SRC-PNG S.B. 1731 76(R)BILL ANALYSIS


Senate Research CenterS.B. 1731
76R7896By: Brown
Natural Resources
7/61999
Enrolled


DIGEST 

Currently, the School Land Board is authorized to reduce royalty rates for
a certain period under certain oil and gas leases for marginally producing
state-owned oil and gas properties.  Given the current state of the oil
industry and the substantial amount of capital that is generally required
to enhance or even maintain marginally producing wells, the potential of
losing the royalty after two years limits the practical value of the
existing law.  For oil and gas companies that propose an enhanced recovery
project on marginally producing wells, more than two years may be necessary
to recoup their investment.  This bill revises the period during which the
School Land Board may reduce the royalty rate under certain oil and gas
leases. 

PURPOSE

As enrolled, S.B. 1731 revises the period during which the School Land
Board may reduce the royalty rate under certain oil and gas leases. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Sections 32.067(c) and (d), Natural Resources Code, to
authorize the royalty rate for oil and gas produced from a qualifying
reservoir to be reduced to not less than one-sixteenth (6.25 percent) for a
prescribed term by the School Land Board (board), rather than for a term
not to exceed two years unless extended at the reduced rate for additional
periods not to exceed two years on approval.  Authorizes the royalty rate
for the state's share under a lease issued under Chapter 52F, or Sections
51.195(c)(2) and (d) to be reduced to not less than one-thirty-second
(3.125 percent) for a term prescribed by the board, rather than for a term
not to exceed two years unless extended at the reduced rate for additional
periods not to exceed two years on approval.   

SECTION 2. Effective date: September 1, 1999.

SECTION 3. Emergency clause.