HB3568: Creates the Oklahoma Emission Reduction Technology Incentive Act, Okla. Stat., tit. 68, §§ 55006-55012, that establishes a Rebate Program and a Revolving Fund designed to provide incentives for technology projects that reduce regulated pollutants from stationary sources and reduce emissions from upstream and midstream oil and gas exploration, production, completions, gathering, storage, processing, and transmission activities.
Amends Okla. Stat., tit. 68 § 1001 to create gross production tax exemptions and refunds for certain secondary and tertiary recovery projects.
Amends Okla. Stat., tit. 68 § 1001.3a modifying definitions, exemption amounts, total amount of refunds, and the refund procedure applicable to exemptions from gross production tax.
Effects: Operators of qualified Emission Reduction Projects can receive a tax rebate of up to 25% of their project expenditures subject to an annual total rebate limit of $10,000,000 and the failure to fund the newly created Oklahoma Emission Reduction Technology Incentive Revolving Fund at the level necessary to provide $10,000,000 of rebates. This incentive might provide some marginal reduction in harmful emissions and its raid on Oklahoma’s general revenues is small.
§ 1001 modifications provide a five-year Gross Production Tax exemption for production resulting from secondary and tertiary recovery projects approved or started on or after July 1, 2022, subject to a total a tax refund limit of $15,000,000 annually and a 24-month Gross Production Tax exemption on production from wells drilled by not completed as of July 1, 2021, that are subsequently completed with the use of recycled water on or after July 2022, subject to a total refund limit of $10,000,000 annually. Persons eligible for both exemptions must choose one or the other. This incentive is a totally unjustified raid on Oklahoma’s general revenues because oil and gas prices are sufficiently high to induce enhanced oil and gas recovery projects without the exemptions.
§ 1001.3a modifications alter the definition of “economically at-risk oil and gas leases for calendar years 2022 and beyond to include any oil lease operating while the gross value of the production of oil is less than Fifty Dollars ($50.00), on an average monthly basis, based on a per-barrel measurement of forty-two (42) U.S. gallons of two hundred thirty-one (231) cubic inches per gallon, computed at a temperature of sixty (60) degrees Fahrenheit or gas lease operating while the gross value of the production of gas is less than Three Dollars and fifty cents ($3.50), on an average monthly basis, based on a measurement of one million (1,000,000) British thermal units (MMBtu). They also provide for a 4/5ths Gross Production Tax Exemption for wells otherwise subject to a 5% Gross Production Tax Rate subject to a total refund limit of $10,000,000 annually and require that claims for refunds shall be paid in the form of a one-time payment. This raid on Oklahoma’s general revenues is small, but it encourages the continued production of oil and gas from uneconomic leases, thereby increasing carbon emissions and postponing the re-use of land and other resources to more economically and environmentally beneficial uses.
Outcome: The Sierra club opposed this bill. However, it passsed Senate 43-0; Passed House 70-6; Signed into Law May 26; Effective Date July 1, 2022.