Oklahoma business energy news

[onthestrip]

Hooray, our state gave oil companies $321 million last year to drill for oil and they give back $1.3 million to schools. Thats one helluva deal for the oil guys.

Here is another op-ed from an actual oil company owner about our states boneheaded use tax reduction. While Im no fan of Kaiser, he is right on with this. Our state is giving away tax breaks when its completely unnecessary.
Tax incentive does not serve its intended purpose | Tulsa World

[BoulderSooner]

Hooray, our state gave oil companies $321 million last year to drill for oil and they give back $1.3 million to schools. Thats one helluva deal for the oil guys.

Here is another op-ed from an actual oil company owner about our states boneheaded use tax reduction. While Im no fan of Kaiser, he is right on with this. Our state is giving away tax breaks when its completely unnecessary.
Tax incentive does not serve its intended purpose | Tulsa World

our state didn't give oil companies anything

[HangryHippo]

our state didn't give oil companies anything

Not outright, but did you read the Tulsa World article?

[BoulderSooner]

Not outright, but did you read the Tulsa World article?

the op ed from George Kaiser ... yes i did

[onthestrip]

our state didn't give oil companies anything

Oh how I love your one sentence replies that never explain anything...

What do you call it then?

And did you happen to read these articles?
Time is right for Oklahoma policymakers to discuss merits of drilling tax credit | News OK
Tax credits for oil, gas drilling cost Okla. $321M | News OK
Oklahoma tax collections see boost despite declines | News OK

This oil boom isnt going to improve our state's core services if we keep needlessly giving away hundreds of millions.

[Bellaboo]

Not outright, but did you read the Tulsa World article?

I read the article - I'm not too sure you understand how this works. The horizontal drilling is extremely expensive, thus the tax is greatly reduced. Just the rig activity (thousands of jobs due to the drilling) with all the additional drilling makes up for a shortfall. This incentive is not giving away existing cofers, it's just not collecting up front what will be reaped 100 X over during the life of the producing wells.

[HangryHippo]

I read the article - I'm not too sure you understand how this works. The horizontal drilling is extremely expensive, thus the tax is greatly reduced. Just the rig activity (thousands of jobs due to the drilling) with all the additional drilling makes up for a shortfall. This incentive is not giving away existing cofers, it's just not collecting up front what will be reaped 100 X over during the life of the producing wells.

The wells are being drilled anyway, and if you somehow think that Oklahoma is reaping 100x more over the life of the wells, then I don't know what to tell you other than you're wrong. You're simply forgoing revenue for the state on something that's going to be drilled anyway. And if we were making it up with additional activity, why then would there be a burgeoning push to revisit the tax reduction? Certainly not because it's earning so much money for OK... We're needlessly subsidizing this process.

[onthestrip]

I read the article - I'm not too sure you understand how this works. The horizontal drilling is extremely expensive, thus the tax is greatly reduced. Just the rig activity (thousands of jobs due to the drilling) with all the additional drilling makes up for a shortfall. This incentive is not giving away existing cofers, it's just not collecting up front what will be reaped 100 X over during the life of the producing wells.

The only thing you need to read to know that we are needlessly subsidizing drilling is that North Dakota taxes this 10 times what we are, and theyre not slowing down up there. The oil underneath us isnt going anywhere, drillers will drill because there is oil there and prices are good. It may be smart to give tax breaks to attract new industries but here we are simply subsidizing an industry that doesnt need it. And at the expense of public education, health and roads.

[BoulderSooner]

The only thing you need to read to know that we are needlessly subsidizing drilling is that North Dakota taxes this 10 times what we are, and theyre not slowing down up there. The oil underneath us isnt going anywhere, drillers will drill because there is oil there and prices are good. It may be smart to give tax breaks to attract new industries but here we are simply subsidizing an industry that doesnt need it. And at the expense of public education, health and roads.

link?

[onthestrip]

link?

Link for what? That North Dakota's tax is at 11.5%, compared to our 1%..? Read the Kaiser op-ed that you said you read. Its in there.

[Bellaboo]

The only thing you need to read to know that we are needlessly subsidizing drilling is that North Dakota taxes this 10 times what we are, and theyre not slowing down up there. The oil underneath us isnt going anywhere, drillers will drill because there is oil there and prices are good. It may be smart to give tax breaks to attract new industries but here we are simply subsidizing an industry that doesnt need it. And at the expense of public education, health and roads.

