By Holzheauser H.B. No. 3491
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to tax exemptions on oil and gas production:
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter B, Chapter 201, Section 201.058 Tax
1-5 Code, is amended to read as follows:
1-6 Sec. 201.058. Tax Exemptions. (a) The exemptions described
1-7 by Sections 202.056, 202.057, and 202.059 apply to the taxes
1-8 imposed by this chapter as authorized by and subject to the
1-9 certification and approvals required by those sections.
1-10 (b) Operators increasing production by marketing gas from an
1-11 oil well or lease that has been flared for 12 months or more
1-12 pursuant to the rules of the commission shall be entitled to an
1-13 exemption from the tax imposed by this chapter on the production
1-14 resulting from the marketing of such gas for the life of the well
1-15 or lease.
1-16 SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
1-17 by adding Section 202.057 to read:
1-18 Sec. 202.057. TAX CREDIT FOR INCREMENTAL PRODUCTION
1-19 TECHNIQUES. (a) In this section:
1-20 (1) "Baseline production" means a lease's average
1-21 production from January 1995 through December 1995.
1-22 (2) "Commission" means Railroad Commission of Texas.
2-1 (3) "Incremental production" means production from a
2-2 qualifying lease in excess of the baseline production.
2-3 (4) "Incremental production techniques" means any
2-4 primary, secondary or tertiary production enhancement technique
2-5 which causes incremental production from an existing oil lease or
2-6 from a newly drilled single completion well on an existing lease.
2-7 (5) "Incremental ratio" means the amount of a
2-8 qualifying lease's average incremental production divided by its
2-9 average total production for the four (4) months utilized to meet
2-10 the definition of a qualifying lease.
2-11 (6) "Qualifying lease" means a commission designated
2-12 oil lease whose baseline production is no more than seven (7)
2-13 barrel-of-oil equivalents (BOE) per day per well (excluding gas
2-14 flared pursuant to the rules of the commission) that has shown
2-15 incremental production for four (4) of five (5) months following
2-16 baseline production determination.
2-17 (7) "Qualified incremental production" means the
2-18 lease's monthly total production multiplied by the incremental
2-19 ratio.
2-20 (b) An operator of a qualifying lease is entitled to a fifty
2-21 percent (50%) tax exemption on that lease's qualified incremental
2-22 production for 5 years provided that:
2-23 (1) the incremental production required to define a
2-24 qualifying lease occurred after the effective date of this bill and
2-25 before December 31, 1998; and
2-26 (2) the operator of a qualifying lease applies to the
2-27 Commission for a determination of a lease's incremental ratio
3-1 before February 11, 1999; and
3-2 (3) the operator provides to the Comptroller of Public
3-3 Accounts a commission-certified incremental ratio.
3-4 (c) If the Comptroller of Public Account's average taxable
3-5 price of crude oil reaches $25.00 per barrel, adjusted to 1997
3-6 dollars, for three consecutive months, then the tax credit under
3-7 this section shall be suspended until the price drops below $25.00
3-8 per barrel, adjusted to 1997 dollars, for three consecutive months.
3-9 (d) If the tax is paid at the full rate provided by Section
3-10 201.052(a), 201.052(b), 202.052(a), or 202.052(b) before the
3-11 comptroller approves an application for an exemption provided in
3-12 this chapter, the operator is entitled to a credit against taxes
3-13 imposed by this chapter in an amount equal to the fifty percent
3-14 (50%) of the tax paid on the incremental production. To receive a
3-15 credit, the operator must apply to the comptroller for the credit
3-16 not later that the first anniversary after the date the commission
3-17 certifies the incremental ratio for a qualifying lease.
3-18 (e) The commission may enact rules necessary to administer
3-19 the provisions of this section.
3-20 SECTION 3. This Act takes effect September 1, 1997.
3-21 SECTION 4. The importance of this legislation and the
3-22 crowded condition of the calendars in both houses create an
3-23 emergency and an imperative public necessity that the
3-24 constitutional rule requiring bills to be read on three several
3-25 days in each house be suspended, and this rule is hereby suspended.