Dave Galt - August 03, 2006
Montana Petroleum Association
Oil and Gas Development
The motto, “The Treasure State” originally appeared in a publication of the Bureau of Agriculture, Labor, and Industry in 1895. The Treasure State was adopted as our motto and was used for over 50 years. Between 1950 and 1966 every license plate issued in Montana bore the moniker, “The Treasure State”. Other familiar mottos like, Montana-High, Wide and Handsome; Big Sky Country, and the Last Best Place remind us of our home. But as it was in the beginning, Montana was blessed with abundant treasure, a resource for the citizens of the great State of Montana.
The Montana Petroleum Association promotes oil and gas development in Montana and understands why the motto, “The Treasure State” came about. In the day, 1895, Montana’s treasure was in hard rock minerals, the first oil well was 21 years away. Today, production taxes on oil and gas are the third largest source of revenue to the state general fund. Montana is truly the Treasure State.
Montana reached its pinnacle in oil and gas production in the 1960’s. Falling commodity prices and an excessive tax policy slowed exploration and development in Montana, to a modern all time low in the 1990’s. The Montana Petroleum Association spearheaded efforts beginning in 1989 to make Montana’s tax structure competitive with our neighboring states. The most recent tax law redesign in the 1999 legislative sessions spurred a reemergence of oil and gas development in Montana. Oil production has more than doubled and natural gas production increased 63% since 1999. This is quite a success story.
What has all this development meant for Montana? The easy answer is good paying jobs and increased tax revenue. Taxes on the production of oil and gas placed $140 million in state coffers last year. Oil and gas production contributes to increased income taxes, along with boosting other sectors like trucking, construction, food and lodging providers, and many more. A recent economic analysis by Montana State University Billings concluded that oil and gas development has a total impact to Montana of over 8.6 billion dollars and supports over 12,000 jobs. In 2005 we produced at levels last seen in the mid 1970s; and there is more development in the future, if access is available.
Current state and federal mineral royalties range from 12.5% to 16.67%. Royalty revenues go directly to Montana coffers. State school trust royalties naturally go to schools, and half of all federal royalties are returned to the State. We are very concerned about the amount of public lands, designated for multiple use, that are not open for oil and gas development. For example, a draft forest plan for the Flathead National Forest is out for public comment and does not contain a discussion of oil and gas development. There are over 1 millions of acres of oil and gas leases that are currently suspended in the Flathead forest, so one would think that merits some discussion. Environmental obstructionists are quick to point out that only 11 percent of lands are totally off limits. But that doesn’t mean that the remaining 89% are open for business either. More and more public, multiple use lands are being shut in every day.
The people who work in the petroleum industry take particular offense to comments like those of the Montana Wilderness Association who tell the public our industry wants to abandon proven environmental protections. What nonsense! Modern drilling technology has enabled the industry to drill fewer wells, dramatically increase production, and to comply with all environmental regulations.
Remember a few critical points:
1. Oil and gas development provides good living wage jobs and tax revenues.
2. Oil and gas is developed in environmentally sound ways.
3. Oil and gas are not under every acre of land on the planet, so ask hard questions when environmental groups suggest closing large sections of your land to oil and gas exploration.
4. How is our country going to address its growing energy needs in an uncertain world when we can not develop our own oil and gas reserves?
Montana is the Treasure State, always has been, always will be. The members of the Montana Petroleum Association are committed to protecting the environment, while providing jobs, tax revenue, and energy to America.
I am Dave Galt, representing the Montana Petroleum Association.
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