American Oil and Gas Reporter - May 2015 - 36

MPA Satisfied With Montana Session
HELENA, MT.-As the 64th session
of the Montana Legislature moved toward
its scheduled conclusion May 1, bills
supported by the state's oil and gas industry headed for approval while legislation to restrict or add expense was
tabled, according to the Montana Petroleum Association.
Headlines in Helena were dominated
by, among other things, an expansion of
Medicaid, an anti-bullying bill, and a bill
that would raise the highway speed limit
to 80 miles an hour on rural interstates.
Late in the session, published reports indicate, a battle flared over the state's
$10.1 billion biennial budget bill when
the House rejected amendments that included an additional $23.5 million in
spending sent over by the Senate. The
budget bill was sent to a conference committee.
Earlier, reports say, several infrastructure spending bills, including one sent
by Democratic Governor Steve Bullock,
were tabled, leaving SB 416 to funnel
$150 million in cash, bonds and borrowing
authority to local governments. The bill
includes several triggers that would allocate additional infrastructure funding if
state revenues rise.
Seen as a compromise bill, SB 416's
sponsor, Republican Senator John Brenden, says in a published report, "This is a
bill nobody really likes, but there is not
much time left. Do we want something,
or do we want nothing?"

Opposition Onslaught
As the 2015 session wound down,
MPA Executive Director Dave Galt noted
the association's success in beating back
a number of bills aimed at restricting oil
and gas operations in Montana. "It was
tough, but all in all, I think we fared
pretty well," he assesses.
But it was not for lack of trying by
the opposition, Galt adds. He reports,
"They brought four bills to revise the
drilling incentive alone. Others bills would
have revised regulations, increased setbacks, added water testing rules, required
closed-loop drilling, prohibited earthen
pits, added surface owner notifications,
and increased taxes. We saw them all
tabled. Some were along party lines, but
we had bipartisan support on many votes."
Galt continues, "There was a bigger
onslaught of bills aimed at the oil and
gas industry in Montana than we have
seen previously. These bills were written
craftily to look harmless, but they would
have devastated the industry. I am happy
to say they all were stopped."
36 THE AMERICAN OIL & GAS REPORTER

The MPA has "a record of success in
blocking bad bills," observes Galt.
At least this session, he adds, the association had equal success in getting
the bills it supported passed. Galt remarks,
"I am proud of the work we put into the
three bills we supported."
The first of those is SB 261, the
Greater Sage Grouse Stewardship Act,
Galt says. The legislation formalizes a
conservation program created by Governor
Bullock in 2014 and provides funding
for the effort to head off a federal listing
of the bird under the Endangered Species
Act. The program was an early priority
for Bullock when elected in 2012, Galt
mentions.
Amended versions of the bill were
heard in both the House and Senate, with
the Senate voting 42-8 on April 20 to approve the conference committee report
and the House following suit on an 8911 vote two days later. The amendments
added a state senator and a House member
to the oversight committee, which will
develop rules for grants, engage public
and private partners, and support "freemarket mechanisms for voluntary, incentive-based conservation measures," Galt
reports.
A separate bill that would have prohibited hunting sage grouse was tabled
in late March, according to published reports.

Tax Relief Bills
The Northern Oil & Gas Association
was the primary proponent of a bill to
raise the trigger price for stripper well
tax exemptions to $54 a barrel from $38.
HB 411 passed the House on March 11,
and got through the Senate on April 18
following an unsuccessful attempt to push
the tax trigger even higher, according to
NOGA President Mac McDermott.
Marginal wells' profitability was the
main impetus behind the legislation, he
explains. "The reason we picked $54 is
because North Dakota has a similar mechanism," McDermott reveals. "It does not
solve the problem of low prices, but
maybe it helps people weather the storm
until prices firm.
"The point is not to avoid taxes," he
adds. "We really have a problem with
taxing things that are uneconomic."
Representative Tom Richmond, RBillings, who sponsored HB 411, notes
the tax relief trigger for marginal wells
was last revised in 1999. Below the
trigger price, wells producing three barrels
a day or less are taxed at 0.5 percent,
compared with 6.0 percent above the

trigger price.
Patrick Montalban, president of Mountain View Energy and operator of 127
wells in Montana and North Dakota, testified at a hearing on HB 411 before the
Senate Taxation Committee that many
stripper wells were uneconomic at today's
prices. "This is a jobs bill," published reports quote Montalban's testimony. "It
takes as many people to operate a three
bbl/d well in Montana as it does a 700
bbl/d well in North Dakota. When you
consider the differential between (West
Texas Intermediate) and the price we get
at the wellhead, a large number of wells-
and the jobs that go with them-will go
away."
The third MPA-backed bill will create
a tax benefit for installing pollution control
equipment, which is an issue the association first proposed in 2013, says Galt.
"It means a huge reduction in property
taxes for MPA members," he attests.
Galt notes the previous version of HB
156 passed the legislature only to be
vetoed by Governor Bullock.
"We worked with the governor's office
in the interim," he reveals. "(Administration officials) have told us they are interested in seeing a bill. The discussions
between the governor's office, the legislature and MPA were very productive."
In this year's bill, the exemption from
property taxes includes any air and water
pollution-control equipment installed or
enhanced that provides an environmental
benefit or complies with state or federal
regulations. Equipment must be certified
by the state to qualify for the exemption,
Galt says. Equipment that provides carbon
capture, transportation or sequestration
likewise will be exempt from property
taxes, he adds.
Amendments to the bill include a 10year expiration of the property tax exemption and a 10-year sunset provision.
HB 156 passed the Montana Senate 3416 on April 20, and the House concurred
with the Senate amendments on April
23.
"Overall, we are pleased with how
things went this session," observes Galt.
"The opposition will always be there.
Our job is to show the importance of this
industry and head off bills that could
make things difficult as the industry struggles though a rough patch."
Ì

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