Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 3 - TAX ADMINISTRATION › Subchapter B - NATURAL GAS › Section 3.21 - Exemption or Tax Reduction for High-Cost Natural Gas

Current through Reg. 49, No. 28; July 12, 2024
(a) Definitions. The following words and
				  terms, when used in this section, shall have the following meanings, unless the
				  context clearly indicates otherwise.
(1)
				  Commission--The Railroad Commission of Texas.
(2) Recompletion--The performance of work
				  within an existing wellbore for the purpose of drilling to a deeper producing
				  formation or plugging back to a more shallow producing formation.
(3) High-cost gas--
(A) High-cost natural gas as described by
				  Natural Gas Policy Act of 1978, §107, as that section exists on January 1,
				  1989, without regard to whether that section is in effect or whether a
				  determination has been made that the gas is high-cost natural gas for purposes
				  of that Act; or
(B) All gas
				  produced from oil wells or gas wells within a Commission approved co-production
				  project.
(4) Commission
				  approved co-production project--A reservoir development project in which the
				  Commission has recognized that water withdrawals from an oil or gas reservoir
				  in excess of specified minimum volumes will result in recovery of additional
				  oil and/or gas from the reservoir that would not be produced by conventional
				  production methods and where operators of wells completed in the reservoir have
				  begun to implement Commission requirements to withdraw such volumes of water
				  and dispose of such water outside the subject reservoir. Reservoirs potentially
				  eligible for this designation shall be limited to those reservoirs in which oil
				  and/or gas has been bypassed by water encroachment caused by production from
				  the reservoir and such bypassed oil and/or gas may be produced as a result of
				  reservoir-wide high-volume water withdrawals of natural formation
				  water.
(5) Date of first
				  production--For high-cost natural gas wells spudded or completed after August
				  31, 1996, the first day of the month of the deliverability test as reported on
				  the appropriate Commission form, or the production month as indicated on the
				  first production report filed with the Commission that shows a gas disposition
				  code other than "lease or field fuel use" or "vented or flared", whichever
				  month is earlier.
(6) Consecutive
				  months--Months in consecutive order, regardless of whether or not a well
				  produces oil or gas during any or all such months.
(7) Amount of tax reduction for a well--The
				  product of the full tax rate times the ratio of drilling and completion costs
				  for the well to twice the median drilling and completion costs for high-costs
				  wells for which an application for the exemption or tax reduction was made
				  during the previous state fiscal year. Drilling and completion costs for a
				  recompletion shall only include current and contemporaneous costs associated
				  with the recompletion.
(8) Reduced
				  tax rate--The tax rate obtained when the amount of tax reduction is subtracted
				  from the full tax rate, except that the effective rate of the tax shall never
				  be less than zero.