A legislative committee killed a bill Tuesday that would have taxed natural gas flaring from oil wells.
When there isn’t pipeline or processing infrastructure available to move the natural gas, companies simply burn it. The draft bill would have required severance tax payments on gas flared more than 180 days after the well starts producing. Representative Michael Madden, one of two supporters of the bill, said the proposal wasn’t a tax increase, but rather the repeal of an exemption.
“You know, if you’re a poor little gas molecule coming up that pipe, alright, you don’t know if you’re going to go into the pipeline and do some good for somebody or whether you’re going to be flared, right? But we make a distinction about it by saying if it’s flared, it’s tax-free, but if it’s not flared, we’re going to tax it.”
Petroleum Association of Wyoming President Bruce Hinchey told the Joint Revenue Committee that taxing flared gas wouldn’t be fair because companies don’t make a profit off of it. He warned that if the bill were to be enacted, it would almost certainly result in litigation.
“Over not a large amount of gas, that’s probably going to end up getting settled as time goes on, with these companies, as they drill more wells and can make it profitable then to gather all the gas and run it to processing plants.”
Estimates of how much revenue the state is losing because of flaring vary widely, from tens of thousands to hundreds of thousands of dollars.