| 1 | 1 | | 81R15430 T |
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| 2 | 2 | | By: Callegari H.B. No. 4166 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the provision of severance tax credits and exemptions |
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| 8 | 8 | | and other incentives and procedures for producing oil from certain |
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| 9 | 9 | | wells. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Sec. 202.062. TAX CREDIT FOR PROCESSING |
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| 12 | 12 | | CONTAMINATED PRODUCED WATERS USED IN THE PRODUCTION OF OIL. |
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| 13 | 13 | | (a) In this section: |
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| 14 | 14 | | (1) "Hydraulic fracturing" means a method used to |
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| 15 | 15 | | create fractures that extend from a borehole into rock formations, |
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| 16 | 16 | | informally called fracing or hydrofracing. The technique is used to |
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| 17 | 17 | | increase or restore the rate at which fluids, such as oil, can be |
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| 18 | 18 | | produced from the formation. By creating or restoring fractures, |
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| 19 | 19 | | the reservoir surface area exposed to the borehole is increased and |
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| 20 | 20 | | the fracture provides a conductive path connecting this reservoir |
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| 21 | 21 | | surface area to the well, which effectively increases the rate that |
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| 22 | 22 | | fluids can be produced from the reservoir formations. |
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| 23 | 23 | | (2) "Process contaminated produced waters" means a |
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| 24 | 24 | | patented thermal evaporation technology used to desalinate and |
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| 25 | 25 | | purify water contaminated by its use in hydraulic fracturing. |
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| 26 | 26 | | (b) The taxpayer responsible for the payment of severance |
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| 27 | 27 | | taxes on the production from an oil well in this state on which |
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| 28 | 28 | | hydraulic fracturing is performed and who pays a fee to another |
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| 29 | 29 | | person or entity to process contaminated produced waters resulting |
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| 30 | 30 | | from hydraulic fracturing operations so that waters can then be |
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| 31 | 31 | | reused is entitled to a credit in an amount equal to fifty cents per |
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| 32 | 32 | | barrel of reclaimed water paid to said person or entity, provided |
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| 33 | 33 | | that: |
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| 34 | 34 | | (1) the taxpayer must file an application with the |
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| 35 | 35 | | comptroller for the credit and must demonstrate to the comptroller |
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| 36 | 36 | | that it is obligated to pay a fee to another person or entity to |
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| 37 | 37 | | process contaminated produced waters resulting from hydraulic |
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| 38 | 38 | | fracturing operations. |
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| 39 | 39 | | (2) The taxpayer may carry any unused credit forward |
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| 40 | 40 | | until the credit is used. |
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| 41 | 41 | | (3) Any costs associated with this water reclamation |
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| 42 | 42 | | program must be paid from stimulus monies first if such monies are |
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| 43 | 43 | | available. |
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| 44 | 44 | | (4) The Texas Commission on Environmental Quality |
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| 45 | 45 | | (TCEQ) shall adopt rules to provide regulatory oversight and |
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| 46 | 46 | | approval of any water reclamation program which results in |
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| 47 | 47 | | severance tax credits. |
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| 48 | 48 | | SECTION 2. EFFECTIVE DATE. This Act takes effect |
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| 49 | 49 | | immediately if it receives a vote of two-thirds of all the members |
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| 50 | 50 | | elected to each house, as provided by Section 39, Article III, Texas |
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| 51 | 51 | | Constitution. If this Act does not receive the vote necessary for |
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| 52 | 52 | | immediate effect, this Act takes effect September 1, 2009. This Act |
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| 53 | 53 | | will expire at the end of two years after the date this Act takes |
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| 54 | 54 | | effect. |
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