BILL ANALYSIS
By: Averitt
BACKGROUND AND PURPOSE
Under current law, there are no incentives provided for reusing water in oil and gas activities. The oil and gas industry uses water in nearly every aspect of exploration and production. The Railroad Commission of Texas (commission) estimates that 6,112 million barrels of fluid were used in 2001 in enhanced recovery operations. Of these barrels, approximately 212 million barrels were fresh or brackish water. Technological advances, such as hydraulic fracturing, have presented new opportunities to access geological formations once unreachable. Hydraulic fracturing, generally used in the Barnett Shale, is a water-intensive extraction process that involves pumping large volumes of freshwater into a geological formation. The commission estimates that, in 2005, approximately 82.19 million barrels of water were used for hydraulic fracturing in the Barnett Shale, equaling about 10,592 acre-feet of water. There are projects underway that explore the reuse of water used in hydraulic fracturing. Incentives are needed for reuse technologies to reduce the amount of wastewater that is required to be disposed of by the oil and gas industry.
S.B. 1816 exempts tangible personal property specifically used to process, reuse, or recycle wastewater that will be used in fracturing work performed at an oil or gas well from certain taxes imposed by this chapter.
RULEMAKING AUTHORITY
ANALYSIS
The bill amends Section 151.355, Tax Code, as follows:
Sec. 151.355. WATER-RELATED EXEMPTIONS. Exempts tangible personal property specifically used to process, reuse, or recycle wastewater that will be used in fracturing work performed at an oil or gas well from taxes imposed by this chapter (Limited Sales, Excise, and Use Tax). Makes nonsubstantive changes.
The bill makes application of this Act prospective.
This Act takes effect July 1, 2007, if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for effect on that date, the Act takes effect October 1, 2007.
EFFECTIVE DATE
This Act takes effect July 1, 2007, if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for effect on that date, the Act takes effect October 1, 2007.