Title:سیاست های مالی دولت و ایالت های محلی ویژه استخراج نفت و گاز طبیعی

این وب‌کست فقط برای مشاهده در دسترس است. برای اعتبارات AICP CM قابل استفاده نیست. ۳-۱۵-۲۰۱۳ ارائه کننده: مارک هاگرتی توضیحات: قیمت بالای نفت و گاز طبیعی در دهه گذشته، همراه با فناوری جدید، باعث رونق سوخت فسیلی در سراسر غرب شده است. حفاری برای نفت و گاز طبیعی یک فعالیت اقتصادی پر تاثیر است. توسعه غیرمتعارف نفت امروز و اثرات آن از جنبه های مهمی با رونق نفت در گذشته متفاوت است. این وبینار رونق جدید سوخت فسیلی «غیر متعارف»، ردیابی تولید، اشتغال، و روندهای مالی را در تلاشی برای درک بهتر فشارهایی که شهرهای رونق با آن مواجه می‌شوند و شناسایی بهترین شیوه‌ها برای بهره‌مندی از این بازی‌های جدید سوخت‌های فسیلی غیرمتعارف، نمودار می‌کند. این جلسه توسط APA Western Central Chapter حمایت می شود. ارائه کننده مارک هاگرتی از Headwater Economics، یک گروه تحقیقاتی غیرانتفاعی مستقل خواهد بود که ماموریت آن بهبود توسعه جامعه و تصمیم مدیریت زمین در غرب است.

قسمتي از متن فيلم: Hurting all attendees are in listen-only mode hello my name is benjamin lee and i just want to welcome everyone it is now 1 p.m. so we’ll begin our presentation shortly today on March fifteenth we’ll have our presentation on state and local government fiscal policies specific to oil and natural gas extraction for help

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Org CM select today’s date select today’s webcast it’ll be available for 1.5 cm credit at this time I would like to introduce our moderator for today April she will be the moderator from western central chapter and our presenter is Mark and he applies economics and physical data to real-world land use and development

Challenges he has experienced as a researcher trainer and facilitator in Western communities with an emphasis on land use and Community Planning mark holds a bachelor in economics and masters in geography from the University of Colorado and I’ll end it over to mark hello hello thank you i will show my

Screen and start my slides here thanks everyone for joining along and please you ask questions as we go through them and to present a bunch of information today and I want to make sure that if there’s something that I go through too quickly or if it doesn’t make sense that

You have a chance to stop me and ask a question about it so I want to talk today about the unconventional oil and gas plays really taking off across the country specifically I’m going to focus on the Bakken which is located mainly in North Dakota but spills over into

Montana as well but the lessons from the Bakken can be applied to shale plays across the country from Texas to Pennsylvania into Colorado and elsewhere for both oil and natural gas and what I want to try to communicate is that these shale plays bring tremendous opportunities for communities in terms

Of new employment potential and revenue from oil gas to local governments and state governments but they also come with a significant new set of challenges and planners are going to play a critical role in helping communities try to mitigate those challenges both during the boom times when there’s significant

New activity moving into a community and also to try to create benefits over the long term as these plays play out and ultimately after they are over whether that comes in a sudden bust or whether it plays out over a long period of time 10 critical to the ability of

Communities and planners to work together to try to resolve a lot of these challenges his fiscal policy that communities have the money that they need and the time to try to mitigate some of the impacts so the goal of the goal of fiscal policy and the goal of

Planning for most of these communities is too sorry is to try to make these communities a better place to live as a result of natural resource wealth that they have in their communities we know that the economic benefits can be significant this is a picture of Miles

City Montana it has had negative growth in the past decade from 2002 2011 they lost close to two percent of their population on average while the United States has grown closer to nine percent over that period so the prospect of reversing long-term declines and creating some new jobs is pretty

Attractive to these communities we also know that there are challenges associated with it particularly on infrastructure because of the industrial nature of the development is the picture of truck traffic on a rural county road in North Dakota either coming to or from a well and I think we don’t have to talk

A lot about the impacts that are coming on communities both in terms of infrastructure because of industrial X and on communities themselves in terms of pressure on housing pressure on water in sanitation systems Public Safety and police services so managing these challenges during the boom is really

Important in fiscal policy plays a big role we also know that in the past resource booms have gone bust this is a photo from May third 1982 in rifle colorado this was black sunday when the colony shale project from shell essentially closed its doors overnight lots of people were thrown out of work

And the community was plunged into a deep recession that they didn’t emerge from for quite a while so we want to try to manage the bus as well how do we take advantage of the opportunity during the boom to put us in a better place and we also know that the

Dynamics of boom and busters still with us this is a headline from western Colorado in the same region from just a couple of years ago as the natural gas boom that took off in the early part of this century from about 2003 2 2008 went bust with the recession that we all

Experienced and as you know natural gas prices have remained very low and those jobs have not come back or they have been slow to come back so not only his boom and bust not left us as an important dynamic to plan and prepare for but in many respects we feel that

These new unconventional shale plays might make us at greater risk an exposure to that boom and bust and I’ll talk about that in a little bit and ultimately what it means for communities is in spite of best intentions and in spite of all of the activities and plans

