TALLAHASSEE — An oil recovery tax incentive passed the Florida House on Wednesday that supporters say will encourage oil companies to drill in old wells in Southwest Florida and the Panhandle.
Sponsored by Rep. Matt Hudson, R-Naples, the legislation eases the tax burden for drilling in capped wells in oil fields discovered before 1981.
By an 80-36 vote, HB 87 cleared the House and heads to the Senate over objections from Democrats, who said the state should discourage oil drilling in some of the state’s most sensitive environments.
“This bill will be a great benefit to Northwest Florida and Southwest Florida, identifying our own domestic natural resources,” Hudson said. “(It) will help us put people back to work, it will allow us to explore in areas that have already previously been explored, and that can be done safely and soundly and put us on path toward energy independence in Florida.”
One local company, Collier Resources Co., a joint energy subsidiary of the two Collier family businesses, could stand to gain from increased drilling on the mineral rights it leases to oil companies.
Three oil fields in Collier, Lee and Hendry counties qualify, and while much of the land is now part of the U.S.-controlled Big Cypress National Preserve, the mineral rights are still owned by Collier Resources.
Under the legislation, oil severance taxes could fall from 8 percent to as little as 1 percent if oil prices dropped significantly. The bill applies a tiered tax rate structure ranging from 1 percent to 9 percent depending on the price of oil.
For example, Bear Island oil field in Big Cypress is owned by Collier Resources, and state Department of Environmental Protection records show Exxon holds many of the drilling permits. In 2010, three wells produced 76,779 barrels of oil, the department reported.
If U.S. Department of Energy predictions on oil value hold true, by 2016 three new wells in Bear Island would produce oil at half the effective tax burden under Hudson’s bill, or about $300,000 for the oil producer.
Attempts to reach a Collier Resources spokeswoman Wednesday were unsuccessful, but she released a statement to the Associated Press in December, saying, “While we have not been following state Rep. Matt Hudson’s proposal, HB 87, we do believe that additional onshore drilling in Florida can provide many benefits including new jobs.
“Oil drilling in Southwest Florida, ongoing for over 60 years, has proven to be an economic advantage generating tax revenues and creating jobs all in an environmentally sensitive manner.”
According to the company’s website, Collier Resources leases the mineral rights and monitors oil production at Bear Island, Raccoon Point and Sunniland Field. All of those Southwest Florida fields began production before 1981, thus potentially qualifying for the tax incentives.
Hudson said he was not aware who owned the oil fields.
Five other oil fields in Southwest Florida and two in Northwest Florida have been totally plugged and abandoned, the rights to which are mostly owned by other companies.
If the price of oil rises high enough, companies may decide to drill regardless of tax incentives, meaning a loss in tax revenue. Supporters hope the tax incentive will encourage drilling that otherwise would not happen.
“For drilling on abandoned fields where the damage has been done, that area’s already been disturbed — better to drill there than in an undisturbed field,” said Andrew McElwaine, president and CEO of the Southwest Florida Conservancy in Naples.
Democrats on the House floor in debate Wednesday and Tuesday distrusted any new drilling and feared expansion into Everglades National Park.
“I understand there are folks in this body that feel this is the direction we need to be moving; however, I would question whether we need to be moving … into areas that serve as habitat for the Florida panther and Florida black bear,” said Rep. Mark Pafford, D-West Palm Beach, one of the bill’s leading critics.
Amendments to a separate bill, HB 695, sponsored by a Pensacola Republican, restricted drilling to the Panhandle to prevent Everglades exploration. That legislation, which also passed its chamber Wednesday mostly on party lines, seeks to create public-private partnerships in onshore oil and gas exploration.