Committee approves bill returning some royalties to producers

Committee approves bill returning some royalties to producers
 
By Nicole Pollack
Casper Star-Tribune
Via Wyoming News Exchange
 
CASPER — Wyoming is one step closer to insulating its coal, oil and gas producers from future federal royalty increases.
Friday’s debate over Senate File 84 continued in the Senate Minerals, Business and Natural Resources Committee on Monday, with industry members urging the committee to advance the bill and conservation advocates arguing against it.
The committee voted in favor of the bill, which would partly offset a federal royalty increase by redistributing the state’s half of added revenue among affected producers.
Because higher federal royalties would cause state severance tax revenue to decrease, Sen. Brain Boner, R-Douglas, proposed an amendment that would use a portion of federal royalty revenue to replace lost severance tax dollars. Boner is the chairman of the select committee sponsoring the bill.
“This is an additional opportunity to make sure that we keep that revenue stream whole, in addition to providing the tax refund to the affected industries,” Boner said.
The committee approved the amendment.
Pete Obermueller, president of the Petroleum Association of Wyoming, told the committee that the royalty relief would help keep operators interested in Wyoming, where taxes and royalties are already higher compared with competitors.
“It is a small, small token — a gesture of something in Wyoming’s power to mitigate what the impact will be of a federal mineral royalty,” Obermueller said. “It’s a policy decision on the part of the state to slightly mitigate that impact in order to keep Wyoming competitive.”
The only Democrat on the committee, Sen. Chris Rothfuss, D-Albany County, was also the only opponent of the bill.
“I do not believe this does damage to the industry, because it’s across the board throughout the country,” Rothfuss said of the federal royalty increase. “If this were unique to the state of Wyoming, this would be a bad thing.”

The rest of the committee disagreed.
“The problem that Wyoming has is we’re 50% federally owned,” said Rep. Jim Anderson, R-Natrona County and chairman of the committee. “The reason this affects us so badly is because of how much we rely on federal land to produce our products.”
Rothfuss urged the other committee members to wait to see whether, and how significantly, a federal royalty increase affects the state’s oil and gas industry — if the federal government chooses to raise the rate at all. He was the only one to vote against it.
The amended bill will move on to the Senate for its first of three readings.
 
This story was published on Feb. 22.