Possible Change in Tax Incentive for Oil and Gas Drilling
State legislators are expected to consider a bill this week that would adjust a generous tax incentive for the oil and gas industry and extend it to all wells drilled in Oklahoma.
A bill drafted on Monday calls for a new 2 percent tax rate on oil and gas produced in Oklahoma. The 2 percent rate would be in effect for the first 36 months of a well's production. After that, the rate would increase to the standard tax rate of 7 percent.
A tax incentive first approved by lawmakers in the 1990's dropped the tax rate for horizontally drilled wells from seven percent to one percent. Now that most wells are drilled horizontally, the reduced rate is costing the state hundreds of millions of dollars annually in potential revenue.