Apr 10 5:26 PM

Oklahoma oil industry stages 'rally for the rigs'

by The Stream Team @ajamstream

An attendee at the 'rally for the rigs' hold up a sign about horizontal drilling.

Jay F. Marks/@OKenergybeat

A group representing Oklahoma's oil and natural gas industry organized its first rally at the state Capitol Wednesday, calling for a continuation of tax breaks for horizontal drilling.

The Oklahoma Independent Petroleum Association reportedly bused 1,000 people to take part in the event, which they dubbed the "rally for the rigs."

The debate over whether to allow the tax incentive to expire in 2015 has divided Oklahoma lawmakers and voters. While the tax issue was one of the primary drivers of the rally, former OIPA chairman Mike Cantrell said it did not constitute a protest.

“We’re not here to protest anything. We’re not mad about anything," said Cantrell. "We’re just here to remind our legislative friends, as they take up policies, ... of how important our industry is."

Rally attendees shared images from the event using #RallyForTheRigs and #OneIndustryOneVoice:

A group representing Oklahoma's oil and natural gas industry organized its first rally at the state Capitol Wednesday, calling for a continuation of tax breaks for horizontal drilling.

The Oklahoma Independent Petroleum Association reportedly bused 1,000 people to take part in the event, which they dubbed the "rally for the rigs."

The debate over whether to allow the tax incentive to expire in 2015 has divided Oklahoma lawmakers and voters. While the tax issue was one of the primary drivers of the rally, former OIPA chairman Mike Cantrell said it did not constitute a protest.

“We’re not here to protest anything. We’re not mad about anything," said Cantrell. "We’re just here to remind our legislative friends, as they take up policies, ... of how important our industry is."

Rally attendees shared images from the event using #RallyForTheRigs and #OneIndustryOneVoice:

View the story "Oklahoma oil industry stages 'rally for the rigs'" on StorifyOklahoma oil industry stages 'rally for the rigs'Oklahoma oil industry group organizes rally amid debate on tax breaks for drilling.Storified by AJAMStream· Thu, Apr 10 2014 15:52:29 Just a few of our favorite signs out here. We're ready to #RallyForTheRigs @ the Capitol today! #oklahoma http://t.co/yy7gkXlxnLOIPA#OIPA Rally for the Rigs #OneIndustryOneVoice @OIPA @OERBAdvancing http://t.co/Y7oUY3UvDcAshley CampbellNow this is how you fire up the grill, @Halliburton style. #rallyfortherigs http://t.co/F4wYZMTqytJay F. MarksOklahoma introduced a one percent tax rate on horizontal drilling in the 1990s to encourage what was then a novel and experimental technique. Other types of drilling are taxed at a rate of seven percent.

Horizontal drilling has become the most common approach for new wells in recent years. In this procedure, the drill goes into the earth straight down, then slowly bends as it moves until it travels horizontally through a layer of oil-containing rock. As the technique has spread, the amount of foregone tax revenue for the state has risen to approximately $150 million annually.

Proponents say the incentive is essential for encouraging oil development. State Rep. T.W. Shannon (R-Lawton) has introduced legislation to make the one percent rate permanent.

State Sen. John Sparks (D-Norman) wrote in an op-ed that allowing the expiration would mean job losses to neighboring states:

With current annual drilling expenditures already at $12 billion in Oklahoma, eliminating the horizontal drilling tax incentive as proposed by a small faction at the state Capitol would trigger a series of negative economic outcomes. Potential effects of raising taxes include a decline in oil and gas production, reduced royalty owner income, and a loss of jobs to neighboring states.journalrecord.comOne Oklahoma oil executive has spoken out in favor of letting the tax incentive expire. Kaiser-Francis CFO Don Millican says tax rates don't significantly factor into companies' decisions about where to drill.

“Severance tax rates never make a difference in that decision," said Millican. “People are drilling where the hydrocarbons are."

To support his argument, Millican pointed to North Dakota, where an oil boom is occurring despite an 11.5 percent tax rate on drilling.

According to a recent poll, the majority of Oklahoma voters support ending the horizontal drilling tax incentive, with only 28 percent in favor of the tax breaks.

OIPA's attempts to influence the decision are not limited to rallies. OIPA controls two political action committees and has ranked among the top spenders on political contributions in the past several election cycles.

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Oklahoma oil industry stages 'rally for the rigs'

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