Oil industry groups split on budget plan

OPEA, OIPA disagree on size of tax increase

Disagreement continues between groups representing Oklahoma’s large and small independent oil and gas producers over how their industry should be taxed to help pay for teacher pay raises.

Leaders of the Oklahoma Energy Producers Alliance — which represents about 200 of the state’s smaller producers — said Thursday they have no plans to drop their support for an initiative petition that calls for raising the state’s gross production tax on all wells to 7 percent to fund $4,000 teacher pay raises.

They said representatives of Step Up Oklahoma had asked them to consider dropping their support for the proposed ballot measure and instead endorse Step Up’s package of proposals. Those proposals include raising the initial gross production tax from 2 percent to 4 percent to help pay for $5,000 teacher pay raises.

Step Up Oklahoma’s proposals gained endorsements earlier this week from the executive committee of the Oklahoma Independent Petroleum Association and the board of directors

of the Oklahoma Oil & Gas Association. Many of the state’s larger independent oil and gas producers participate in those two organizations.

“While we have great respect for the state leaders that have fashioned this deal and appreciate their leadership, we believe that those who put their name on the ballot, knock doors and campaign have earned the right to make decisions without being dictated to by anyone from the outside,” Mike Cantrell, co-chairman of the Oklahoma Energy Producers Alliance’s executive committee, said in a letter released Thursday.

“The role of a trade association should be to educate, inform and perhaps advise but never to dictate,” Cantrell wrote. “We sincerely hope that our Legislature can work together with all parties to come to an agreeable solution. We will continue to do our part to be of help in this process.”

OEPA leaders said they disagree with several of Step Up Oklahoma’s proposals, including a proposal to eliminate the depletion allowance for individual state income tax returns.

“There are 95,498 returns that this would affect to the tune of $19,141,000 total,” Cantrell wrote. “That would have a negative effect on those of us that

file individual returns. Of course, as we know, the big oil companies don’t care about percentage depletion.”

OEPA officials said they also disagree with Step Up Oklahoma’s proposals to have the governor and lieutenant governor run for office as a team and to have the governor appoint corporation commissioners instead of having those officials elected.

OEPA representatives said they believe having the governor and lieutenant governor run as a team would “put too much power in too few hands and in the process advantage urban Oklahoma over rural Oklahoma.”

They complained that making corporation commissioners appointive positions would provide an advantage to big oil companies.

OEPA officials said they would like to see a 4 percent

gross production tax rate established for wells that are put back in production after having been down for a year, as well as for “new zones to be opened in old wells.”

“This would raise revenue for the state by incentivizing putting marginal wells back in production,” Cantrell stated.

OEPA officials said they believe leaders of OIPA and OKOGA endorsed Step Up Oklahoma’s proposals “out of concern for the initiative petition passing.”

They also said they feel like they are being “slow played” by other oil industry groups in an effort to thwart the initiative petition.

OIPA President Tim Wigley denied the “slow play” allegation, saying his organization has just tried to represent the best interests of its members.

Wigley said he thought it was inconsistent for OEPA officials to call for an across-the-board 7 percent gross production tax, while at the same time asking for a special deal that would lower the tax to 4 percent for wells being put back into production after a year of being down.

While friction between the organizations remains, OEPA officials seemed to leave the door open for compromise.

“Our current position remains the same. We are now in discussions with leaders that have put this together and seem to be making progress,” Cantrell wrote. “At the same time, we are still supporting the initiative petition filed by Restore Oklahoma Now.

OIPA has a challenge to the proposed ballot measure pending in the Oklahoma Supreme Court.