That we can try to put in place to lessen some of the impacts these communities are going to face a predictable set of pressures and there are tools that we can try to use to help them manage those although some unintended consequences are inevitable there are things that we can do to try

Try to make these booms play out more smoothly in these three more I want to talk about names today Marcus are to interrupt but you speak closer to the mic and the speak louder please okay yeah sorry all right thank you want to talk about three things today I want to

Provide a characterization of these new shale place and these are resources that are being extracted thanks to new horizontal drilling technology and fracking hydraulic fracturing of the resource and it’s really high prices that have allowed these plays to take off and I want to just a little bit

About how they perform and how they work to get a sense of the kinds of community challenges that will be facing I want to talk about the differences in state fiscal policy every state has some way of deriving revenue from the energy that’s produced from the

Ground but no two states do it the same and the way that states tax and spend the resources have a big implication for the outcomes that communities might be able to expect and then I want to end with an example in Montana on Montana side of the Bakken to illustrate how

Some of these dynamics play out so first of all what makes today’s shale boobs so big a lot of you have probably heard that these are game changers that there’s been a significant amount of new production out of both oil and natural gas shale plays across the country and

That’s certainly true you can see the brown line the crude oil production on a u.s. scale has turned around for the first time in decades we’re now producing more oil up year-over-year than we did in past so we’ve reversed the trends of decline in natural gas we’ve actually produced so much natural

Gas that we’ve put ourselves in a position of oversupply and prices remain low for that resource so there has been a tremendous amount of new production from the place a big part of that production is coming from the Bakken these two curves show production in both Montana and North Dakota the orange line

That you see skyrocketing there up to 23 million barrels of oil per month is from North Dakota Montana has had a smaller boom in the old Cooley fields down there at the bottom and it looks like there might be returned to drilling in Montana now these are big place there’s a lot of

Oil in the ground and they are producing a tremendous amount of the resource and they’re producing the tremendous amount of wealth these communities but it’s important to understand the nature of them and one of the things that’s clear as we produce these resources is that they are less productive than the

Conventional place that we had in the past illustrated by the resource triangle these resources have always been there and there is a tremendous amount of resource available but as we move down through the resource triangle from conventional pools of liquid oil and natural gas that are trapped by

Geologic formations and now we’re trying to extract oil directly in some cases from the source rock if it costs go up and the productivity of the activity goes down so it is really a reflection not of us finding new resources we’ve known they’ve been there but really of developing new technology and having

High prices that have made the extraction of these resources available to us I want to just give you an example to characterize how different shale plays are from some of the conventional plays in the past if you look at Prudhoe Bay in Alaska that play has developed or

Produced about 11 billion barrels of oil and still producing over the last several decades the area of production in Prudhoe Bay is about 200,000 square miles and about 1,100 wells have been drilled to produce that volume of oil from the Prudhoe Bay formation if you look at the Bakken as comparison the

Bakken has depending on whose estimates you listen to a similar amount of oil as Prudhoe Bay may end up producing more oil than came out of Prudhoe Bay it may end up producing less we’re not sure yet but it is a it is a dramatic resource on

A similar scale and yet it’s spread not only over 200,000 square or 200,000 acres but 200,000 square miles of area and some of the estimates suggest that as many as forty eight thousand wells might be produced across the Bakken to produce a similar amount of oil it was

Produced from just 1100 wells in Prudhoe Bay so the scale and the intensity in the space of development for the shale place is really unprecedented in our history of understanding of how these things play out in conventional place we also know that the costs are going up

This graph I update it often and it’s it’s already out of date the average cost of drilling a new well in the Bakken today is about eight million dollars in Montana and it can be as high as 10 million dollars in North Dakota a lot of that has to do with upward

Pressure on wages and competition for scarce resources so that that the price of securing labor and materials and services to drill these wells is inflated because we’re in the midst of a boom but it is still true that in order to drill a well that might

Be several miles deep and extend for a mile or more horizontally underground and then is subsequently fracked it’s much more expensive to develop these resources than it has been in past and at the same time the productivity per well has fallen and we might be turning that around a little but it’s unlikely

We’ll get back to the productivity that we had from big conventional wells in places like Prudhoe Bay and the resources also heterogeneous it’s not evenly distributed across the landscape there’s sweet spots in these place where the shale is a little bit thicker or thinner and it means that from a

Community perspective we might see drilling activity moving around quite a bit focusing in one area until wells are evenly spaced and played out and then moving on somewhere else and then maybe returning when secondary production becomes an option as production declines so we’re going to see a lot of activity

Moving around these landscapes and unpredictable ways due to the heterogeneous nature and I’ve alluded before to the idea that these wells are less productive this is a graph of an actual well production profile for all wells that have been drilled in the Montana side of the Bakken in the helm

Cruelly field and you can see that it produces a significant amount of oil 246 barrels per day average in the first month of production but that production declines quickly and by the 18 month of production it’s producing only about ninety five barrels per day that represents about a sixty-five percent

Decline over the first 18 months of the production life of the well and it continues to decline although stabilizing at lower levels what it means for these shale plays is that we have to continue to drill new wells in order to maintain or increase production this graph is showing the total field

