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A BILL TO BE ENTITLED
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AN ACT
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relating to incentives for enhanced recovery of oil and gas. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 91.110, Natural Resources Code, is |
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amended to read as follows: |
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Sec. 91.110. OIL AND GAS WASTE REDUCTION, [AND] |
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MINIMIZATION, AND ENHANCED PRODUCTION. (a) To encourage enhanced |
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oil and gas production and the reduction and minimization of oil and |
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gas waste, the commission shall implement a program to: |
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(1) provide operators with training and technical |
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assistance on enhanced oil and gas production and oil and gas waste |
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reduction and minimization; |
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(2) assist operators in developing enhanced oil and |
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gas production and oil and gas waste reduction and minimization |
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plans; and |
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(3) by rule establish incentives for enhanced oil and |
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gas production and oil and gas waste reduction and minimization. |
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SECTION 2. Subtitle I, Tax Code, is amended by adding |
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Chapter 205 to read as follows: |
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CHAPTER 205. TAX CREDIT FOR ENHANCED RECOVERY. |
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Sec. 205.001. DEFINITIONS. In this chapter: |
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(1) "Commission" means the Railroad Commission of |
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Texas. |
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(2) "Enhanced recovery" means any secondary or |
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tertiary production enhancement technique that enables a producer |
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to increase production by more than five percent for a period of no |
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less than four months. |
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(3) "Gas" means natural gas, casinghead gas, or other |
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gas taken from the earth or water, whether produced from a gas well |
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or a well also producing oil, distillate or condensate or both, or |
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other products |
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(4) "Producer" means a person who takes oil or gas from |
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the earth or water in any manner, a person who owns, controls, |
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manages, or leases an oil or gas well, or a person who owns an |
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interest, including a royalty interest, in oil or gas or its value, |
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whether the oil or gas is produced by the person owning the interest |
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or by another on his behalf by lease, contract, or any other |
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arrangement. |
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(5) "Oil" means crude oil or other oil taken from the |
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earth, regardless of the gravity of the oil. |
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(6) "Well" means an oil or gas well. |
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Sec. 205.002. TAX CREDIT FOR ENHANCED RECOVERY. (a) |
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Persons who utilize enhanced recovery to increase production at a |
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well are eligible for a tax credit applicable against the taxes |
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imposed by Chapters 201 and 202. |
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(b) The amount of the tax credit shall be as follows shall |
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not exceed $200,000 per well in which the enhanced recovery is |
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implemented. |
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Sec. 205.003. CERTIFICATION OF ENHANCED RECOVERY. (a) The |
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commission shall have the authority to determine whether a producer |
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qualifies for an enhanced recovery tax tax credit under this |
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chapter. The commission may require an applicant for a tax credit |
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under this chapter to provide the commission with any relevant |
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information required to administer this chapter. Upon determining |
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that a producer is eligible for an enhanced recovery tax credit, the |
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commission shall furnish a certificate of enhanced recovery to the |
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applicant. |
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(b) For purposes of obtaining a tax credit under this |
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chapter, applications for a certificate of enhanced recovery must |
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be made to the commission |
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Sec. 205.004. APPLICATION. To qualify for the tax credit, a |
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person who receives a certificate of enhanced recovery from the |
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commission must apply to the comptroller. The comptroller shall |
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approve the application of a person who demonstrates eligibility |
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for a tax credit. The comptroller shall have the power to establish |
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procedures in order to comply with this chapter and may require a |
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person applying for the tax credit to provide any relevant |
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information. The commission shall immediately notify the |
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comptroller in writing if it determines that the enhanced recovery |
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designation obtained by the applicant has been revoked or if it |
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discovers any information that affects the tax credit. |
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Sec. 205.005. APPLICABILITY OF TAX CREDIT. (a) Tax credits |
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earned under this chapter may only be applied against the severance |
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taxes imposed by Chapters 201 and 202 of this code. The tax credit |
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may be applied to either oil or gas severance taxes regardless of |
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the field from which the production originates. |
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(b) Tax credits provided under this chapter shall only be |
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available if at the time the application for a tax credit is made, |
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the well that is the basis for the tax credit is producing oil or gas |
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from the discovery field. |
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Sec. 205.006. RULES AND ORDERS. The commission has broad |
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discretion in administering this chapter and may adopt and enforce |
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any appropriate rules or orders that the commission finds necessary |
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to administer this chapter. |
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SECTION 3. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2015. |