SRC-AAA S.B. 1440 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1440
By: Wentworth
Finance
4-1-97
As Filed


DIGEST 

Currently, there are no tax breaks to oil and gas leases which 
show a sustained increase in 
production.  Lower product wells have high production costs and 
smaller profits.  This bill provides 
for a tax break for those oil and gas leases which show a 
sustained increase in production, creating 
an incentive for those operators to invest in 
production-enhancing activity. 

PURPOSE

As proposed, S.B. 1440 provides for a tax break for those oil and 
gas leases which show a sustained 
increase in production creating an incentive for those operators 
to invest in production-enhancing 
activity. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Railroad Commission of 
Texas in SECTION 2 (Section 
202.057(e), Tax Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 201.058, Chapter 201B, Tax Code, to 
require certain operators 
increasing production by  marketing gas from an oil well or lease 
that has been flared for 12 months 
or more, pursuant to the rules of the Railroad Commission of 
Texas, to be entitled to an exemption 
from tax imposed by this chapter.  Makes a conforming change.

SECTION 2. Amends Chapter 202B, Tax Code, by adding Section 
202.057, as follows:

Sec.  202.057.  TAX CREDIT FOR INCREMENTAL PRODUCTION 
TECHNIQUES. 
Defines "baseline production," "commission," "incremental 
production," "incremental 
production techniques," "incremental ratio," "qualifying 
lease," and "qualified incremental 
production."  Provides that an operator of a qualifying 
lease is entitled to a 50 percent tax 
exemption on that lease's qualified incremental production 
for five years provided that 
certain provisions are met.  Requires this section to be 
suspended if certain provisions are 
met.  Sets forth requirements for receiving a credit against 
taxes imposed by this chapter. 
Requires the Railroad Commission of Texas to adopt rules 
necessary to administer this 
section.

SECTION 3. Effective date: September 1, 1997.