Production from the unruly in Montana and each of the layers of varying red stacked areas there in this graph represent wells that were drilled within a particular year so at the very bottom we started with just one well in two thousand year 2000 we started adding new

Wells at a pretty rapid rate and you can see production increased dramatically but even as we continue to drill wells and the young cooley field production started to flatten and it even started decline even as new Wales where be at were being added to the field and that’s

Because of the steep production profiles of these wells require that in order to maintain production you have to drill new wells and if you want to not only maintain but increase production the rate of drilling is essentially continuous so it’s breaking down the way we understand the old field development

Model from oil and gas it used to be that we had an idea that we’d come in and drill a number of wells in a field put in the infrastructure in terms of pipelines and other capacity and then we could walk away from that field and it would continue to produce at a

Relatively stable weight and then slowly start to decline in the Bakken in another shale place because of the decline curves we now have essentially a continuous drilling and production phase in other words as long as we want to maintain production we have to continue drilling new wells so we’ve broken down

That old model and it means a couple of things for communities some people have described that the need to constantly drill new wells is the Red Queen effect from Alice in Wonderland where you have to keep running faster and faster murder keep still it means you have to keep

Drilling more and more wells just to maintain the same amount of production from these fields what does it mean for communities well a few things one is that it means there’s a lot more opportunity associated with these plays the idea that we have to continue drilling new wells means there are going

To be more jobs associated with producing the same amount of oil or an equivalent amount of oil compared to a conventional field these jobs might be around for a lot longer and it provides significant opportunities for support business is to grow up and to service the industry so there are significant

Opportunities associated with this model we also know though that the community impacts are likely to be extended so communities are going to be dealing with a drilling boom in the sense for the life of the play so it might extend for decades before all the oil is is

Produced out of the Bakken so the character of the plays is quite different what does it mean for state energy tax policy and the way that tax policy helps communities deal with some of their impacts it shouldn’t be any surprise that no two states do it differently but I want to start with

Just some basic principles but what we think tax policy ought to be able to do the first principle is that fossil fuel extraction ought to be able to pay for itself through through effective impact mitigation in other words the money that is derived from taxing the resource

Should be sufficient to deal with the infrastructure improvements that are needed to facilitate that development and to maintain a level of service that is adequate to ensure Public Safety and other impacts can be mitigated we also believe that if you have natural resource wealth in community it ought to

Make you better off over the long term and that’s where we started this with a quote from the Commissioner in North Dakota these communities have an idea that they will be better places to live at the end of the boom so one of the things that tax policy auto do is make

Sure you have some revenues left over after the boom that you can use to diversify your economy and maintain infrastructure and services that you put in place during the boom and finally the severance tax on oil and gas is really designed to replace the wellthis leaving the ground with some kind of permanent

Value that can be used to support government services and to create economic benefits over the long term so saving some of the revenue for for the future is a really important part in most states have permanent fund that they invest some portion of revenues into Alaska has a very large one New

Mexico saves a significant amount of money does North Dakota Wyoming and others so it’s a well-established principle for taxing oil and gas revenue and saving some of the proceeds there are certain at wealth so let me just review the kinds of taxes first a production tax or

Severance tax is simply a tax on the value the resource extracted from the ground and it is to compensate the state for the lost wealth royalty is also a tax applied against the value of the resource but it is essentially a payment to the owner of the resource on federal

Lands where the mineral resources owned by the federal government the royalties paid directly to the federal treasury on a private land situation a royalty agreement is reached between the land owner or the mineral right holder in many cases and the in the industry so it’s a payment to the owner of the

Resource and then a lot of communities use property taxes is the way to text the resource and ad valorem tax on production is is the same kind of tax in other words it’s tax applied against the value of the resource that’s produced although it is just assessed for value

For property tax purposes and local levies are applied against it to the three main ways that value is derived from production of oil and natural gas there are a couple of barriers inherent to taxing oil and gas that are important to understand the first is timing when communities are experiencing impacts

Related to an oil gas boom they need to have revenue in the time and in the time that they need to deal with those impacts a property tax delays when revenue is received by significant amount of time sometimes up to two years from when production actually begins

From a well just because of the way the ad valorem tax works in a lot of states and their severance taxes also have incentives that can delay the timing of revenue but there’s just a problem inherent to it because the time that the well is drilled is the time that the

Impacts occur in the community and the value of the tax is levied against the production so in other words you don’t start receiving tax revenue even in the best-case scenario until after the well has been drilled and starts producing and the impacts have already occurred in the community the second is distribution in

A lot of cases the tax revenue accrues to the jurisdiction where the production takes place and this is often a rural county government but often cities in the oil patch or the ones that are bearing a lot of the impacts related to population growth and impact on infrastructure so often the places that

Are trying to manage impacts do not have any revenue to do anything with and state taxation policy can help mitigate some of those but not all states have a good distribution system that tries to recognize what we call jurisdictional and evenness but really what it means it’s just that the location of

Production and the location of impact are not always the same the third is volatility we know that the price of oil in the price of natural gas can fluctuate dramatically and because the tax is levied against the value of the resource the tax revenues that can be expected from production can vary quite