I understand way more than you know, North Dakota Bakken Shale oil is a very high grade and high output, making it much more profitable. They easily pay the tax versus the risk. It's a matter of risk/reward, with the reward outweighing the risk.

[Bellaboo]

The only thing you need to read to know that we are needlessly subsidizing drilling is that North Dakota taxes this 10 times what we are, and theyre not slowing down up there. The oil underneath us isnt going anywhere, drillers will drill because there is oil there and prices are good. It may be smart to give tax breaks to attract new industries but here we are simply subsidizing an industry that doesnt need it. And at the expense of public education, health and roads.

Without the subsidy, they could ship those rigs that are drilling here to the Bakken Shale....the subsidy evens the field.

[onthestrip]

Without the subsidy, they could ship those rigs that are drilling here to the Bakken Shale....the subsidy evens the field.

Oh, so I guess there werent any horizontal wells being drilled before the tax reduction? Of course not.

When state revenues as whole are starting to decline, thats when you know it isnt working.

[ou48A]

I understand way more than you know, North Dakota Bakken Shale oil is a very high grade and high output, making it much more profitable. They easily pay the tax versus the risk. It's a matter of risk/reward, with the reward outweighing the risk.

It's very obvious that you know far more about the facts but this is a case where closed minds will never listen to any amount of factual reasoning, they have been brainwashed by people who stand to profit for their own personal gain..... making a response waste of time.

[onthestrip]

It's very obvious that you know far more about the facts but this is a case where closed minds will never listen to any amount of factual reasoning, they have been brainwashed by people who stand to profit for their own personal gain..... making a response waste of time.

Hahaha...brainwashed by people who stand to profit...kind of like what the oil companies do? The only thing I (as well as every citizen of this state) stand to profit if we cut these irresponsible tax breaks would be a better education system, better access to healthcare and maybe better roads.

[Bellaboo]

Oh, so I guess there werent any horizontal wells being drilled before the tax reduction? Of course not.

When state revenues as whole are starting to decline, thats when you know it isnt working.

The Mississippi Lime code was cracked about 2 years ago. Horizontal drilling, such as with shale, was the answer. Take a drive up to Crescent and Mulhall, as I did this past weekend. It's an all out oil boom going on. Pipeline crews and drilling activity everywhere, I passed several 'travel trailer towns' randomly in the country. Half the truck tags up there are from Texas......tons of jobs right now. You can thank that tax credit for a lot of these, and the horizontal drilling. My family owns and operates 3 deep wells in excess of 10,000 ft, and participates in another 18 or so. We just leased 420 divided acres to Devon energy in Western Payne county - we are a small company and are hoping for the best.

[PWitty]

Bellaboo answered it perfectly. The reason taxes are higher there is because the crude is very high quality and the initial peak production is much higher. Both of those lead to much higher profits in a short amount of time. By allowing companies to pay a lower tax rate for drilling expenses in fields like the Anadarko basin (in OK), the fields become more attractive because companies don't have to spend as much money money up front. This leads to a higher rate of return in the near term, which allows the company to drill more wells. Like Bellaboo said if you take away that tax incentive you almost surely decrease the amount of activity in the area. But it sounds like you already have your mind made up on how you feel about it regardless of the logical explanations given in favor of the tax.

[PWitty]

I'm not saying the tax on drilling carries couldn't stand to be increased a little, but there is most definitely a reason why OK's is so much lower than ND's.

[adaniel]

I'm not saying the tax on drilling carries couldn't stand to be increased a little, but there is most definitely a reason why OK's is so much lower than ND's.

I don't think anyone is advocating we get rid of all tax credits on drilling. Nearly every major energy producing state has some sort of incentive program, either with drilling or on severance taxes. People are just asking for a little balance.

This program was budgeted to only cost $150 million yet has more than doubled that. That's money that has to come from somewhere else. Whose taxes are you planning to raise to plug a $150 million hole? For the record I work in the industry, but I have to call things like I see it. Texas is also taking a pretty hard look at reining in (not getting rid of) some of their tax breaks.

One of the positive things about living in a major energy state is that severance and drilling taxes are money not paid out of citizen's pockets to fund crucial services. If you can't do that, your going to have to find the money elsewhere.

[PWitty]

I don't think anyone is advocating we get rid of all tax credits on drilling. Nearly every major energy producing state has some sort of incentive program, either with drilling or on severance taxes. People are just asking for a little balance.

