1-1 By: Ellis S.B. No. 905
1-2 (In the Senate - Filed March 2, 1995; March 6, 1995, read
1-3 first time and referred to Committee on Natural Resources;
1-4 March 29, 1995, reported favorably, as amended, by the following
1-5 vote: Yeas 11, Nays 0; March 29, 1995, sent to printer.)
1-6 COMMITTEE AMENDMENT NO. 1 By: Brown
1-7 Amend S.B. No. 905 by striking the number "15" at page 1, line 17
1-8 (committee printing line ), and substituting in its place the
1-9 number "50."
1-10 COMMITTEE AMENDMENT NO. 2 By: Brown
1-11 Amend S. B. No. 905 by inserting a new Section 2 at page 3, line 14
1-12 (committee printing page , line ), to read as follows, and
1-13 renumbering Sections 2 and 3.
1-14 SECTION 2. Subchapter D, Chapter 66, Education Code, is
1-15 amended by adding Section 66.84 to read as follows:
1-16 Sec. 66.84. MARGINAL PROPERTY ROYALTY RATES. (a) In this
1-17 section:
1-18 (1) "Barrel of oil equivalent" means 6,000 cubic feet
1-19 of natural gas per 42-gallon barrel of crude oil.
1-20 (2) "Lease" or "leases" means an oil and gas lease
1-21 issued or approved by the state that is valid and in force on or
1-22 after the effective date of this section.
1-23 (3) "Qualifying property" means land subject to a
1-24 lease issued under this subchapter.
1-25 (4) "Qualifying reservoir" means a reservoir having an
1-26 average daily per well production equal to or less than 15 barrels
1-27 of oil equivalent during a period established by the board by rule
1-28 and underlying either:
1-29 (A) a qualifying property; or
1-30 (B) a pooled unit including a qualifying
1-31 property.
1-32 (5) "Reservoir" has the same meaning as "common
1-33 reservoir" as defined in Section 86.002, Natural Resources Code.
1-34 (b) The board may provide by rule that the royalty rate for
1-35 qualifying reservoirs may be reduced to not less than one-sixteenth
1-36 (6.25 percent).
1-37 (c) If a qualifying reservoir for which royalty rate
1-38 reduction is sought under this section is included in a unit
1-39 subject to the authority of the board, the board may modify the
1-40 terms and conditions of the unit as a condition of approving a
1-41 reduction in the royalty rate.
1-42 A BILL TO BE ENTITLED
1-43 AN ACT
1-44 relating to royalty rates applicable to certain oil and gas
1-45 properties on public lands.
1-46 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-47 SECTION 1. Subchapter C, Chapter 32, Natural Resources Code,
1-48 is amended by adding Section 32.067 to read as follows:
1-49 Sec. 32.067. MARGINAL PROPERTY ROYALTY RATES. (a) In this
1-50 section:
1-51 (1) "Barrel of oil equivalent" means 6,000 cubic feet
1-52 of natural gas for each 42-gallon barrel of crude oil.
1-53 (2) "Qualifying Gulf of Mexico property" means land
1-54 described in Section 52.011(2) that is subject to a lease issued
1-55 under Subchapter B, Chapter 52.
1-56 (3) "Qualifying Gulf of Mexico reservoir" means a
1-57 reservoir that:
1-58 (A) during a period established by board rule
1-59 has an average daily per well production equal to or less than 15
1-60 barrels of oil or barrels of oil equivalent; and
1-61 (B) underlies:
1-62 (i) a qualifying Gulf of Mexico property;
1-63 or
1-64 (ii) a pooled unit that includes a
1-65 qualifying Gulf of Mexico property.
1-66 (4) "Qualifying property" means land subject to a
1-67 lease issued under this chapter, under Subchapter E, Chapter 51, or
1-68 under Chapter 52.
2-1 (5) "Qualifying reservoir" means a reservoir that:
2-2 (A) during a period established by board rule
2-3 has an average daily per well production equal to or less than 15
2-4 barrels of oil or barrels of oil equivalent; and
2-5 (B) underlies:
2-6 (i) a qualifying property; or
2-7 (ii) a pooled unit that includes a
2-8 qualifying property.
2-9 (6) "Reservoir" has the same meaning as "common
2-10 reservoir" as that term is defined in Section 86.002.
2-11 (b) The board by rule may provide for the reduction of
2-12 royalty rates as provided by this section.
2-13 (c) The royalty rate for oil and gas produced from a
2-14 qualifying reservoir may be reduced to not less than one-sixteenth
2-15 (6.25 percent).
2-16 (d) The royalty rate for the state's share under a lease
2-17 issued under Subchapter F, Chapter 52, or Sections 51.195(c)(2) and
2-18 (d) may be reduced under this section to not less than
2-19 one-thirty-second (3.125 percent). The state's royalty rate may be
2-20 reduced under this subsection only if the royalty rate for the
2-21 owner of the soil is reduced in the same proportion.
2-22 (e) The royalty rate under a lease issued under Subchapter
2-23 C, Chapter 52, may not be reduced to a rate that is lower than the
2-24 rate under lease of land that:
2-25 (1) adjoins the land leased under Subchapter C; and
2-26 (2) is held or operated by, or under the significant
2-27 control of, the state's lessee.
2-28 (f) The royalty rate under a lease issued under Subchapter F
2-29 of this chapter may not be reduced to a rate that is lower than the
2-30 rate under a lease of land that adjoins the land leased under
2-31 Subchapter F.
2-32 (g) If a qualifying reservoir for which a royalty rate
2-33 reduction is sought under this section is included in a unit
2-34 subject to the board's authority, the board may modify the terms
2-35 and conditions for the unit as a condition of approving the
2-36 requested reduction in the royalty rate.
2-37 (h) This section does not apply to the free royalty reserved
2-38 by the state under Section 51.054.
2-39 SECTION 2. Section 32.067, Natural Resources Code, as added
2-40 by this Act, applies to the royalty rate under a lease issued or
2-41 approved by the state that is in effect on, or takes effect on or
2-42 after, the effective date of this Act.
2-43 SECTION 3. The importance of this legislation and the
2-44 crowded condition of the calendars in both houses create an
2-45 emergency and an imperative public necessity that the
2-46 constitutional rule requiring bills to be read on three several
2-47 days in each house be suspended, and this rule is hereby suspended,
2-48 and that this Act take effect and be in force from and after its
2-49 passage, and it is so enacted.
2-50 * * * * *