Dramatically as price goes up and down and tax policy can actually have a big impact on on either smoothing that volatility or actually exacerbating it and finally amount states have really different tax policies and they also levy very different tax rates and they have different incentive structures and

It means that production from one state to the next can return a dramatically different effective tax rate back to the state and local governments so I want to go through these each in a little bit more detail and then provide an example in Montana so I talked a little bit

About timing and the fact that the impacts accrue to the community when the well is drilled but revenues don’t flow until after the well starts producing this is a graph adapted from some work that BBC research consulting did for western Colorado and they showed that even more relevant than that is there is

A need on the local government side to plan and prepare to construct infrastructure to have it in place before the crews and the rigs arrived and start impacting communities so there’s even a greater lag and they suggested that the lag from the time that the community would need

To have certainty of revenues so they could start planning and constructing infrastructure to mitigate population growth too when revenues were actually received by the community could be up to six years well sorry five years to 25 years is that revenue gap distribution varies from state to state and one of

The things that we’ve seen pretty dramatically in the Bakken is that North Dakota collects a relatively high amount of tax revenue but the state retains the lion’s share of that revenue local governments are receiving only about eleven percent of the revenue from oil and gas extraction and most of that

Revenues accruing to counties it was just a story in bloomberg news about Williston North Dakota which is in the middle of the Bakken play and the city is essentially broke because they are not receiving direct revenue from production of oil and gas and yet they

Are the main service hub for a lot of the activity and they form a lot of the population growth and have that impacts on housing and infrastructure and they don’t have any money to deal with it and their bond credit rating was just downgraded by Standard & Poor’s because

The investment community doesn’t have any confidence that Williston will be able to pay back its loans in the midst of all of the money that is coming out of the ground around them just because of the inequitable distribution of revenues it’s not that there’s not enough revenue available necessarily but

That it’s not going to the right places this can also occur between counties this is an example of two counties in western Colorado Garfield County and Mesa County on the west slope most of the drilling activity you can see in the bottom graph occurred in garfield county

Which is a relatively rural county they had significant higher rates of drilling rigs working in the county and ultimately had much higher production of natural gas Mason County was the location where most people live in Grand Junction is the largest city in the area so you can see the number of

Employees working for oil and gas companies were living in mesa county and yet the revenue was accruing to Garfield County so the the uneven distribution of payments is a really difficult challenge for communities to deal with the volatility of production value can be significant you can see the Green Line

Fluctuating around the axis there is production value that is the volume of the resources of his extracted times the price and you can see in Colorado production value from natural gas can vary up and down by forty fifty sixty percent from the year to year because of

The state’s tax policy that has a very peculiar incentive that allows companies to deduct their property taxes paid to the local government from their severance taxes paid to the state government the actual return in severance taxes to the state is much much more volatile than production value

Would actually lend you to believe they were seeing dramatic swings both up and down in production in severance tax collections so tax policy has a really important either mitigating or exacerbating effect on volatility and in amount we see that across four states that we have looked into in some depth

In North Dakota Montana Colorado and Wyoming that the effective tax rate applied against oil and gas varies dramatically from a low of 4.6 percent in Montana up to over ten point three percent in Wyoming and that means that communities will have a significant difference in the resources that are

Available to them to try to deal with what tend to be very similar impacts across these communities so I want to just end now with a little bit of story in Montana in Montana like I said as part of the Bakken but is really being swamped by what’s happening in latico de

The Bakken extends into Montana but the resource in Montana is relatively marginal compared to what on in North Dakota and it’s created a unique set of challenges for Montana communities so we looked at the oil and gas tax policy across the different states and what we did is we applied the

Tax rate in the tax policy from each state to a typical well so you can see this shaded box is cumulative production value over 36 months from a typical unconventional oil well in North Dakota and the production value that will be produced over three years from a typical

Well is about 15 million dollars when we looked at each counties here each state’s tax policy you can see the curves growing from the bottom in terms of cumulative tax revenue you can see a couple of things going on first of all there’s a dramatic difference in how

Much is collected over time Montana at the bottom only about four point six percent of the 15 million dollars in value will be collected in taxes Wyoming at the top over ten percent you can also see a dramatic difference in the timing of revenue collection North Dakota collects a monthly production tax and

There are no property taxes the production tax is collected in lieu of their to there’s an extraction tax into production tax so with monthly collections you can see that their cumulative tax revenue grows relatively consistently over time Wyoming has a combination of both monthly production tax and annual property tax revenues

That are collected by local governments and you can see that kind of stepwise increase in revenues in Wyoming Montana has a holiday or in the exemption of from taxation for the first 18 months on new wells so you can see that tax collections grow very slowly over the

First 18 months the tax rate is only a fraction of one percent over that period and then starts to grow after that and they collect production taxes quarterly what it means for communities in Montana is that there’s a significant delay in the time between when a well starts

Producing and when they receive revenue to try to deal with with boomtown impacts and that’s already so it’s exacerbating the already difficult problem of timing just associated with the relationship between when the well is drilled and when production begins and when communities need revenues so Montana is not only collecting less money on

Average but they’re significantly delaying on they collect it the state has been tracking the value of the 18-month exemption and I showed you a production profile earlier from the El Bulli that showed production peaked in about two thousand six declined until about 2010-11 and now it’s starting to