This program was budgeted to only cost $150 million yet has more than doubled that. That's money that has to come from somewhere else. Whose taxes are you planning to raise to plug a $150 million hole? For the record I work in the industry, but I have to call things like I see it. Texas is also taking a pretty hard look at reining in (not getting rid of) some of their tax breaks.

One of the positive things about living in a major energy state is that severance and drilling taxes are money not paid out of citizen's pockets to fund crucial services. If you can't do that, your going to have to find the money elsewhere.

Sorry, I wasn't advocating for no increase for taxes on the drilling and completion costs. I was simply pointing out why it would be logical that OK would have a lower tax on well costs than ND. Some were speaking as if the cost to get the oil out of the ground and the profits made were equivalent in any basin across the country and that the only reason for the lower tax was corporate greed, and I was just trying to point out that's not the case.

[zookeeper]

Without the subsidy, they could ship those rigs that are drilling here to the Bakken Shale....the subsidy evens the field.

You gotta love the "conservatives" who love government giveaways ------- when they're giving it to Big Energy to "even the field." That's free enterprise?

[BoulderSooner]

You gotta love the "conservatives" who love government giveaways ------- when they're giving it to Big Energy to "even the field." That's free enterprise?

how lower taxes = a "giveaway" boggles my mind

[Bellaboo]

You gotta love the "conservatives" who love government giveaways ------- when they're giving it to Big Energy to "even the field." That's free enterprise?

Not sure you know how it works either........You can't give away something you don't have.....think about it...

[zookeeper]

how lower taxes = a "giveaway" boggles my mind

How does it boggle your mind? I have thought about it. You think about the following...a fictional analogy away from your industry.

Let's say that Oklahoma City had a tax on everything sold at, say, WalMart, of 10% and this is the national median, the norm. WalMart pays 10% of everything to OKC.
Tulsa decides to tax everything sold at WalMart at 1%. WalMart pays Tulsa 1% of all sales. This is NOT the median - NOT the norm.

On every $1,000.000.00 of sales, Walmart pays OKC (and most other cities) their 10% or.......... $100,000.00
But in Tulsa, on every $1,000.000.00 of sales, WalMart pays only $10,000

WalMart pays Tulsa $90,000.00 LESS than OKC and most all other cities.

On what planet is this fictional sweetheart deal with Tulsa NOT called a giveaway?


To further illustrate the fallacy of your logic. You argue the same in your support of the tax break. If it's not helpful, if it doesn't pad the bottom line of your energy company in Oklahoma, why the support for it to continue? Because it's money in the bank you don't have elsewhere. We can play with the semantics forever, but a sweetheart deal that amounts to a giveaway, a handout, a "subsidy", an "incentive", is what it is.

[ou48A]

How does it boggle your mind? I have thought about it. You think about the following...a fictional analogy away from your industry.

Let's say that Oklahoma City had a tax on everything sold at, say, WalMart, of 10% and this is the national median, the norm. WalMart pays 10% of everything to OKC.
Tulsa decides to tax everything sold at WalMart at 1%. WalMart pays Tulsa 1% of all sales. This is NOT the median - NOT the norm.

On every $1,000.000.00 of sales, Walmart pays OKC (and most other cities) their 10% or.......... $100,000.00
But in Tulsa, on every $1,000.000.00 of sales, WalMart pays only $10,000

WalMart pays Tulsa $90,000.00 LESS than OKC and most all other cities.

On what planet is this fictional sweetheart deal with Tulsa NOT called a giveaway?


To further illustrate the fallacy of your logic. You argue the same in your support of the tax break. If it's not helpful, if it doesn't pad the bottom line of your energy company in Oklahoma, why the support for it to continue? Because it's money in the bank you don't have elsewhere. We can play with the semantics forever, but a sweetheart deal that amounts to a giveaway, a handout, a "subsidy", an "incentive", is what it is.

It is an incentive that without would cause many drilling rigs packing up for better prospects and there are many better prospect out there all over the world.

We need to be careful that we don't needlessly and suddenly devastate many small Oklahoma towns with rash decisions. Fewer jobs would put additional strain on our states social services.

The, workers, suppliers, manufacturers royalty holders and more all pay taxes to the sate and local governments that in the end exceed the state incentive.

What I would like to see is the incentive tied to the price of crude and NG The higher the prices the lower the incentive and I would like to see the severance tax increased after one year.
When crude or NG prices are at very high prices I would like to see a certain % go into a state oil /NG fund that would be treated much like an endowment.