| TO: | Honorable Rick Hardcastle, Chair, House Committee on Energy Resources |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB1920 by Keffer, Jim (Relating to the remedies available in connection with certain disputes between producers of natural gas and persons who gather or transport the gas.), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | $0 |
| 2009 | $0 |
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| Fiscal Year | Probable Revenue Gain from Higher Ed Fund Outside the Treasury--Permanent University Fund |
|---|---|
| 2008 | $1,900,000 |
| 2009 | $1,900,000 |
| 2010 | $1,900,000 |
| 2011 | $1,900,000 |
| 2012 | $1,900,000 |
The bill would provide for an informal complaint process for gas producers seeking explanations of any loss or inability to account for gas tendered each month by gas gatherers and transporters. Such complaints would be filed with the Railroad Commission and would require the gatherer or producer to furnish an accounting of gas tendered. The bill would provide for gatherers and transporters to seek extensions from the requirements from the Railroad Commission.
The bill would also entitle a producer to an audit of compliance by gatherers and transporters, and it would provide for producers to file informal complaints for any loss of or inability to account for specific amounts of gas.
There could be some increase in revenues to the state in additional severance tax collections, if the bill results in natural gas gatherers and transporters improving their facilities and reducing the amount of gas lost. The University of Texas System Administration reports that it estimates a loss of 15 percent of the total gas royalty produced on University Lands. Upon passage of the bill, this estimate assumes that a significant portion of those royalties would no longer be lost, resulting in a revenue gain of $1.9 million per fiscal year to the Permanent University Fund as shown in the table above.
The bill also would likely result in a revenue gain to the Permanent School Fund No. 44 because there would be a reduction in lost gas royalties. This estimate, however, assumes that the associated revenue gain would not be significant.
The Railroad Commission could incur costs associated with handling a potential increase in informal and complaints received as a result of the bill's passage. The cost would depend on the number of informal cases that would be filed with the Commission. This estimate assumes that the additional number of cases would not be significant, and that the Railroad Commission could cover those costs using existing resources.
| Source Agencies: | 455 Railroad Commission
|
| LBB Staff: | JOB, WK, DB, ZS, TL
|