TEXAS OIL REGULATOR CALLS FOR STATE TAX BREAKS
Texas Railroad Commissioner James
Nugent, saying that the ailing oilpatch cannot wait for
Congress to act, today urged Texas state lawmakers to adopt
incentives to find new oil reserves and to exempt severance
taxes on oil produced from stripper wells.
    Nugent said in a speech to the Texas house of
representatives that the state must take the initiative in
molding U.S. energy policy and finding new ways to assist
troubled oil producers.
    His proposal to revitalize Texas' oil industry would exempt
stripper wells that produce 10 barrels of oil or less each day
from the state's 4.6 pct severance tax. He said that the
majority of Texas' oil wells fall within the stripper well
category and a price swing of two to three dlrs a barrel can be
crucial in determining if the well remains in production.
    Nugent also called for state lawmakers to exempt new
wildcat wells from the state severance tax for up to five years
as a financial incentive to explore for new oil reserves.
    Secondary and tertiary oil production, expensive methods of
production that inject water or gas into the ground to recover
oil, should also be exempted from the severance tax, Nugent
said. His plan would exempt existing secondary and tertiary
wells that produce at a rate of less than three barrels a day
for three years, or until the price of oil reaches $25 a
barrel.
    "We've been sitting back and waiting on two federal
administrations to develop a coherent energy policy for the
nation to follow. I say we have waited long enough," Nugent
said. "In other words, let's tell Washington to either lead,
follow, or get out of the way."
    Nugent said that the financial losses to the state treasury
by exempting marginal oil production from state severance taxes
would be more than made up by stimulating new business for the
oil supply and service industry.
 Reuter
