Gas Drilling Boosts State Revenues
By Eric Kelderman, Staff Writer
High prices and strong energy demands are fueling a boom in drilling new oil and natural gas wells, according to a recent report. And the taxes on gas and oil pumped from those wells are filling state tax coffers.
A survey of 24 states found the issuing of permits for new wells in the first five months of 2005 has increased nearly 5 percent over last year, according to information from the Interstate Oil and Gas Compact Commission (IOGCC), which tracks energy issues for 37 state governments.
Texas led the nation with a total of 5,514 new drilling permits issued through May 15, 2005 -- a 27 percent increase over the same period last year. Oklahoma (5,413), Wyoming (4,053), Colorado (3,700) and Kansas (1,089) rounded out the top five states for new permits.
Tax revenues from oil and gas drilling have doubled in many states since 2003, according to the IOGCC.
Most of the new permits are for natural gas wells. Although 85 percent of the nation's natural gas is from domestic supplies. Demand for natural gas, which emits fewer pollutants than coal, has grown steadily in recent years and now provides a quarter of the nation's heating and electricity.
As a result, the price of natural gas has more than doubled in recent years and made it feasible for energy companies to pursue projects once considered too expensive, said Dan Naatz, director of public resources for the Independent Petroleum Association of America.
Gas producers are also more optimistic about the future price of their product because of a focus on reducing dependence on foreign oil and gas supplies, he said. Because of those policies, both state and federal regulators are increasing their staffs to handle the larger number of permits being sought, Naatz said.
Peggy Laramie, a spokeswoman for the American Gas Association, cautioned that while the number of wells may be increasing, the amount of gas being pumped from the ground is not increasing at the same rate.
A number of the nation's largest gas fields have seen declining production for a number of years, she said. And most of the new wells being sought are for natural gas trapped in underground coal beds -- a reliable source, but one that may take longer to tap because large amounts of water must first be pumped out of the ground, Laramie said.