81R15430 T

By: Callegari H.B. No. 4166

A BILL TO BE ENTITLED

AN ACT

relating to the provision of severance tax credits and exemptions and other incentives and procedures for producing oil from certain wells.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sec. 202.062. TAX CREDIT FOR PROCESSING CONTAMINATED PRODUCED WATERS USED IN THE PRODUCTION OF OIL.

(a) In this section:

(1) "Hydraulic fracturing" means a method used to create fractures that extend from a borehole into rock formations, informally called fracing or hydrofracing. The technique is used to increase or restore the rate at which fluids, such as oil, can be produced from the formation. By creating or restoring fractures, the reservoir surface area exposed to the borehole is increased and the fracture provides a conductive path connecting this reservoir surface area to the well, which effectively increases the rate that fluids can be produced from the reservoir formations.

(2) "Process contaminated produced waters" means a patented thermal evaporation technology used to desalinate and purify water contaminated by its use in hydraulic fracturing.

(b) The taxpayer responsible for the payment of severance taxes on the production from an oil well in this state on which hydraulic fracturing is performed and who pays a fee to another person or entity to process contaminated produced waters resulting from hydraulic fracturing operations so that waters can then be reused is entitled to a credit in an amount equal to fifty cents per barrel of reclaimed water paid to said person or entity, provided that:

(1) the taxpayer must file an application with the comptroller for the credit and must demonstrate to the comptroller that it is obligated to pay a fee to another person or entity to process contaminated produced waters resulting from hydraulic fracturing operations.

(2) The taxpayer may carry any unused credit forward until the credit is used.

(3) Any costs associated with this water reclamation program must be paid from stimulus monies first if such monies are available.

(4) The Texas Commission on Environmental Quality (TCEQ) shall adopt rules to provide regulatory oversight and approval of any water reclamation program which results in severance tax credits.

SECTION 2. EFFECTIVE DATE. This Act takes effect immediately 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 immediate effect, this Act takes effect September 1, 2009. This Act will expire at the end of two years after the date this Act takes effect.