WTI reaches $45 per barrel
The Wyoming legislature’s Joint Minerals, Business and Economic Development Committee has sponsored a bill proposing tax relief for oil and gas companies in a bid to stimulate an increase in production.
The bill calls for a tax exemption once the price of West Texas Intermediate reaches $45 per barrel for light sweet crude and $38 per barrel for sour grades produced in the state.
While the tax exemption will only be temporary, to be in effect no longer than 12 months after the benchmark price of oil reaches the necessary threshold, its sponsors believe it could have a positive effect on the oil and gas industry in Wyoming.
“We’re recognizing that if [the] price is too low, companies are not going to come back anyway. So, we’re gonna set it at maybe a break-even to get a company over the hump to choose Wyoming over North Dakota, to choose Wyoming over New Mexico,” said the president of the Petroleum Association of Wyoming, Pete Obermueller, as quoted by Wyoming Public Media.
While not the biggest producer in the United States, Wyoming did pump 102.1 million barrels of crude last year. That was up from 87.9 million barrels a year earlier, according to the Wyoming State Geological Survey. And yet the price collapse has severely affected production in the state: a year ago, there were 37 drilling rigs in Wyoming. To date, there is just one.
One of the oldest oil-producing regions in the United States, three years ago Wyoming grabbed headlines with its Powder River Basin—a legacy producing region that was attracting a lot of oil and gas investment thanks to low land prices and the recovery in the prices of oil. At the time, some expected the Powder River Basin to become something like a new Permian. This has not happened, but tax relief would certainly motivate drillers to expand once the price becomes right.
By Charles Kennedy for Oilprice.com
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