SB 706
Modifying severance tax on newly drilled oil and natural gas wells
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Sign in to take action- Introduced
- Passed Senate
- Passed House of Delegates
- To Governor
- Became Law
Bill overview
This bill modifies the severance tax on newly drilled oil and natural gas wells in West Virginia. It establishes a three percent tax rate for oil and gas produced from wells drilled after June 30, 2026, and that utilize horizontal drilling techniques targeting shale formations. The tax rate will be applied for the first 24 consecutive months of production. Existing wells with lower production rates will be subject to different tax rates depending on their production levels.
Key provisions
- Establishes a three percent severance tax rate for oil and gas produced from wells drilled after June 30, 2026, and utilizing horizontal drilling techniques targeting shale formations.
- Sets a 24-month production period for the three percent tax rate.
- Defines specific production thresholds (cubic feet per day and barrels per day) that trigger different tax rates.
- Exempts natural gas provided to surface owners and natural gas/oil from wells producing below specified daily averages.
- Creates a provision for a reduced tax rate if the Oil and Gas Abandoned Well Plugging Fund exceeds $6 million.
- Specifies that the tax is calculated based on gross proceeds from the sale of natural gas or oil.
- Excludes wells utilizing horizontal drilling techniques targeting shale formations from certain tax rate calculations.
- Requires taxpayers to calculate average production based on actual production days.
Who is affected
- Oil and gas producers
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