Wyoming Independent Producers Association -- March 1997 Issue

Wyoming Independent
March 1997 Issue

  1. U.S. or Canadian Trade Representative?
  2. Wyoming Ranks Fourth In Gas and Sixth In Oil Reserves
  3. 1997 Wyoming State Legislative Action
  4. Tertiary
  5. Other Bills of Interest
  6. Workover/Recompletion Severance Tax Reduction
  7. Express Pipeline
  8. Educational Funding

U.S. or Canadian Trade Representative?

Charlene Barshefsky (acting U.S. Trade Representative) was confirmed by the U.S. Senate to become the new U.S. Trade Representative. The vote was 99-1 with Senator Wayne Allard of Colorado the lone dissenting vote. Ms. Barshefsky has represented the Canadian Government in the past, while in private practice.

Wyoming Ranks Fourth In Gas and Sixth In Oil Reserves

The U.S. Department of Energy just released its 1995 year end reserve estimates for crude oil and natural gas. Wyoming ranked fourth in natural gas reserves and sixth in crude oil reserves. Crude oil reserves have been declining since 1983 when reserves were estimated at 957 million barrels. According to the report Wyoming's oil reserves went from 565 million barrels in 1994 to 605 million barrels in 1995.


1997 Wyoming State Legislative Action

WORKOVER/RECOMPLETION


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Sponsored by:

Representatives
Baker (R-Thermopolis)
Deegan (D-Gillette)
Hines (R-Gillette)
Parady (R-Rock Springs)
Smith (R-Powell)
Stafford (R-Chugwater)
Senators:
Barton (R-Upton)
Erb (R-Gillette)
Gilbertz (R-Gillette)
Ayes(HOUSE): 43
Nayes(HOUSE): 17
Barker, Bensel, Berry, Boswell, Case, Decaria, Esquibel, Garcia, Massie, McGraw, Morrow, Nicholas, Reese, Robinson, Ryckman, Sessions, Zanetti.

Ayes(SENATE): 27
Nayes(SENATE): 3
Job, Mockler, Phillips

WIPA was successful in renewing the severance tax reduction for workovers and recompletions. (The WIPA-sponsored 1993 legislation expired December 31, 1996.) We defeated a damaging amendment sponsored by Rep. Charles Hessenthaler (R-Big Horn County).

Hessenthaler's amendment would have placed a strike price of $20 per barrel based on Platt's Oilgram price list of West Texas sour crude (used West Texas because Platt's doesn't track Wyoming sour). The bill went through and was signed by the Governor on March 1, 1997 WITHOUT A STRIKE PRICE.

The Workover/Recompletion reduced severance rate is retroactive to January 1, 1997 and is due to expire again on March 31, 2001. If you'd like a copy of the bill let us know. Please make an effort to thank the House and Senate sponsors!


TERTIARY

The terciary severance reduction was also renewed and was signed by the Governor on February 19, 1997. It is due to expire again on March 31, 2001.

Ayes(HOUSE): 51
Nayes(HOUSE): 8
Barker, Bensel, Berry, Case, Garcia, Massie, Morrow, Ryckman

Ayes (SENATE): 28
Nayes (SENATE): 2
Phillips, Vinich


OTHER BILLS OF INTEREST

HB#235
Changes th.e waiver for monthly severance tax reporting from less than $10,000 per year to $30,000 per year. (Put forth by the Department of Revenue and passed unanimously in both houses.)

HB#88
Would permit the establishment of a Senior Citizen Service District when approved by a majority of the voters. Would permit a district mill levy not to exceed 3 mills. (Bad news...potential ad valorem increase if passed by voters in the affected county.)

HB# 97
Permits the Department of Revenue to waive property tax penalties as part of a settlement.

HB# 126
Federal Natural Resource Policy Account- (Passed in both houses but died in Conference Committee due to discrepancies of dollar amount.) Created a special revenue fund to be expended by the Governor's office to monitor and challenge and litigate federal land, water, air, mineral and environmental policies which adversely affect leasehold rights, land uses, private property rights or water policy in Wyoming. (Appropriated $1.5 million House, $750,000 Senate)

SF#148
Authorizes the state to receive federal mineral royalties in the form of production.

SF#143
Creates a 9-member Tax Reform 2000 Committee to recommend standard and options for developing a FAIR, viable and economically competitive state and local tax structure capable of generating sufficient revenues to meet expected needs in the future. (The Governor has 3 appointments, Senate appoints 3 Senate members, House appoints 3 House members.) Committee reports to Governor and Legislature July 1, 1999.

SF# 109 & 113
Failed- Would have formed special taxing districts for regional utilities and airports. (Ad valorem increase)


WORKOVER/RECOMPLETION SEVERANCE TAX REDUCTION EFFECTIVE JULY 1, 1993

1996 1995 1994
NUMBER OF WORKOVERS 158 236 134
NUMBER OF RECOMPLETIONS 38 74 46
REPORTED SALES TAX COLLECTED
ON APPROVED PROJECTS
$844,343 $1,329,134 NA
INCREMENTAL INCREASE IN OIL AND GAS VOLUMES
OIL WORKOVER (barrels) 1,159,550 1,397,461 508,198
GAS WORKOVER (MCF) 13,491,078 16,511,137 3,336,938
OIL RECOMPLETION (barrels) 257,341 207,860 129,163
GAS RECOMPLETION (MCF) 14,519,861 7,340,933 1,901,758

WIPA is writing comments on the MMS proposal to value federal lease crude oil based on the NYMEX price. Look for our comments in the next WIPA newsletter.


EXPRESS PIPELINE

WIPA/IPAMS, represented by Hugh Schaefer of Wellborn, Sullivan, Meck & Tooley, as well as Campbell County represented by Carol Seeger, Deputy County attorney, presented testimony in U.S. District Court on March 14, 1997 defending Express' and the Federal Government's motion to dismiss.
Federal Judge Clarence Brimmer has taken the case under advisement and will issue an opinion within the next 2 weeks. If you would like the forthcoming opinion faxed or mailed to you, let us know.

On another front, according to the arrangement between Express and the State of Wyoming, Express had until February 1, 1997 to comply with the state land easement agreement which stipulated a "revisit" of the Platte Pipe Line tariffs paid by Wyoming producers. Express asked the Board of Land Commissioners for an extension until August 1, 1997, which was granted. We'll keep you advised.


EDUCATION FUNDING

A State of Wyoming special legislative session will begin on June 2, 1997. A 1995 Wyoming Supreme Court decision on public school education requires that a new school finance system be in place by July 1, 1997.

The consultants hired by the state have publicly stated that in order for education funding in Wyoming to be equitable, the legislature needs to come up with another $50-80 million per year in addition to the $600 million per year we already spend on 100,000 K-12 Wyoming students. Hearings will be held across the State and WIPA plans to be in Cheyenne during the special session.


WIPA
P.O. Box 2325
Gillettte, WY 82717-2325
Phone: (307) 686-1081 Fax: (307) 686-0560
E-mail: kennedywipa@vcn.com