A bill granting tax exemptions to oil and gas companies failed Monday in the Wyoming House after sailing through the Senate.
The bill’s sponsor, Sen. Eli Bebout, R-Riverton, argued that cutting severance taxes in the third and fourth year of production for new wells would incentivize more drilling in Wyoming. Oil and gas wells produce the most volume in the first few years under current drilling practices, the Senate president and oilman said.
The decline curve in new wells has impacted Wyoming revenue streams as wells drilled a few years ago are producing less oil while new drilling hasn’t increased enough to pick up the slack, some argue. The imbalance has been exacerbated by the lull in drilling during the two-year bust in crude prices nationally.
“We need more rigs out there and more people drilling,” Bruce Hinchey, president of the Petroleum Association of Wyoming, said in an earlier interview. “I’ll take anything I can get to try and get that up. More rigs and more wells means more revenue to the state and the counties.”
Others argued that incentives via tax breaks lack a proven track record. A tax cut like the one proposed would likely hurt Wyoming in the long run, according to studies from the University of Wyoming, opponents argued.
“It seems like a lot of good intentions in this bill,” said Phoebe Stoner, executive director of the Equality State Policy Center, in a statement Monday. “But, there’s no empirical evidence that severance tax exemptions drive production.”
The bill failed in the House Revenue Committee 3-6.