FISCAL NOTE
Date Requested: February 01, 2023
Time Requested: 04:43 PM |
| Agency: |
Environmental Protection, Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3061 |
Comm. Sub. |
SB448 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
Special Fund
Sources of Revenue:
Special Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
For the past several sessions, the DEP has negotiated potential solutions to the Office of Oil and Gas' inspector funding crisis. Currently, the agency has only nine inspectors who are responsible for ensuring the safety and integrity of more than 75,000 oil and gas wells in the state. This bill dedicates 0.75% of the oil and gas severance tax to the Office of Oil and Gas and adds annual fees depending upon the amount of oil and gas produced by each well. The bill also increases the costs of an expedited permit modification by $2,500 and eliminates the current cap on fees when OOG account reaches more than $1,000,000 per year.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
2,191,621 |
2,100,000 |
Explanation of above estimates (including long-range effect):
Oil and Gas fee bill has three revenue streams. The estimated increase in revenue is calculated as follows:
1) 0.75% of the Oil and Gas severance tax would go to the Office of Oil and Gas.
FY 2020 $125,675,507
FY 2021 $130,370,286
Average $128,022,896 x 0.75% = $960,171 per year
The reason only FY2020 and FY2021 were used in the the calculation is that marginal well bill passed in 2019 and reduced the amount of severance paid by wells producing less than 60,000 cubic feet per day, which reduced the severance collections. Therefore, data used prior to FY2020 would reflect a much higher revenue stream, which would be skewed and incorrect.
2) Tiered per well fee
Tier A Production > 250,000 cf per day: $350/well with a cap of 400 wells per
operator 2,218 billable wells = $776,300
Tier B Production > 60,000 cf per day to 250,000 cf per day: $75/well with a
cap of 400 wells per operator 479 billable wells = $ 35,925
Tier C Production > 10,000 cf per day to 60,000 cf per day: $25/well with a cap
of 4000 wells per operator 7,769 billable wells = $194,225
Revenue per year $ 1,006,450
3) An additional $2,500 fee for permit modifications
Based on FY2020 and FY2021, the OOG has averaged 90 expedited modifications per
year which would generate $225,000 per year. The increase in the fee may reduce the
number of expedited permits and generate less revenue.
Total new estimated revenue generated = $2,191,621
Memorandum
None
Person submitting Fiscal Note: Gary Rogers
Email Address: Gary.W.Rogers@wv.gov