Grow again this is the value of the holiday as new wells are being drilled in that formation and in others around Montana and you can see it’s growing pretty significantly and it’s worth about thirty million dollars a year to the state in taxes that go and collected

The value on an annual basis during the past boom was much higher than this so it’s a it’s not an insignificant amount of money that’s being left on the table in montana montana does do a decent job of directing revenues back to local governments but again there’s a mismatch

Between the unit of local governments receiving the revenue counties get direct distributions from the state and cities do not so the city cities in eastern montana are facing similar challenges as Williston North Dakota and that they are bearing a lot of the brunt of population growth and needing to provide new infrastructure and

Resurfaces and yet they’re not getting direct distributions from production tax revenue so it’s creating uneven distribution of revenues and creating challenges that could otherwise be ameliorated that they’re having difficult doing so in eastern Montana Montana is one of the only states may be the only state in the West that does not

Save any money from new oil or gas development you can see Wyoming on the left and that’s a significant share of its oil gas revenue and revenue from other fossil fuel resources into a permanent fund that’s now worth well over five billion dollars North Dakota established a permanent

Fund just in September of 2011 and they already have 850 million dollars in the balance Montana has an existing permanent fund the resource indemnity trust fund but it’s capped at a million dollars so no new oil gas revenue is flowing into this fund in other words Montana is spending all of the money

That comes in in the year that it comes in we’re not saving any money for unintended costs or to support these communities after the booms over what we’re seeing in Montana today is that there are significant impacts that are growing not only from drilling within the state but are also spilling over

From North Dakota and these graphs to show a couple of the the kinds of impacts that communities are experiencing first one just shows the increase in landfill tonnage is going in on a regular basis and you can see the landfill and Baker Montana is experiencing a dramatic increase in

Waste that is being brought there along the Sydney the bottom graph is showing subdivisions and subdivision permits and you can see a dramatic increase in Richland County most of this activity started in about 2009-2010 which is when the Bakken in North Dakota really took off you notice there was a bit of an

Increase through two thousand five and six and some of these variables but they were also declined so that the actual boom in Montana didn’t generate the scale of impacts that are now coming spilling over the border from Mote Dakota and it’s just an indication of the sheer size of the play that’s

Happening in North Dakota and these are costs that Montana is having to bear and they’re unanticipated costs and it has implications for Justin’s ability to deal with ipsum this is a figure from the Montana Department of Transportation the results are showing increasing costs for roads across the region it amounts

To about 50 million dollars a year they think for the next 20 years to deal with the improvements and the ongoing maintenance and impacts to roads so added together it’s a significant cost of the state of Montana 50 million dollars a year roads some of the estimates just for water and

Sanitation systems in these communities could be 20 to 30 million dollars a year for the next ten years to deal with all of those impacts and Montana is in a position now where we’ve already had a significant part of our boom in yelm Cooley and it came in and went and we

Have very little to show for it we missed our opportunity to save revenues from the last boom to apply them to these unanticipated costs from the current boom it also means that our tax policy going forward if we do have an increase in drilling in the region we

Are not prepared with our current tax policy to take advantage of it can apply new revenue from New booms in the future to try to deal with some just to catch up from the impacts that we have already and also to try to deal with with the

New impacts that might be coming across the border or from our own production in Montana so I will end with that and you know just say that in eastern Montana right now there are significant job opportunities in communities are quite happy about a lot of the outcomes but

They are struggling to deal with these impacts in our tax policy in Montana is holding us back from being able to do that and it’s a challenge that is potentially going to be replicated across other states as new place come online and as existing place work themselves out so thank you very much

For your attention and I would be happy to answer whatever questions people have okay first question is from Thomas do you have any information on the utica and marcellus shale plays in Ohio we have not done a close look at those shale plays so I don’t have I don’t have

The same kind of graphs that I showed in terms of the effective tax rates in the effect of tax policy on timing or amount to me that so sorry I don’t okay second one is from Richard in the cases you presented has anyone suggested setting up a mechanism

To collect and distribute impact fees that would be based on initial assessment and perhaps adjusted and timing amount or geo distribution depending on the area of actual impact versus predicted during planning yes there are some good solutions out there just in terms of distribution I’ll answer that one first Colorado has a

Very good distribution system in place for distributing the state share of production taxes they direct revenue back to communities both based on the production the value of production and where it was produced but also based on the place that workers are locating so I showed you those two graphs between mesa

And Garfield County or production was happening in one County and most of the workers were living in the adjacent County because that’s where the mean population center is Colorado actually changed their distribution formula to recognize those impacts and other states are considering it and specifically considering changing the way

Distributions are made between counties and cities within the counties to make sure that the cities have revenues that they need to try to help deal with impacts that they’re experiencing the question about impact fees there are there have been attempts of both at the local level to impose impact fees rio

Blanco county in colorado has an impact fee specifically on drilling so it is revenue that comes in at the time that the permit is issued so it does come it improves the timing in terms of when revenues available to deal with it and it’s mainly for roads in Rio Blanco

County there have been discussions at the state level I know Pennsylvania has been trying to figure out how to address the fact that they don’t have a severance tax and they have been using the idea of an impact fee rather than a severance tax to try to put that in

