Ohio governor’s proposed shale severance tax lower than WV’s - WTRF 7 News Sports Weather - Wheeling Steubenville

Ohio governor’s proposed shale severance tax lower than WV’s

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By Pam Kasey - email

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A shale gas severance tax plan unveiled by Ohio Gov. John Kasich on Monday would be lower than West Virginia's.

In the proposal, the state would tax the production of natural gas from shale at 1 percent of market value and natural gas liquids, condensate and oil at 4 percent of value.

The tax rate for liquids would be 1.5 percent in the first year to allow producers to recover the cost of establishing new wells.

Low-volume gas wells — those producing less than 10 thousand cubic feet per day, or Mcf, on average — would be taxed at the lesser of 3 cents/Mcf or 1 percent of market value, and small, conventional natural gas producers would see their severance tax eliminated.

The proposal came as part of Kasich's proposed fiscal 2014 and fiscal 2015 budget.

Ohio's current severance tax is 3 cents/Mcf on natural gas produced and 20 cents per barrel on oil and condensates.

West Virginia's severance tax on gas and liquids alike is 5 percent on the value of produced plus 4.7 cents on each thousand cubic feet.

Kasich's office estimates the proposed tax would generate $45 million in fiscal 2014, $155 million in fiscal 2015, $305 million in fiscal 2016 and $415 million in fiscal 2017.

Kasich cited an Ernst and Young analysis showing that the proposal still would leave Ohio taxes on the oil and gas industry lowest among surrounding states.

The Ohio Petroleum Council, a division of the trade group the American Petroleum Institute, released a statement in opposition, saying, "… the last thing a recovering economy needs is more taxes; and the last thing Ohio's economy needs is a hefty tax increase that will harm job growth."

Kasich proposed a similar plan in 2012, but was unable to rally enough support.