Tallahassee, FL -- December 6, 2011 --
Trying to encourage more oil production in Florida, a House panel Tuesday approved a proposal that would offer a tax incentive for tapping old wells in Southwest Florida and the Panhandle.
Sponsor Matt Hudson, R-Naples, said HB 87 seeks to "rejuvenate" oil fields that were discovered decades ago but have been abandoned. At least in some cases, he said active wells are operating near the abandoned sites.
"If producers decide to tap into those abandoned wells, without question it will create jobs,'' Hudson told the House Energy & Utilities Subcommittee, which voted 10-4 for the proposal.
One of the dissenters, Rep. Jeff Clemens, D-Lake Worth, said he had questions about where the abandoned wells are located and the potential environmental effects of tapping them.
Though drawing relatively little attention, Florida has long had oil production in the northwest Panhandle and in parts of Southwest Florida. A House staff analysis said the Panhandle fields produced about 1 million barrels of oil in 2010, while the Southwest Florida fields produced about 775,000 barrels.
Hudson's bill would target fields that were discovered before 1981 and that would begin producing oil after July 1, 2012.
It would not lead to offshore oil drilling, a highly controversial issue in Florida. Earlier this year, Republican presidential candidate Michele Bachmann drew criticism when she raised the prospect of opening up the Everglades to oil drilling, though backers of the idea noted that it wasn't that far from some of the drilling already going on in Southwest Florida.
The House analysis says 16 oil fields were discovered in Florida before 1981, with seven of them plugged and abandoned. Five of those abandoned fields are in the southwest part of the state.
Florida has an 8 percent severance tax on oil production, though some producers pay lower rates based on factors such as whether wells are small.
Hudson's bill would offer varying tax rates for producing in the abandoned fields. The rate would be 1 percent on the value of oil that is $60 and below per barrel; 7 percent on the value between $60 and $80; and 9 percent on the value above $80.