Oil and gas industry hits back on paying more fees to do business in Utah

Oil and gas industry hits back on paying more fees to do business in Utah

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SALT LAKE CITY — A proposal to revamp the permitting fee for industry based on per-ton emissions is fueling strong objections from the oil and gas producers in Utah as well as school trust land administrators who say it will add to the growing exodus of firms fleeing the state, ultimately harming schoolchildren who benefit from the revenue.

The bottom line is dollars generated for state and local coffers from an industry that says it is already dealing with a slew of regulatory fees that make it hard for the Uinta Basin to compete with states like North Dakota, Texas and Oklahoma.

“We are chasing people out of the state by what we are doing in the Uinta Basin,” said Dave Ure, executive director of the Utah School and Institutional Trust Lands Administration.

“If we are going to have an increase in fees, what does rural Utah get out of it?”

Ure was speaking Wednesday to members of the Natural Resources, Agriculture and Environment Interim Committee after the state’s top air quality regulator detailed a proposal that would recoup more money from industrial polluters.

As it stands, industry pays for permitting fees based on the hours it takes for the Utah Division of Air Quality to review the permit, said Bryce Bird, division director.

An analysis showed the total cost of the permit is shouldered by one-fourth by the division, another fourth by federal grants and the remaining half is subsidized by general fund monies from the state of Utah.

Shifting it to a per-ton basis for emissions would put more of the costs on industry, Bird said, noting his division was asked to explore the idea based on a request by legislators.

Rikki Henrko-Browning, president of the Utah Petroleum Association, said the Uinta Basin is already at a competitive disadvantage with other oil and gas producing regions in the United States.

“This proposal only further limits our ability to be cost competitive with other basins,” she said, noting an announcement earlier this month that Crescent Energy was ditching all of its Utah assets.

The company, she said, was producing about 20,000 barrels a day — or about a fifth of the state’s oil production.

“The state has a mutual interest in supporting a strong oil and gas industry” because of the revenue it generates not only for Utah in general but specifically rural economies, she said.

One producer told her the proposed change would add $250,000 in costs to their operation, and producers also have multiple permits that have been in effect for years that would come under the new structure, she noted.

She said at the very least, any revised fee structure should be phased in over a year’s time to allow producers a chance to adjust.

Ure was more blunt and said that oil and gas wells on tribal lands operate under an entirely different, and more relaxed, regulatory scheme that fails to distinguish the harsh reality of the DNA of where emissions are generated.

“Tribal (producers) have another standard, and we have another standard, and those barbed wires fences are just not strong enough to (prevent) the co-mingling of emissions.”

Ure painted a monetary picture of what one Wolverine well in Sevier County has delivered for Utah in its operating lifetime, delivering more than $17 million to school trust land beneficiaries, $242 million for the federal government, $20 million for the county and $67 million in severance taxes.

“We don’t own oil and gas wells,” he said, “but we make good money.”

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Amy Joi O'Donoghue
Amy Joi O’Donoghue is a reporter for the Utah InDepth team at the Deseret News with decades of expertise in land and environmental issues.

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