JACKSON — Legislation to lower the Mississippi severance tax on hydraulically fractured oil wells from 6 percent to 1.25 percent for first 30 months of well production has been signed into law by Gov. Phil Bryant.
House Bill 1698 also will allow counties where fracking is occurring to keep a larger share of tax proceeds. The law takes effect July 1.
Hydraulic fracturing is a technique used by the energy industry to extract oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel and chemicals.
The Enterprise-Journal reports several companies are conducting horizontal drilling operations in the Tuscaloosa Marine Shale formation in Amite and Wilkinson counties in southwest Mississippi.
Under the law, a county in which a horizontal oil well is located would get all the tax proceeds rather than sharing them with the state.
The law gives the tax break on a specific well for up to 30 months or until the well’s costs have been recovered, whichever comes first. The law also gives a five-year tax break for oil exploration efforts.
Under current tax law, the state gets 6 percent in severance taxes and gives the counties 33 1/3 percent of the first $600,000, 20 percent of the next $600,000 and 15 percent thereafter.
In a separate but related item, new report raises serious concerns about the online database used by 11 states, including Mississippi, to track the chemicals used in fracking.
The Harvard Law School report says FracFocus, a reporting site formed by industry groups and intergovernmental agencies in 2011, has loose reporting standards, makes it too difficult for states to track whether companies submit chemical disclosures on time and allows for inconsistency in declaring chemicals trade secrets.
The 11 states that require companies to divulge fracking chemicals through FracFocus: Colorado, Louisiana, Mississippi, Montana, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Texas and Utah.
Fracking involves pumping water, fine sand and chemicals underground to split open oil- and gas-bearing rocks.
The site and its operators don’t regulate fracking in any way, but rather provide a repository for relevant information.
Though each state has different reporting requirements, FracFocus offers just one form for disclosing fracking chemicals. This flaw, the Harvard report says, creates loopholes that could allow operators to avoid sharing information required by state law.
Most states also require fracking reports be made within a certain timeframe. Colorado, for example, requires operators to disclose their fracking chemicals within 60 days of completing the process. But FracFocus provides no easy way for regulators to verify when a report was submitted, according to the Harvard report.
The report claims the database is also difficult to search and doesn’t allow users to view more than one report at a time. Colorado and Pennsylvania asked FracFocus to become searchable by the beginning of this year, though that change still has not been made.
A Colorado regulation states that if FracFocus failed to provide search functions by January, the state would begin requiring operators to submit reports both to the site and to state agencies. The regulation does stipulate, however, that this new reporting mandate can be avoided if the state Oil and Gas Commission has “reasonable assurance” those changes are coming down the pipeline.
A spokesman for the Colorado Department of Natural Resources, which oversees the Oil and Gas Commission, said the commission expects the necessary improvements to be made by June 1. Because of this, the state has not implemented any new reporting requirements.
But the fact that reports are provided only to FracFocus, and not to state agencies, is another concern of the Harvard report. The authors said the reliance on a third-party database makes the information exempt from public information laws and could cause problems should the site ever go offline.
Other concerns include inconsistency in labeling chemicals “trade secrets,” which shielded them from reporting, and a general lack of oversight of the timeliness and quality of operators’ reports.