In the second week of March, the Montana Board of Oil and Gas Conservation:
- Issued three new oil well permits in Richland County.
- Reissued permits for 17 wells in Carter, Fallon and Roosevelt counties.
- Reported seven wells were completed in Roosevelt, Sheridan and Toole counties.
However, Montana oil development is dwarfed by the Bakken bonanza in North Dakota, which spills across the border with demands for workers, goods, services, housing and public infrastructure.
The cost of growth isn’t just in building infrastructure. As oil patch wages attract workers, other businesses and local governments struggle to recruit and retain employees.
“Right now Dawson County doesn’t have many wells, but we’re being impacted,” said Amy Deines, county economic development executive director. “Last week we had five new businesses come in.”
Eastern Montanans are lobbying the Legislature to provide access to resources needed to respond to boom demands. State and local governments need to adjust the oil revenue stream to put infrastructure where it's needed.
Some proposals on infrastructure needs in the oil patch area have already been killed. House Bill 452, which woulded have allowed adding up to $5 per night per room lodging tax (on top of existing lodging taxes), and Senate Bill 295, which would have eliminated the 18-month tax holiday on new oil wells, were tabled in committees.
On Thursday, Sen. Kendall Van Dyk, D-Billings, introduced Senate Bill 399, which would put a trigger on the oil tax holiday, similar to a trigger in North Dakota law. Van Dyk proposes that the tax holiday would be in effect when the price of oil is $50.07 a barrel or lower. At current prices, new wells would be generating more taxes that would be used to address local oil development impacts.
Municipal leaders and regional economic development directors are keeping close watch on House Bill 218, according to Alec Hansen, director of the Montana League of Cities and Towns. Introduced by Rep. Duane Ankney, R-Colstrip, this bill would divert about $10 million a year in federal mineral royalties that now go to the state general fund to a grant program for oil-impacted local governments.
These royalties, which come from coal, oil and gas development presently are split with 25 percent going to counties where development occurs and 75 percent to the state. Ankney’s bill would make the state share 50 percent. The bill is in House Appropriations Committee, which Ankney chairs.
Other oil impact proposals include:
- House Bill 589, which would ask voters to establish a permanent oil and gas trust fund similar to the coal trust established with coal revenues. The bill, sponsored by Rep. Tom Jacobson, D-Great Falls, is scheduled for a hearing today. At least 100 of the 150 legislators would have to support this constitutional amendment to get it on the ballot.
- Senate Bill 175, a comprehensive K-12 funding reform measure introduced by Sen. Llew Jones, R-Conrad, would divert some general fund money to oil-impacted schools and redistribute some revenues within oil-impacted counties. The bill passed the Senate and awaits House action.
Gov. Steve Bullock has proposed a one-time $15 million general fund appropriation for oil impact grants.
Folks in Eastern Montana are looking for ongoing funding in anticipation that the oil development will continue for many years. However, there is reluctance to tax oil to pay for oil impacts.
“We don’t want to do anything to handicap drilling,” said Jason Rittal, executive director for the regional economic development organization serving Wibaux, Prairie, Dawson, Carter and Fallon counties. “We’d like to see some drilling so in 18 months, at least we’d see some money.”
Lawmakers have tough decisions ahead. The affects of the Bakken oil boom – positive and negative – are being felt across much of Montana. Unfortunately, that growth isn’t yet generating revenue cover its costs.