The fiscal implications of the bill cannot be determined due to the unknown amount of produced natural gas that would be consumed on the well site as opposed to being lawfully vented or flared. The bill would result in an indeterminate amount of revenue loss from the General Revenue Fund, Economic Stabilization Fund, and State Highway Fund.
The bill would amend Chapter 201 of the Tax Code (Gas Production Tax) to add Section 201.061 regarding a tax exemption for on-site use of natural gas that would be normally vented or flared from an oil well.
Gas produced from a qualifying well that is consumed on the well site and would otherwise have been lawfully vented or flared would not be subject to the tax imposed by this chapter.
In order to qualify for the exemption a well site must abide by certain application requirements and be certified by the Texas Railroad Commission and the Comptroller of Public Accounts. The RRC indicates they would have administrative and IT costs related to reviewing the applications required under the bill and certifying that a well is a qualifying well.
There would be a loss of revenue from the General Revenue, Economic Stabilization, and State Highway Funds from the new exemption created under this bill. The amount of produced natural gas that would be consumed on the well site as opposed to being lawfully vented or flared is unknown, therefore the amount of revenue loss cannot be determined at this time.
The bill would take effect September 1, 2023.
No significant fiscal implication to units of local government is anticipated.