LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  February 23, 1997
         
         
      TO: Honorable Bill Ratliff, Chair            IN RE:  Senate Bill No. 582
          Committee on Finance                              By: Ratliff
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB582 ( Relating 
to the application of the oil production tax to new or expanded 
enhanced recovery projects.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB582-As Introduced
         
No significant fiscal implication to the State is anticipated.
         

         
 
FISCAL ANALYSIS
The bill would extend the application period 
for a new enhanced oil recovery project or expansion of an existing 
enhance oil recovery project from the ending current date of 
January 1, 1998 to a new ending date of January 1, 2008.  The 
bill would take effect on September 1, 1997.

METHODOLOGY
The 
volume of oil produced from wells certified during the first 
phase of this enhanced oil recovery program, which ran from 
September 1, 1989 to December 31, 1993 was compared to the volume 
of oil reported from wells certified during the second phase, 
which began on January 1, 1994.  The comparison indicates that 
a substantial portion of potential oil production from these 
types of projects has already been achieved.  Assuming this 
downward trend, any fiscal impact on the state would be insignificant 
from a new, third phase of the enhanced recovery program.
          
LOCAL
There would be some potential financial gain to certain 
units of local government where these enhanced recovery projects 
would be undertaken.  The gain would be increased mineral property 
valuations on the wells that are the subjects of enhanced recovery 
projects.  The gain in valuation and subsequent, additional 
 local tax revenues would depend on (1) the number of projects 
undertaken; (2) the production from said projects, and (3) the 
future price of oil.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,CT