Committee advances severance‑tax reduction for CO2 EOR projects after split vote
January 17, 2025 | Minerals, Business & Economic Development Committee, Senate, Committees, Legislative, Wyoming
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The Senate Minerals, Business & Economic Development Committee advanced Senate File 18 by roll call, a bill that would provide a severance‑tax reduction intended to lower costs for enhanced oil recovery (EOR) projects that use CO2 produced in Wyoming. The committee approved the bill 4‑1; Senator Rothfuss cast the lone no vote.
Supporters described Senate File 18 as a straightforward way to reduce the state tax burden on EOR projects and help cover the large upfront costs for field work and pipeline infrastructure. A sponsor said the bill is “pretty much that simple,” describing it as a 3‑percent severance tax reduction for EOR projects that use Wyoming‑sourced CO2. Proponents argued that lowering the effective tax rate would help make otherwise marginal projects economical.
Critics on the committee said the bill is a blunt tool that could produce broad tax cuts for projects that do not require state support. One senator said the measure “is an across‑the‑board severance tax credit effectively, so it affects all existing [EOR] projects. You basically just cut the severance tax in half for every existing … project in the state,” and warned the bill would not target the specific market bias created by the federal 45Q differential.
Committee discussion touched on distinctions between this measure and Senate File 17, the equalization subsidy. Witnesses and senators noted that SF17 directs payments to CO2 owners and ties eligibility to federal 45Q rules, while SF18 would provide a tax break to oil producers (the committee heard that industry favors SF18 for its simplicity). Several senators said they supported advancing both bills to the next stage so the Legislature could consider which approach performs best.
Committee members also discussed project economics and timelines, noting examples of EOR projects that require tens of millions in field preparation and pipeline costs and can take years to reach maximum production. The committee was told that Wyoming’s effective tax burden for oil and gas is higher than many peer states, a factor proponents said supports a tax‑reduction approach.
The committee recorded a roll‑call vote advancing Senate File 18 to the floor (ayes: Cooper, Jones, Nethercott, Chairman Anderson; no: Rothfuss). The bill includes an appropriation referenced in committee testimony but the amount was not specified in the hearing record.
Supporters described Senate File 18 as a straightforward way to reduce the state tax burden on EOR projects and help cover the large upfront costs for field work and pipeline infrastructure. A sponsor said the bill is “pretty much that simple,” describing it as a 3‑percent severance tax reduction for EOR projects that use Wyoming‑sourced CO2. Proponents argued that lowering the effective tax rate would help make otherwise marginal projects economical.
Critics on the committee said the bill is a blunt tool that could produce broad tax cuts for projects that do not require state support. One senator said the measure “is an across‑the‑board severance tax credit effectively, so it affects all existing [EOR] projects. You basically just cut the severance tax in half for every existing … project in the state,” and warned the bill would not target the specific market bias created by the federal 45Q differential.
Committee discussion touched on distinctions between this measure and Senate File 17, the equalization subsidy. Witnesses and senators noted that SF17 directs payments to CO2 owners and ties eligibility to federal 45Q rules, while SF18 would provide a tax break to oil producers (the committee heard that industry favors SF18 for its simplicity). Several senators said they supported advancing both bills to the next stage so the Legislature could consider which approach performs best.
Committee members also discussed project economics and timelines, noting examples of EOR projects that require tens of millions in field preparation and pipeline costs and can take years to reach maximum production. The committee was told that Wyoming’s effective tax burden for oil and gas is higher than many peer states, a factor proponents said supports a tax‑reduction approach.
The committee recorded a roll‑call vote advancing Senate File 18 to the floor (ayes: Cooper, Jones, Nethercott, Chairman Anderson; no: Rothfuss). The bill includes an appropriation referenced in committee testimony but the amount was not specified in the hearing record.
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