Value of gas, oil properties up greatly
Revenue boost coming from recent surge in production
By Justin D. Anderson
Daily Mail Capitol Reporter
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CHARLESTON, W.Va. - State Tax Department estimates show that oil and natural gas lands have gained in value by nearly $3 billion over the past few years as prices and production boomed.
That means a big boost to local tax bases and school systems. And the best year as far as tax revenue for the state is still to come.
The prices and production of just about every fossil fuel and mineral were on the rise - especially natural gas and oil - until the nation's economy faltered. But during the upswing, the values of the land connected with extracting the commodities have surged.
And companies have been gobbling up leases in order to tap into the Marcellus Shale for natural gas, driving up the value of the leases on acreage where reserves are thought to be.
"All of a sudden, areas of the state with little or no oil and gas history have become hot spots for leasing activity, as the Marcellus covers much of the state," said Kimberly Osborne, director of communications for the state Department of Revenue.
"Speculators and producers are attempting to tie up as much acreage as they can, betting on even higher prices in the future, both short and long term."
Oil- and gas-producing lands statewide are estimated to increase in value from $3.5 billion for the 2006 tax year to more than $6.48 billion for the 2009 tax year.
Meanwhile, oil and gas reserve lands have gained in value from $152 million in 2007 to $162 in 2009.
Because the boom over the summer won't be assessed until next July, the big increases in pricing, production and lease activity won't be seen until 2010, Osborne said.
"The values of any increase or decrease are felt the following tax year," Osborne said. "We anticipate some impact for tax year 2009, but even more so in tax year 2010 as long as values remain positive."
Osborne said West Virginia would gain more from the gas and coal price jump than the oil price jump since the state's oil production is smaller.
Lands where coal and other minerals are being produced were valued at $1.7 billion this year. Coal reserve lands were valued at $1.1 billion. While coal prices and production also jumped this year, current value estimates were not yet available.
Managed timberland also is estimated to have gained in value by $8.8 million since the most recent tax year.
The current economic problems have pushed the price of commodities down. But the market enjoyed a boom over the summer.
The price of natural gas reached record levels over the summer, according to data from the federal Department of Energy. Beginning in January, the wellhead price was averaging $6.99 per thousand cubic feet.
By July, the price was an average of $10.62 per thousand cubic feet and has since been crawling downward. Overall production peaked in July, also.
Appalachian coal, meanwhile, was selling for about $123 per short ton back in October. It's down to about $101 per short ton now.
Oil prices peaked at about $134 a barrel in July, but have fallen to just above $40 a barrel.
As far as the value of producing oil and gas lands, Wyoming County currently leads with its lands worth an estimated $555 million, followed by McDowell and Kanawha with respective estimated values of $547 million and $526 million, according to the tax department.
Kanawha leads as far as reserve lands with estimated values of $10.7 million.
Once taxes are collected on the lands, county school systems get the lion's share - 67 percent. Counties get 26 percent and cities get 7 percent. The state gets 1 percent.
Contact writer Justin D. Anderson at jus...@dailymail.com 304-348-4843
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