HB 5398
Relating to dates and deposits for Oil and Gas Well Plugging
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- Passed House of Delegates
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill modifies West Virginia’s oil and gas severance tax rate. It adjusts the tax rate based on the average daily production of wells, with lower rates applied to wells producing less than specified amounts. Furthermore, the bill establishes a mechanism for dedicating a portion of the tax revenue collected at the lower rates to the Oil and Gas Abandoned Well Plugging Fund, contingent on the fund’s balance. Specifically, if the fund exceeds $6 million by September 30th of a given year, the lower tax rate will be eliminated.
Key provisions
- Adjusts the oil and gas severance tax rate based on well production levels.
- Establishes lower tax rates for wells producing below specified daily averages.
- Directs a portion of tax revenue from lower rates to the Oil and Gas Abandoned Well Plugging Fund.
- Sets a threshold of $6 million in the Abandoned Well Plugging Fund by September 30th to trigger the elimination of the lower tax rate.
- Requires the Tax Commissioner to issue an administrative notice by July 1st each year regarding the fund balance and tax rate.
- Provides a 10-year exemption for wells that haven't produced marketable quantities in the preceding five years.
- Specifies a calculation method for determining average production.
Who is affected
- Oil and gas producers in West Virginia
- The West Virginia Oil and Gas Association
- The West Virginia Legislature
- The West Virginia Tax Commissioner
- Property owners affected by abandoned wells
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