By: Dale H.B. No. 3554
A BILL TO BE ENTITLED
AN ACT
relating to incentives for enhanced recovery of oil and gas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 91.110, Natural Resources Code, is
amended to read as follows:
Sec. 91.110. OIL AND GAS WASTE REDUCTION, [AND]
MINIMIZATION, AND ENHANCED PRODUCTION. (a) To encourage enhanced
oil and gas production and the reduction and minimization of oil and
gas waste, the commission shall implement a program to:
(1) provide operators with training and technical
assistance on enhanced oil and gas production and oil and gas waste
reduction and minimization;
(2) assist operators in developing enhanced oil and
gas production and oil and gas waste reduction and minimization
plans; and
(3) by rule establish incentives for enhanced oil and
gas production and oil and gas waste reduction and minimization.
SECTION 2. Subtitle I, Tax Code, is amended by adding
Chapter 205 to read as follows:
CHAPTER 205. TAX CREDIT FOR ENHANCED RECOVERY.
Sec. 205.001. DEFINITIONS. In this chapter:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Enhanced recovery" means any secondary or
tertiary production enhancement technique that enables a producer
to increase production by more than five percent for a period of no
less than four months.
(3) "Gas" means natural gas, casinghead gas, or other
gas taken from the earth or water, whether produced from a gas well
or a well also producing oil, distillate or condensate or both, or
other products
(4) "Producer" means a person who takes oil or gas from
the earth or water in any manner, a person who owns, controls,
manages, or leases an oil or gas well, or a person who owns an
interest, including a royalty interest, in oil or gas or its value,
whether the oil or gas is produced by the person owning the interest
or by another on his behalf by lease, contract, or any other
arrangement.
(5) "Oil" means crude oil or other oil taken from the
earth, regardless of the gravity of the oil.
(6) "Well" means an oil or gas well.
Sec. 205.002. TAX CREDIT FOR ENHANCED RECOVERY. (a)
Persons who utilize enhanced recovery to increase production at a
well are eligible for a tax credit applicable against the taxes
imposed by Chapters 201 and 202.
(b) The amount of the tax credit shall be as follows shall
not exceed $200,000 per well in which the enhanced recovery is
implemented.
Sec. 205.003. CERTIFICATION OF ENHANCED RECOVERY. (a) The
commission shall have the authority to determine whether a producer
qualifies for an enhanced recovery tax tax credit under this
chapter. The commission may require an applicant for a tax credit
under this chapter to provide the commission with any relevant
information required to administer this chapter. Upon determining
that a producer is eligible for an enhanced recovery tax credit, the
commission shall furnish a certificate of enhanced recovery to the
applicant.
(b) For purposes of obtaining a tax credit under this
chapter, applications for a certificate of enhanced recovery must
be made to the commission
Sec. 205.004. APPLICATION. To qualify for the tax credit, a
person who receives a certificate of enhanced recovery from the
commission must apply to the comptroller. The comptroller shall
approve the application of a person who demonstrates eligibility
for a tax credit. The comptroller shall have the power to establish
procedures in order to comply with this chapter and may require a
person applying for the tax credit to provide any relevant
information. The commission shall immediately notify the
comptroller in writing if it determines that the enhanced recovery
designation obtained by the applicant has been revoked or if it
discovers any information that affects the tax credit.
Sec. 205.005. APPLICABILITY OF TAX CREDIT. (a) Tax credits
earned under this chapter may only be applied against the severance
taxes imposed by Chapters 201 and 202 of this code. The tax credit
may be applied to either oil or gas severance taxes regardless of
the field from which the production originates.
(b) Tax credits provided under this chapter shall only be
available if at the time the application for a tax credit is made,
the well that is the basis for the tax credit is producing oil or gas
from the discovery field.
Sec. 205.006. RULES AND ORDERS. The commission has broad
discretion in administering this chapter and may adopt and enforce
any appropriate rules or orders that the commission finds necessary
to administer this chapter.
SECTION 3. 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, 2015.