Tax Breaks For Underperfoming Wells Could Cost The State

Wednesday, April 6th 2016, 6:45 pm
By: Karl Torp

Part of the state 1.3 billion dollar budget shortfall is associated to the tax break the state is giving struggling oil producers.

"It’s now being used in a way that was never really imaged," says Sen. Mike Mazzei about the state’s tax rebate program for struggling and unprofitable wells.

“The cost has skyrocketed from two to three million dollars a year to an estimate of over 150 million for this year,” says Sen. Mazzei.

The OK Tax Commission puts the number between 130 and 158 million dollars.

Sen. Mazzei wrote legislation that contained a two-year suspension of the “at risk” well rebate, but it was never voted through.

The Oklahoma Independent Petroleum Association wants to remind lawmakers that the rebate serves an important purpose.

“You have to realize if you take out the at risk provision you are also putting at risk that a lot of these wells will be shut in,” says James Roller with the Oklahoma Independent Petroleum Association.

Roller says shut in wells can’t be tapped again.

But Sen. Mazzei feels the program needs to change.

“We are facing a situation where the program needs to be addressed.”