Bill Would Allow Tax on Gas Drilling Rigs

Measure would also provide tax credit for purchase of alternative fuel vehicles

Wheeling WV  Intelligencer
17 February 2011
By Casey Junkins, Staff Writer

As West Virginia legislators ponder whether to enact new regulations on Marcellus Shale drillers, a new bill would tax drilling rigs and allow tax credits for alternative fuel vehicles.

"Currently, there is concern that rigs are not being taxed in a uniform and consistent manner," said Delegate Scott Varner, D-Marshall. "The bill references a national standard for the tax departments to use to provide a uniform method."

Titled "The Marcellus Gas and Manufacturing Development Act," the bill is sponsored by Delegates Varner and Mike Ferro, both D-Marshall; Dave Pethtel, D-Wetzel; Ryan Ferns, D-Ohio, and Erikka Storch, R-Ohio.

This bill is in addition to several other pieces of legislation working their way through the state House and Senate, which deal with a gamut of issues ranging from increasing fees for drilling wells to deciding whether gas companies should be able to pool mineral owners' properties by force.

There are now many gas rigs drilling throughout the Northern Panhandle, including Ohio County, with plans for drilling in Brooke County progressing. Marshall, Wetzel and Tyler counties have seen multiple gas rigs in place for several months.

The new bill also provides 35 percent credits for the purchase of alternative fuel vehicles, while providing a 50 percent credit for converting a conventional engine to run on alternative fuel.

It would also give credits for building alternative fuel filling facilities of up to 50 percent.

"The Legislature further finds that the wholesale cost of fuel for certain alternatively-fueled motor vehicles is significantly lower than the cost of fueling traditional motor vehicles with oil-based fuels," a clause in the bill reads.

Another provision in the legislation would ensure that any future ethane cracking plants are taxed at the same rate as other manufacturers, as Varner noted, "The bill provides for parity with regard to taxation as well as incentives the same as for other types of manufacturing."

Ethane is one of the prevalent natural gas liquids - along with propane, butane and pentanes - found in the "wet" Marcellus Shale gas of northern West Virginia. Tuesday, officials with Bayer Corp. said they hope to build an ethane cracker - a plant that would use ethane to produce ethylene, a component of plastic - in the Mountain State, with the property adjacent to its New Martinsville facility being a possible location.

Officials said the project could eventually yield hundred of jobs.