Wyoming Considering Subsidies for Pipelines

State lawmakers are shifting away from offering severance tax breaks and toward offering payments to encourage construction of gas pipelines.

Booming gas drilling but limited export capacity has translated into low prices for Wyoming gas compared to gas from other areas, like the Gulf of Mexico. State officials hope that getting more pipelines built would boost the price of Wyoming gas and thus state revenue.

The Wyoming Pipeline Authority estimates that Wyoming this year will lose out on $470 million in revenue based on the lower price of Wyoming gas.

The Legislature's Joint Minerals, Business and Economic Development Committee has been discussing incentives through the Pipeline Authority. The Pipeline Authority supports payments rather than tax breaks.

"It gets away from the perception that this is an effort to benefit producers when actually it's a benefit to the state," said Pipeline Authority executive director Brian Jeffries.

The committee on Tuesday discussed tabling the incentives bill. But Sen. Eli Bebout, R-Riverton, urged the committee to keep working on it, saying the estimated $470 million revenue loss is too critical for lawmakers to ignore a potential remedy.

"This is an issue that will not solve itself," Bebout said. "This is a huge, huge issue. This could be one of the biggest issues that comes out of this session."

On Tuesday, the Pipeline Authority provided figures to lawmakers suggesting that the cost of the incentive program could be $164 million, with a payoff of well over $500 million.

Jeffries said where the incentive money would come from still needed to be worked out.

Three major pipeline expansion proposals have been announced in recent weeks. None is scheduled to become operational before rapidly growing gas production again catches up with export capacity sometime in 2010.