State Representative Jim Buchy
Keeping Oil and Gas Competitive; Reducing Taxes for Ohioans

When we think about Ohio’s oil and gas drilling, we most often focus on the eastern half of the state. There is, no doubt, good reason for this. Those of us in west central Ohio do not have this oil below our feet like our neighbors to the east. But that does not mean that our region is not affected by it, or that we cannot benefit from it.

One aspect of oil and gas development that directly affects our region of the state is what is called orphan wells. Those are wells that have been dug and where oil has been extracted, and then they dry up. Because they will no longer be used in the future, they need to be capped. The Ohio Department of Natural Resources has identified somewhere between 5,000 and 6,000 orphan wells in the state of Ohio, more than 150 of which are in western Ohio.

Some of the wells can potentially be used to store wastewater that is created during the fracking process. However, for a variety of reasons, the wells in west central Ohio will not be looked at as wastewater-storing wells because the proper permits and paperwork are not in place. Public safety is of the utmost importance, so therefore it is critical that all decisions are made with caution and diligence. The responsible thing to do is to cap them.

Another issue under consideration in the legislature is the implementation of a competitive severance tax, a tax levied on the oil and gas companies for extracting the state’s natural resources. I am a cosponsor of House Bill 375, which would impose a small severance tax on well owners who use horizontal fracturing, or fracking. The tax—1 percent for the first five years of production and 2 percent after that—is a rate that will still uphold Ohio’s competitive advantage in this industry.

For everyday Ohioans, the bill features many benefits. First, part of the proceeds will go toward capping the orphan wells that I mentioned earlier. Second, some of the proceeds will be used to help reduce personal income tax rates in the state, which remains a top priority for me, as well as Governor Kasich. That will allow for more disposable income in Ohioans’ pockets.

As these measures move through the legislative process, I will keep you informed about HB 375 and other policies that are important for fostering this relatively new economic opportunity that Ohio is so blessed to have.