Several U.S. States Deemed Best Global Oil and Gas Investments

By: - June 27, 2012 12:00 am

Oklahoma is the best place on earth to do business in oil and gas, and it’s followed closely by several other U.S. states, according to a global survey of petroleum executives.

Seven U.S. states ranked in the top 10, and five more cracked the top 25 among 147 jurisdictions evaluated in the Frasier Institute’s Global Petroleum Survey, whose results were released Tuesday (June 26).

In the survey, the Canada-based libertarian think tank ranked oil and gas-producing regions according to their business climates, rewarding jurisdictions with the fewest so-called investment barriers, including high tax rates, strict regulatory regimes and uncertainty over environmental regulation.

The results were based on responses from 623 industry representatives.

Mississippi, Texas and North Dakota followed Oklahoma in succession, while New Mexico, Kansas and West Virginia were ranked seventh, eighth, and tenth, respectively. Wyoming, Ohio, Louisiana, Colorado, Montana and Utah were rated in the top 25.

“Their tax, regulatory, and labor terms are clear, consistent, and competitive,” Gerry Angevine, a Frasier Institute economist, said of the high-ranking states. “They are in a great position to attract and reap economic benefits from petroleum investment, including the development of shale gas and tight oil resources through the application of hydraulic fracking technology.”

Most of the top-ranked U.S. states in the Frazier survey were found by the U.S. Environmental Protection Agency last year to have poor records of enforcing federal clean air and water laws.

Alaska and New York were at the bottom of U.S. states in the survey, ranking 61st and 68th, respectively. A survey respondent criticized Alaska for “punitive regulations; anti-business environment in press and government; excessive taxation.” New York was faulted for “burdensome legislation.”

Several U.S. states rose in the rankings compared to last year, with California leaping to the 45th slot from 91st, the result of higher scores on fiscal terms, taxation, labor availability and regulations. Other huge jumps came from New Mexico, Colorado and Pennsylvania, though Pennsylvania was criticized by one respondent for “no legal history to determine leases and obligations.”

Ohio fell in the index over the past year, from second to 14th, a result of increased concerns about proposed tax increases and tightened environmental regulations, according to the survey. Lawmakers in Ohio spent much of this year trying to balance economic and environmental concerns while energy companies were flocking to tap the state’s vast Utica shale deposit.

Governor John Kasich has proposed a severance tax on natural gas, which he says would help the state pay for the income tax cuts he has proposed. But energy executives and some of Kasich’s fellow Republicans fear the tax will discourage investment.

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