Oil and Gas Royalty Increase Bill Passes Committee in NM
House Bill 48 aims to raise oil and gas royalties from 20% to 25%.
House Republicans voiced their concerns on oil and gas bills going through the legislature.
House Bill 48 aims to raise oil and gas royalties from 20% to 25%. This is for new contracts for unleased state land.
The House Commerce and Economic Development Committee passed HB 48 in a six to five vote.
“We're currently charging less than market. This money goes into land grant permanent fund, land grant permanent fund is for the benefit of our kids and other beneficiaries of that fund,” Democrat Rep. Matthew McQueen from Galisteo said.
The land grant permanent fund uses these royalties to fund infrastructure and education.
McQueen says this bill would raise royalties to $50 million a year and up to $1 billion over the life of the bill.
“Independent producers who have literally said they want a larger profit margin, that's what's at stake. Do we continue to lease out our mineral rights for less than a fair market value?” McQueen said.
Well, several people spoke in support of raising the royalty, some representing smaller companies, saying higher royalties would put them out of business.
Republican lawmakers are concerned that this would lead to more land not being leased.
“It may cause some marginal properties up to lease to fall off with no bids,” Rep. Larry Scott from Hobbs said.
Other Republican lawmakers say the state is already benefiting from the oil and gas industry, but trying to get more money can result in the state getting less.
“Any attempts to increase royalty rates or cost of operation are going to be detrimental to the long-term health of not southeast New Mexico, but the entire state,” Scott said.
HB 48 is now headed to the House floor.
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