"It's really an insurance policy," he said. "It protects the potential some of the more productive wells that would take advantage of that exemption.
"There's been a little concern that with the (Marcellus shale) gas formations. . .depending upon market conditions, there might be some incentive for folks to shut them in for five years and open them back up," he said.
Sen. Sam Cann, D-Harrison, challenged Muchow's statements, however.
"I would not agree. The market has not changed for these shallow wells. The price is still quite cheap," said Cann, former president of the Independent Oil and Gas Association.
He said while large companies are pumping out more and more natural gas through horizontal drilling, or "fracking," operations, many state gas companies are mom-and-pop operations that produce only a few units per day.
Charlie Burd, executive director of the Independent Oil and Gas Association, told committee member some well operators make only about $20 per day with recent rock-bottom natural gas prices.
He said there are about 7,000 abandoned wells in the state, and while they won't produce like new wells, they can contribute to the natural gas market if there is an incentive for them to reopen.
Cann said he agreed the state should not protect major companies who might decide to cap a well for five years, just to receive a decade of severance tax exemptions. But he said the state should continue to provide incentives for smaller producers to re-open their closed wells.
Committee members unanimously approved the severance tax bill following the amendment. The bill now will go to the Senate Finance Committee where its sponsor, Sen. Roman Prezioso, D-Marion, is chairman.