Ohio’s top six Utica Shale counties collected more than $43.7 million in real estate property taxes on production from 2010-2015, according to a new report by Energy In Depth and the Ohio Oil and Gas Association.
The report entitled “The Utica Shale Local Support Series: Ohio’s Oil and Gas Industry Property Tax Payments,” consults ad valorem (real estate) tax collection data from six Utica Shale mineral producing counties from 2010-2015 to examine the impact made from the first three years of Utica Shale production in these six counties. The report includes breakout statistics for each county as well, including Belmont, Carroll, Guernsey, Harrison, Monroe and Noble.
Below are the report’s key findings, by the numbers,
The finding by the Ohio Oil and Gas Association and Energy In Depth Ohio, a natural-gas research and education group, comes as Republican Gov. John Kasich has renewed calls for a severance-tax increase on the industry.
Kasich’s proposed two-year, $66.9 billion operating budget raises $448 million from the severance-tax increase. The increase would combine with other tax reforms to pay for a net statewide income-tax reduction of $39 million.
Thursday’s report shows Belmont, Carroll, Harrison, Noble, Monroe and Guernsey Counties have seen a combined 22 percent revenue boost from the longstanding ad valorem real estate property tax, amid a 35-fold increase in natural gas production.
“I’ve heard from many county commissioners and other elected officials, community leaders in Eastern and Southeastern Ohio, who’ve told me that they’ve had their budgets saved, thanks to the millions of new tax dollars rolling into their coffers,” said U.S. Rep. Bill Johnson, a Marietta Republican whose district spans much of Appalachian Ohio.
The industry projects that continued growth will allow the same tax to generate between $200 million and $250 million over the next 10 years.
Energy In Depth State Director Jackie Stewart said counties have the opportunity to build a coordinated regional growth strategy based on those estimates. She said the tax has been misunderstood and hard to track, so her organization took the initiative to sort out the information and provide it to the counties.
Shawn Bennett, Executive Vice President of the Oil and Gas Association, said Kasich’s tax proposal could negatively impact an industry that’s already giving money back to the communities.
“Any time you raise taxes on an industry, there is going to be consequences,” he said. “In this instance, you’re going to see less drilling, less development of natural resources. So there’s going to be less wells drilled, and less wells drilled on the fringe counties.”
Kasich argues the industry’s operations in Ohio’s lucrative Utica Shale play is strong enough to sustain a severance tax increase.
The report helps to quantify taxes to be paid over the next 10 years, based on payments already received to six counties from the first three years of Utica Shale production (taxes collected in the latest year available, 2015, reflect 2013 production). Using the Freedom of Information Act, we were able to obtain the data from these six counties on real estate property taxes collected, as well as the breakout of real estate property taxes paid specifically from wells or ad valorem taxes.
Stewart said that considering Utica Shale oil production has increased by 496 percent and natural gas production has increased by 852 percent since 2013, it is reasonable to conservatively project Ohio Utica Shale counties will reasonably receive an additional $200-$250 million boost from real estate property taxes on wells over the course of 10 years (2016-2026). Of course this is only one tax the oil and natural gas industry pays in Ohio. Energy in Depth - Ohio has previously reported, sales tax revenues have skyrocketed by 65 percent in these same counties over the past five year as well. Real estate taxes paid on wells accounted for, on average, 22 percent of the total real estate property taxes paid in 2015 to these counties.