LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION May 5, 2017 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3201 by Darby (relating to the severance tax exemption for oil and gas produced from certain inactive wells.), Committee Report 1st House, Substituted No significant fiscal implication to the State is anticipated. The bill would amend Section 202.056 of the Tax Code to make permanent the two-year inactive well exemptions for oil and natural gas production taxes by removing the deadlines for the application submission and the designation of the wells by the Railroad Commission (RRC). The bill would narrow the definition of a qualifying two-year inactive well to a well with a record of hydrocarbon production as reported to the RRC and that is not part of an enhanced oil recovery project. The exemption period would be reduced from 10 to 5 years. The bill would repeal the definition of a three-year inactive well and remove from this section references to the expired three-year inactive well exemptions for oil and natural gas production taxes, which were last certified by the RRC in 1996.The bill would provide an incentive to return marginal inactive wells to production. Although it is possible that certain non-marginal wells would qualify for this exemption, production is expected to be inconsequential and there would be no significant state revenue impact. The bill would take effect September 1, 2017. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK, SD
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION
May 5, 2017
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3201 by Darby (relating to the severance tax exemption for oil and gas produced from certain inactive wells.), Committee Report 1st House, Substituted
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB3201 by Darby (relating to the severance tax exemption for oil and gas produced from certain inactive wells.), Committee Report 1st House, Substituted
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB3201 by Darby (relating to the severance tax exemption for oil and gas produced from certain inactive wells.), Committee Report 1st House, Substituted
HB3201 by Darby (relating to the severance tax exemption for oil and gas produced from certain inactive wells.), Committee Report 1st House, Substituted
No significant fiscal implication to the State is anticipated.
No significant fiscal implication to the State is anticipated.
The bill would amend Section 202.056 of the Tax Code to make permanent the two-year inactive well exemptions for oil and natural gas production taxes by removing the deadlines for the application submission and the designation of the wells by the Railroad Commission (RRC). The bill would narrow the definition of a qualifying two-year inactive well to a well with a record of hydrocarbon production as reported to the RRC and that is not part of an enhanced oil recovery project. The exemption period would be reduced from 10 to 5 years. The bill would repeal the definition of a three-year inactive well and remove from this section references to the expired three-year inactive well exemptions for oil and natural gas production taxes, which were last certified by the RRC in 1996.The bill would provide an incentive to return marginal inactive wells to production. Although it is possible that certain non-marginal wells would qualify for this exemption, production is expected to be inconsequential and there would be no significant state revenue impact. The bill would take effect September 1, 2017.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD