American Oil and Gas Reporter - July 2016 - 95

ConventionCoverage: Oklahoma Independent Petroleum Association

OIPA Seeks To Level Field
For Oklahoma Energy
By Del Torkelson
LAS COLINAS, TX.-Finding themselves $1.3 billion short, Oklahoma lawmakers amended a portion of their state's
tax code that was designed to cushion
the blow low oil and gas prices inflict on
marginal wells.
In a budget move that came during
the 2016 session's final days, the legislature
capped at $12.5 million, Oklahoma's tax
credit for at-risk wells, which Oklahoma
Independent Petroleum Association Chairman Jeffrey McDougall noted, stymied
more than $100 million in gross production
tax refunds (see story, page 28).
He pointed that out during the Oklahoma legislative round table that took
place during the third day of OIPA's 2016
annual meeting, held June 10-13 in Las
Colinas. McDougall, who is president of
JMA Energy Company LLC in Oklahoma
City, offered his comments from the audience at the tail end of a forum that featured remarks by Senate President Pro
Tempore-elect Mike Schulz, R-Altus, and
House Speaker-elect Charles McCall, RAtoka.
But, at the same time oil and gas companies were being asked to sacrifice a
provision seemingly tailored for the current
oil and gas market, McDougall pointed
out, wind energy companies continued
to pay no taxes and also enjoyed more
than $300 million in state subsidies.
Considering the severity of Oklahoma's
budget calamity, McDougall commented,
"We really were shocked that wind was
not touched. It did not see a gross production tax or any sort of changes to its
emissions credits."
That trend may be almost over, both
lawmakers suggested in response to a
question OIPA Vice President of Legislative Affairs James Roller asked. Schulz
indicated he had been telling wind energy
producers for eight years they must prepare
for a GPT akin to oil and gas. That could
actually help the wind industry, he suggested, since oil and gas advocates enjoy
the credibility that comes with contributing
$700 million of GPT to state coffers.
"When I first started telling wind pro-

ducers that, they did not want to talk to
me," he recounted. "Slowly but surely,
some are coming around. That discussion
needs to continue. For the long-term interest of both their companies and Oklahoma, wind needs to pay something to
the state."
According to McCall, efforts to curtail
wind energy incentives failed to gain
traction in the Oklahoma House because
many representatives wanted to honor a
deal their leadership made the year before.
However, he said, that deal was nearing
its expiration.
"The wind industry is very aware that
things are going to change radically next
year," the speaker-elect related. "Do we
curtail those enough that your industry
feels like the playing field is level? I
don't know if we will accomplish that
fully in one legislative cycle, but there is
going to be a tremendous amount of pressure (on) the budget next year, and I have
told the wind industry to be prepared.
We are going to ask it to give up a lot,
and early indications are they understand
that."
Regarding his major goals, McCall
expressed a desire to ease the volatility
to which Sooner State revenues were
prone. "Too often, everything in Oklahoma

is either really good or really tough," he
reflected. "If we enact good policies, we
can create a situation such that when the
downcycles appear, we have some stability
and continuity in our revenues to uphold
core services."
Schulz concurred with that goal, and
also upheld the importance of helping
future lawmakers understand the lessons
their predecessors learned the hard way.
He recalled how the 2006 Oklahoma
Legislature spent most of a $500 million
surplus on ongoing expenses, only to
regret that a few years later.
"It is not only having a discussion
and putting policies in place, but instilling
into our caucuses and our successors the
reminder that you repeat history if you
do not know it," he mused. "It is about
creating a vision that goes beyond the
two-year election cycle and setting things
in place from which we may never see
the fruits. Hopefully, 10 years down the
road, people in the legislature are saying
they sure love what we did 10 years ago."
Meet The New Boss
Contrary to suggestions that 2016 is
shattering national political precedents,
University of Oklahoma political science
professor Keith Gaddie predicted this year

Pausing after the legislative round table on the third day of OIPA's 2016 annual meeting
are, from left, OIPA Vice President of Legislative Affairs James Roller, OIPA Chairman
Jeffrey McDougall, House Speaker-elect Charles McCall, R-Atoka, and Senate President
Pro Tempore-elect Mike Schulz, R-Altus. The convention was held June 10-13 at the Four
Seasons Resort in Las Colinas, Tx.

JULY 2016 95

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