Place but I haven’t followed that closely and I can’t really tell you if it’s been effective over how it’s worked out for communities thank you this questions from John can you comment on the effects on the public school districts in the impacted communities are they building new additions or

Supposed to address population growth well it’s a great question in North Dakota you know a lot of these places had experienced a boom previously in the 80s that went bust and they are understandably a little bit leery of overbuilding for the current boom but they do have significant increase in

Enrollment and the enrollment didn’t start right at the beginning of the boom it’s it’s now slowly starting to increase as more and more families are following the workers that are going to the oil patch for jobs and as more support industry is actually locating in the region so the schools are

Experiencing a big increase they’re struggling is is the only answer to it some of these places at least around the Bakken have been experiencing significant population declines over the last several decades so they have what in essence amounts to surplus capacity they’re opening old schools and they’re trying to retrofit old buildings to

Provide new classrooms in some cases they are planning for in designing new schools but it’s a it’s a risky business in the shale plays because if you invest in infrastructure that ultimately isn’t needed and you go back to situation as it was before the boom we’re actually losing students rather than gain rapidly

It can be really challenging for this community so I don’t think anyone’s found a really good solution to that problem yet next question is from sumner do these fiscal impacts also applied to coal extraction and transport well we’ve we’ve looked at coal and coal operates very differently from oil and

Gas a coal mine tends to be much more stable and they develop communities around them that tend to have a very different labor dynamic these are typically Union towns with decent paying jobs and those jobs are much more predictable over time so the impacts associated from a new coal mine opening

Or just continued operation or increase in production from the current coal mine are relatively stable compared to oil and gas the dynamics and coal communities are very different from the dynamics in boom and bust oil and gas communities especially in these plays that could just take off so quickly in

Terms of cold transport we have not really done any research and I I don’t know if you’re talking about the proposals right now to Train coal from Wyoming and Montana out to the Pacific coast to export terminals to ship over to Asia but those transportation issues have been a real challenge for the

Communities where they go through and directing revenue is if is a big deal where I live in Bozeman Montana is on the rail line so we would be affected by the coal transport trains going through and one of the big issues is running into barriers across train tracks and

Potentially having to build overpasses or underpasses or in a significant new infrastructure to make sure that public safety and emergency response vehicles can get across efficiently it’s just one small example and those costs unclear how those costs are going to be paid for if it will be compensated at all by the

Development or if it will come from higher local taxes or from the state general funds so those are important issues to be worked out okay thank you and next question is by Eric are there examples of dedicated funds or allocation from revenues for environmental mitigation and clean up there was a proposal to

Create a new fund in North Dakota to do exactly that and it just failed so there are not many but there is Montana does actually have fund it’s called the resource indemnity trust fund and revenue from all kinds of severance taxes flow into it so it’s not just oil

And gas but it’s kool gravel extraction other mineral extraction and that fund is there to indemnify the state of Montana from potential impacts environmental impacts specifically to groundwater or to other resources that fund is capped at one hundred million dollars like I mentioned before so no

New revenues going into it or at least the revenue that goes in it’s just there to offset the distributions from the fund and it is a distribution based on the annual income interest income that is earned on that fund on a regular basis so there there is precedent for

That kind of fund certainly I don’t know if the resource indemnity trust fund is the best way to go about it we would like to see it on capped so that it can it it could start to grow again and have a distribution that is a little more

Certain rather than relying on interest because it’s not necessarily tied to impacts it is a income stream that can be used but if there are unanticipated impacts that cost significantly more money the resources that movie trust fund is not necessarily designed to deal with those so it is part of a solution

Thank you next question is by our Mendel wise Montana’s government reluctance changes tax policy so that it can get more revenue and get it earlier well it’s a good question that was actually just in the state legislature this morning in Helena they were hearing a bill to repeal the tax holiday and the

Argument against it is that the incentive is me for industry that without an incentive that allows them to pay back their costs more quickly that they would not drill in the state of Montana that they would simply leave and take their business elsewhere it is an argument that we hear

Again and again in every state and part of the reason that fiscal policy across states is so different and the reason that it is relatively entrenched in each state is that we each state faces essentially the same challenge if you tinker with tax policy if you try to raise more revenue industry always

Claims that they will just go to greener pastures and drill somewhere else where the state is more friendly to their industry Oklahoma is considering right now removing a tax holiday very similar to what they have in Montana and there the industry is making the same argument

But ultimately it has just come to the point in Oklahoma where it’s clear that they’re simply not getting enough revenue to deal with the impacts and something needs to change so I’m not sure where that threshold is met but but that’s the argument we hear interestingly there’s a lot of research

On the subject and the research suggests that fiscal policy especially associated with production taxes has almost no bearing on industry’s decision to drill in one state versus another for a number of reasons one is that they have to go where the oil is right there not textile

Companies they can’t pull up stakes and and just go elsewhere but the production tax is also what’s considered a downstream tax in other words it only comes after industry has decided to drill a particular well as invested the money and the wealth starts producing then they start getting a credit for

