Montana Petroleum Association President Alan Olson said the oil and gas industry generally goes into every legislative session playing defense.
“Every session there is a host of bills to make life miserable for the petroleum industry,” he said. “But, you know, we have been very fortunate in the past. None of them has been passed by the legislature. We have some fairly good bipartisan opposition to legislature that we would find harmful to our industry.”
MPA has just one ask going into this year’s legislative session. That’s for an exemption on equipment that provides pollution control.
“Currently that equipment is exempt for taxation for 10 years,” Olson said. “We’d like a permanent exemption on taxes on pollution control equipment.”
Among the examples of such equipment are engineered flares, which help industry ensure a 95 to 98 percent combustion rate on flares. Those cost between $25,000 to $30,000 to install.
With a tax exemption, the industry wouldn’t pay any taxes to meet that requirement.
Among the perennial issues Olson expects to see during the session is elimination of the drilling incentive for new production. That is an 18-month tax break on horizontal wells and a 12-mont tax break on vertical wells.
Without that tax break, Richland County Commissioners have said the county would not see much, if any drilling at all.
“If you eliminate the sales tax holiday, you eliminate all chances of having any production,” Richland County Commission Chairman Duane Mitchell told the Sidney Herald. “It’s kind of like cutting the nose off to spite your face.”
Around 76 percent of Montana’s oil is produced in the eastern half of the state, and Richland County is 43 percent of that.
Olson said commissioners from Richland County and the rest of eastern Montana have been helpful in past sessions when it comes to fending off efforts to eliminate the drilling tax holiday.
Olson said he hasn’t seen anything in particular yet with the session still in its early days that he’s concerned about.
“But we still have to keep our guard up and be concerned and stay involved in the process,” he added. “There is a bill to eliminate the board of environmental review, which has rule making authority and is a quasi-judicial board that can set penalties for environmental infractions. We are kind of mixed on that right now. We still have to have more discussion on whether we can support that.”
Olson said the oil and gas industry is starting to see things slowly turning around and has a lot of optimism that a better year is ahead.
However, he, and many experts in the industry, are concerned about where a Biden presidency will lead, particularly when it comes to the promised withdrawal of federal lands from new oil and gas permits.
“Forty-eight percent of the royalty payments, the leasing bonus and rental payments, comes back to the state where that land is located, so it will affect state budgets,” Olson said. “And a portion also comes back to counties where that mineral is located.”
Olson said he was not sure how much of an effect that would have in Montana yet.
“A lot of these Biden appointments are starting to worry me,” he said. “I have concerns about how that is going to affect not only our industry but the economy of the country as a whole and the economy of Montana.”
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