New Oil and Gas Production Fee in Colorado
Oil producer fees will start at $0.04 per barrel and can rise above $0.24 cents per barrel depending on the average value of oil in the previous quarter.
Senate Bill 24-230 was introduced and passed in the recent Colorado State Legislative session. This bill will impose a production fee for every producer of oil and gas in Colorado. The fee will begin on July 1, 2025 and the fee that oil and gas producers must pay will depend on the market value of oil and gas during the previous quarter.
SB 24-230 was signed into law on May 16th and it is a controversial bill on the Western Slope of Colorado. Janice Rich, Colorado State Senator for District 7, tells us, “I don’t know that it’s going to help the Western Slope a whole lot. This is a bill that helps the Front Range more than the Western Slope.
Oil producer fees will start at $0.04 per barrel and can rise above $0.24 cents per barrel depending on the average value of oil in the previous quarter. Natural gas producers fees will range from $0.16 per thousand cubic feet, to anywhere over $1.12 per thousand cubic feet depending on the average value of natural gas in the previous quarter.
Oil and gas producers on the Western Slope say these changes may affect everyone. “We always try to keep costs low for natural gas and every cost that state regulators pass to operators has potential to impact the consumer’s bottom line.” said Chelsie Miera, Executive Director of the West Slope Colorado Oil and Gas Association.
Much of the money from producer fees will go to public transport projects and the bill itself states that these measures are necessary to reduce greenhouse gas emissions and is in the best interest for all Coloradans. Candace Carnahan, President and CEO of Grand Junction Area Chamber of Commerce has communicated to Colorado lawmakers that changes and compromises can be made to make the bill easier for the Western Slope to digest.
“We want to be really careful that we’re not putting so much burden on an industry that is being heavily regulated to now produce funds to allow other ideas and enterprises initiatives across the state,” Carnahan said.
If an oil and gas producer does not pay it required production fee, they could receive a fine or imprisonment.
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