That so as an incentive to get industry to drill the well in the first place it’s relatively weak because it comes at the end and what most of the resource suggests is that the most effective way to get industry to drill more is not through a production tax credit

But it is through pretty aggressive credits for upfront exploration and development costs and Alaska has a tax policy that is geared very much towards that they have a very high tax rate compared to the states that I’ve talked about it’s about twenty-five percent on the value of oil and gas production and

It’s graduated so it’s start to the base rate and it goes higher as the price loyal rises in the highest marginal rate in the state of Alaska for for production above a certain price can be as high as seventy percent on the production of oil but the state provides

Very generous deductions and credits for exploration and you know it’s a quirk of the state they have these large conventional fields that are declining and they feel they can tax those aggressively and companies aren’t going to stop production that’s already continuing but the conundrum for Alaska is that they’re highly dependent on that

Revenue and they are desperate to try to to invest with companies essentially to get new production started from new fields whether that convulse new technology or new exploration it doesn’t matter they’re they’re gearing their tax policy very aggressively to try to get new production going and they don’t do

That through a production tax credit they do it through a different mechanism thank you next question is from Roberto what is the general feeling of communities on montana’s lack of representation or they are ignorant about the way the boom is not creating a foundation for sustaining growth well they’re definitely not ignorant the

Communities in eastern Montana are well aware of what’s going on but I think they are largely split some people are very concerned that if the state tinkers with tax policy then it could go away and you know it is creating significant employment opportunities especially for small businesses who have been able to

Spring up and provide services to the industry so there is a lot of wealth and there are a lot of business opportunities in eastern Montana and some people are concerned as industry has indicated that if the tax rate goes up that all of that could

Be lost the other side is a lot of the local government officials are just seeing very clearly now that the revenues that they have available to them are just not sufficient to deal with the impacts that they’re experiencing so you hear a lot of different voices from eastern Montana

And you know it’s still a very contentious issue across the state next question is from Elaine how do you ali any safety concerns by the resistance with extractions such a shale fracking coming to an area so i don’t know if i understand the question is the question about the potential

Environmental impacts and public health and safety concerns for residents the short answer to that is that we have not looked into it you know where we’re not really qualified to answer the question of the environmental consequences of fracking so you know i can’t provide an answer if that’s the question

We’ll go to the next question next question is by David what about the environmental impacts after the walls are completely tapped out can the land be reused read it we developed into a tax producing news I think in general that the answer would be yes if you look

At the well spacing that’s occurring right now it’s much better than it used to be in a lot of cases wells are being spaced as far apart as a mile often on a grid and the area of the well pad that is being disturbed is relatively small

When you look at the entire area of the place so assuming that there are no issues with contamination or spills or anything else it should be relatively easy to reclaim the well site and put it back into agricultural use which is essentially what’s happening in most

Places a lot of the natural gas plays in Pennsylvania and elsewhere have different spacing and there are different concerns associated with that I don’t know as much but I think the idea is that yes you would be able to reclaim a lot of these places and ideally managed correctly communities

Would have would have been able to invest in new infrastructure they would have been able to recapitalize a lot of their local industries and that they would be in a better position at the end of the boom than they were at the start to pursue economic development and diversification and across other

Industries the the risk I think is that on the fiscal son I’d we’re simply not collecting enough money and we’re getting behind the eight ball before we start by not collecting it in the right time or delivering it to the right place so that that second part of the equation

The communities have been able to invest in their infrastructure and improve quality of life is is uncertain about what’s going to happen from a landscape perspective I think unless there are some kind of spills or other unanticipated impacts should not be a long-term impact on these places

Thank you and next questions by Bradley do you think that the old companies will base new development of wells based on the state tax rates no they haven’t in the past and it’s pretty unlikely that they will in the future we so we did a comparison between Montana and are sorry

Colorado and Wyoming in natural gas back in 2006 and the tax rate in Wyoming was about three times the tax rate in Colorado at the time and a lot of these basins across the state line so the resource in general was the same resource and companies had an option of

Drilling in one state or the other and in fact what happened is that Wyoming ended up with more drilling and more production than colorado and it turns out it has very little to do with tax rates as much more to do with the price of the resource the technology that’s

Available at the time and and the location of the reserve and and where the reserves are most profitable Thanks questions firming Lane are you aware of any oil and gas extractions in Virginia and or Pennsylvania have you have they done as well managing the boom yeah sorry I can’t speak to the community

Impacts in the way that communities have been able to deal with it in in those states we haven’t looked into it in any depth okay next question is from James do States hire new public inspectors or use consulting firms in terms of the oil and gas Commission’s that are responsible with oversight for

The other gas industry I know that they have tried to bring on staff to improve their oversight of what’s going on in terms of permitting and drilling there are a lot of different ways that states are dealing with it in terms of planning and providing technical assistance and capacity to communities so across

Eastern Montana in North Dakota a lot of these communities where there now experiencing significant impacts didn’t have a planner before the boom there are small communities were experiencing long-term population declines so whatever planning was taking place was just handled by somebody else in the in the county or city but now there’s a

Real need for planners across these landscapes so there are efforts to hire new planners on but there are also significant significant efforts by the state’s to fund technical assistance through state agencies but also to use contract planners and consultants to provide contracting services to these communities thank you and next question

