EnCana, Williams taxes top $13.5M | PostIndependent.com

EnCana, Williams taxes top $13.5M

Garfield County’s two major natural gas producers each will pay more than $13 million in property taxes for 2004.That’s more than the industry as a whole paid a year earlier in taxes in Garfield County.Williams Production’s 2004 tax bill is about $13.5 million – nearly double the $7.25 million or so it paid a year earlier.EnCana Oil & Gas will pay $13.61 million, said company spokesman Walt Lowry.Natural gas revenues generated $12.5 million in property taxes in the county in 2003. This year’s increase results largely from the tax on gas production, which is based on the value of the gas. Gas prices have been high, which has helped drive the drilling boom in the county.With drilling expected to increase in coming years, property tax revenues from the industry could continue to remain high for 10 or 20 years or more, said Steve Soychak, district manager for Williams in Parachute.Local gas wells often remain in production for 20 or 30 years.”As you drill eventually there’s going to be some decline, but there’s so much land to be developed in Garfield County that I foresee it as increasing for at least the next 10 years. There’s new fields being extended every day out here,” Soychak said.Lowry said oil and gas production generates so much tax revenue in Wyoming that the state has no income tax.He said EnCana’s property tax payments “certainly subsidize the tax base” in Garfield County.”There’s no doubt that we’re very happy and honored and privileged to be able to contribute to the county like that,” he said.County assessor Shannon Hurst said one reason for the industry’s big tax bill is how state law governs tax collection. Homeowners pay taxes based on an assessed value of their properties that is only 7.96 percent of the actual value. For commercial properties, the assessed valuation is 29 percent. But for the oil and gas industry, the assessed value is 87.5 percent of the actual value of property (see accompanying list).”They pay a huge amount because of the assessment rate,” Hurst said.Soychak said Williams is paying about $12.1 million in property taxes in the county for gas production. About 6 percent of production goes to pay ad valorem, or property, taxes, he said.Soychak said Williams will pay about $300,000 in taxes on personal property and $1.1 million for facilities.Although gas producers often don’t own the land they are drilling beneath, Williams owns probably about 1,800 acres that house offices, gas plants and other facilities in the county, Soychak estimated. EnCana is paying about $12.3 million on production, $228,000 on personal property and a little more than $1 million on miscellaneous property such as well equipment, Lowry said.EnCana leads the county in gas production, at about 325 million cubic feet per day. Williams is slightly behind, at about 300 million cubic feet per day, which Soychak said is enough to heat about 1 million homes.Soychak said Williams invests more than $1 million per well, and said the company’s capital investment in the county is approaching $1 billion.It probably employs 1,000 and 1,500 contract and company employees, for a payroll of perhaps $50 million a year.”Those people are going to be spending money in the county, so … it’s pretty significant,” he said.Lowry said EnCana pays another $5.4 million in severance taxes related to its gas production in the county. Some of that money comes back to the county and local governments.He said EnCana also sets aside 1 percent of net profits before taxes for charitable giving. The company’s South Piceance Unit, which includes operations south of Interstate 70 in Garfield County and a part of Mesa County, gave $332,115 to local charities last year, about three times as much as the previous year.The company gave $125,000 for a baseball field in Rifle. It is a significant contributor to 4-H, Lowry said. And it has committed $10,000 per year to YouthZone for three years.”We try to give back as much as we can,” Lowry said.Separate from its charity budget, it contributed $500,000 to rebuild the Airport Road south of Rifle.”We certainly use it but I think it was a benefit to the entire county as far as access to the airport,” Lowry said.The company also spends about $100,000 extra per well to directionally drill from pads to reduce surface impacts, he said.In addition, he said EnCana worked with Williams and other companies to help register the residences of employees, so local governments receive all the severance tax revenues they are entitled to based on industry employment.Contact Dennis Webb: 945-8515, ext. 516dwebb@postindependent.com

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