Government 2306 Critical Paper #2
April 17th, 2001 | Back to Blog Listing
Government 2306
Critical Paper #2
Committee Hearing in the House

Committee Hearing in the House
Energy Resources

As I began listening to the discussions that were taking place in the Committee Hearing, it occurred to me that these people are just that, people. They do not speak as poets or even articulate writers. If we could call these men and women anything at all (besides what they are), it seems that we could call them non-threatening lawyers. These people are simply sitting around discussing current issues that are problems or at least potential problems in regards to Texas as a whole. In this particular case, the topic of interest is energy resources, as that is the committee that I chose to listen to.

What I find so interesting about this committee meeting, or I would assume any of them is the simple fact that these men and women are simply civilly discussing issues that affect my life in one way or another. Perhaps not right now, but at some point in the future, any one of these issues could come into play for me.

The majority of this segment that I found most interesting was on the taxation or lack thereof of the dried up or forgotten oil wells in Texas. I found this topic to be interesting in the meeting because I feel that its points were argued relatively well, and my father is an oil broker, thus giving me an interest in the taxable steps involved in his business. It certainly would have helped to have known more about the bills that these men and women were discussing, but on the flipside, they argued their points well enough that the bills they spoke of were fairly simple to interpret. One of the many topics discussed on the taxation of oil wells is due to oil entrepreneurs that create an oil well, milk it until it is dry or until the oil is unobtainable (if in fact there ever was oil to take from it), and then move on.

If we look at this concept for what it is we must first look at what drilling for oil actually creates. After speaking with Howard Ludlow, my father, on the matter, I was able to get a layman version of what goes on. The actual space that is necessary for drilling these days is no larger then a one hundred foot squared area. An apparatus is setup to drill, which nowadays can be nothing more then a mobile rig on a truck. In older times humans would have to drill within 5,000 ft to obtain oil but as times have changed and we have taken more and more of our precious resource, it has become necessary to drill deeper and deeper. These days a hole of 10,000 ft or deeper is common. As the hole is drilled (about 4-6" in diameter, the drill is threaded in such a way so that the ground waste that it extracts, called the tailings, are removed at the top of the well. They are usually left in a pile nearby the drilling well. Using a little math, a 6" hole at 10,000 ft would create about 2000 cubic foot of waste that is simply thrown to the side.

Now back to the argument at hand. Most all of the large drilling manufacturers at this point will drill until they can drill no longer. Oil or not, we will assume that the drilling process is over. After they have completed their drilling, they will fill in the hole with a special mixture and then cap it off. The excess waste is plowed over and a small hill is all that is left in this area. The problem is that smaller businesses will not always do this and the House has a large problem with this, I suspect mainly for environmental reasons. Once the well is no longer commercially viable to them, they simply move on to another "hole".

The House wants to create a tax that would be imposed on all oil companies which would then set aside a fund for plugging the dry oil wells up so that they do not pose a threat to the environment or to society for that matter. This would not only impose a tax on the general public, this would also impose a somewhat unnecessary tax to the oil companies that are already doing this, Exxon for example. As we hear from Ben Siebry, a representative from the big oil businesses in Texas, we are informed of this liability that these irresponsible oil drillers create. The larger drilling companies have recently come together (as of last summer) to discuss the issue of dry wells being left as they were when the drilling was finished. They have estimated that the amount of money that is necessary for this yearly operation is about $20 million. In turn, they have taken it upon themselves to raise the capital that is necessary but are fairly only able to allocate $12 million. What they are now asking for is to be taxed the remaining $8 million that it will take to adequately clean and plug these drill holes for every drilling business in Texas.

I feel that this is the right thing to do and asking to be taxed to fix an environmental problem is a huge step for any big business to take. The problem that they now face is that there has been another proposal for taxation which would allocate some $48 million towards this project. They feel that this is completely unnecessary and that the extra $28 million will simply be wasted tax dollars that they as businesses will have to spend. I fully agree with them being against this tax as they have taken it upon themselves to remedy the problem. Obviously there are always hidden costs and such involved in the processes and it would be easy for them to simply argue that they have solved their own mess and have now created a solution because if it doesn't work as they planned, they will still benefit and save over $40 million in tax dollars. I also however feel that their tax proposal for $8 million should be taken seriously and that the ins and outs of it should be examined very closely by the House. Perhaps in doing so a compromise can be made or their tax proposal could in fact be very sound in such a case it should be put into action.