Committee backs redirecting excess oil and gas taxes for orphan well plugging

Senate Bill 339, sponsored by Senator Dee Zolnikov, would revise the distribution of certain oil and natural gas production taxes so that excess revenues can be deposited into the damage mitigation account used to plug orphaned wells and restore sites.

Zolnikov said the bill imposes no new tax on producers but allows the Board of Oil and Gas Conservation to lower the board’s tax rate below 0.22% while preserving access to mitigation funds and prioritizing natural resource distribution account funding. Proponents included the Montana Petroleum Association, which described legacy wells and the need for state support to plug uncapped wells; conservation groups and county associations also testified that Montana faces an ongoing orphan‑well problem and that bonds have been insufficient in some cases.

Ben Jones, administrator for the Board of Oil and Gas Conservation (appearing remotely), explained the board’s operations account and reserve practices and said the board could manage reserves while using the mitigation account for orphan‑well cleanup. Committee members asked whether redirecting excess funds would jeopardize the board’s budget; Jones said the board adjusts the rate based on production and price and would preserve adequate reserves.

House Taxation Committee passed SB 339 by voice/roll call during executive action (recorded 21–0). Sponsor thanked supporters and identified a House carrier for the floor.

Next steps: SB 339 was advanced from committee (21–0) and will proceed to the House floor with a committee carrier.