A serious concern is interstate transport of hazardous material through communities not only surface transport but also over the water basically a port of Albany New York the first cargo of North Dakota crude 12 million gallons grounded in the Houston River only a few miles from the port what are the

Environmental risks that are associated with source of oil what are the environmental cost of supplying the source of oil how are these costs going to be covered I don’t think I’m prepared to answer that question we haven’t looked into the environmental consequences particularly not relative between different sources of supply next

Question is from John are the impacted communities updating or writing new comprehensive plans that address strategies to capture the benefits of the above the boom now to deal with the potential bus cycles yes they are absolutely and one of the interesting new dynamics in these communities is that that they’re wary of overbuilding

Because of experiences from last booms where they they raced to increase their capacity for housing and commercial businesses to another real estate and they over built and then the bust came excuse me so industry in the communities are really embracing what what we call an offshore model where you know North

Dakota and eastern Montana is essentially seen as an offshore oil rig into the industry and they come in and build infrastructure that is designed to be temporary man camps our solution that’s being adopted across the region and at first were very controversial and local governments were were wary and

Goes to them but a lot have now come back around and embraced them the idea being that you can build temporary workforce housing and they can accommodate the me during the boom but it doesn’t impose long-term costs on your community so as communities are trying to update their rags and develop

New zoning codes and subdivision regulations and master plans one of the challenges that they face is dealing with these new kinds of development that they have no experience with how do you permit a mab camp what kind of and sanitation and sewer and water supply needs to be put in place is that

Permanent investment in the infrastructure but a temporary investment in housing these are really important and challenging issues for these communities but there is a real need and a real effort being made to provide technical assistance to help these communities grapple with these issues that review them in a timely

Manner and try to update master plans to reflect the changing needs and pressures thank you and we have a last question by Roberto do you have Economic Development Corporation’s in Montana we do there are three Economic Development Corporation’s in the eastern part of the state that have just recently banded together

They’ve received received some federal money through the EDA to try to predict some of the impacts that they’re expecting to see so they’re doing needs assessments across the region for communities based on the best projections of future local gas development and also spillover impacts from North Dakota and try to put in

Place you know set of a set of needs assessments for communities and start identifying how they can best meet these needs and raise money to put infrastructure in place so the economic development authorities in eastern Montana are quite active and they are probably one of the most appropriate

Groups to to be working on music use in concert with the counties in the cities there’s also a group in Western North Dakota called mission west North Dakota it is made up of mostly local government officials and that edas are also involved there so yeah they’re playing an important role at least out

Here in the West thank you and we have question from Raymond what type of legislative restructure restrictions have these states placed on local zoning and Len land development in relation to natural gas uses at the state level in the West nothing really there is no well

In the West outside of Oregon really a few other week or examples we don’t have any statewide planning legislation so it is essentially left to local governments to decide and in Montana in particular none of these counties in eastern Montana have any county white zone and in most cases zoning only applies within

Incorporated municipal limits if it extends outside into a donut area at all i’m not sure but probably not so there’s very little oversight in terms of where wells can be permitted and the kinds of uses that will be allowed in where they will be allowed the main oversight body

In most states for permitting is the alarm gas commissions and you know they tend to be pretty efficient and pretty friendly at letting industry secure leases and get wells in the ground so there hasn’t been a lot of relationship between the agencies at the state level that are responsible for dealing with a

Lot of the impacts associated with drilling for example the Department of Environmental Quality in Montana is responsible for ensuring that subdivision review and San station is done appropriately that cities and communities are in compliance with state law but they don’t have any influence or even relationship with the permitting authority that is permitting

All of the wells across the region so there’s a real gap there in a relationship between the planning and zoning in water and sewer side of things and the permitting for oil and gas wells and this questions from Elizabeth from Texas what are the major ways that fiscal policies might differ differ

Between natural gas extraction and all oil extraction local policies very little the differences between states are much greater than they are between resources within a particular state the technology that is being used to extract oil and natural gas are very similar the same rake can drill a well that will

Produce either natural gas or oil in fact many of the wells produce a mix of both so in terms of tax policy and regulatory oversight there’s very little difference within a state between oil and natural gas the differences are much greater would you start costing state borders

This questions from James those are well development proceed in the winter or is it the housing and service need consultant constant throughout the year yeah development continues apace there are no there’s no season to it so that the pressures on the need for housing and services is year-round okay and

That’s it for today and we’ll end literally today and thank you for great presentation and answering questions for us mark and we really hope to see you again in planning webcast thank you thank you this concludes today’s session and I want to thank everyone again for attending for further questions

Regarding the presentation please contact the presenter if you have questions regarding the webcast series logging in cm credits please contact me add planning webcast at yahoo com for those of you who are still in attendance I just want to go through a few reminders first off to log your same

Credits for attending today’s webcast please go to planning dot org slash cm selected a state then select today’s webcast this webcast is available for 1.5 same credit also we are recording today session so we’ll be able to find recording of this webcast along with our

۶ly per page PDF at utah APA that work thank you you you

ID: fz9ulf_rz0g
Time: 1363372298
Date: 2013-03-15 22:01:38
Duration: 01:08:02

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