Texas 2023 - 88th Regular

Texas House Bill HB3321 Compare Versions

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1	1	88R1627 CJC/JXC-F
2	2	By: Geren H.B. No. 3321
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a severance tax credit for gas produced from certain
8	8	wells that use an onsite flare mitigation system.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended
11	11	by adding Section 201.061 to read as follows:
12	12	Sec. 201.061. TAX CREDIT FOR GAS PRODUCED FROM WELL USING
13	13	ONSITE FLARE MITIGATION SYSTEM. (a) In this section:
14	14	(1) "Commission" means the Railroad Commission of
15	15	Texas.
16	16	(2) "Flare mitigation" means the quantity of British
17	17	thermal units of heat content of gas used by a qualifying onsite
18	18	flare mitigation system. The term does not include the heat content
19	19	of any gas flared from a well before, during, or after intake by an
20	20	onsite flare mitigation system.
21	21	(3) "Marginal well" has the meaning assigned by
22	22	Section 85.121, Natural Resources Code.
23	23	(4) "Qualifying onsite flare mitigation system" means
24	24	a system that:
25	25	(A) is installed at a well site on or after May
26	26	29, 2023;
27	27	(B) takes in gas and natural gas liquids from the
28	28	well;
29	29	(C) separates and collects or uses over 50
30	30	percent of the propane and heavier hydrocarbons taken in from the
31	31	well;
32	32	(D) reduces flared thermal intensity:
33	33	(i) by compressing or liquefying gas for
34	34	use as fuel or for transport to a processing facility; or
35	35	(ii) as a result of gas or natural gas
36	36	liquids being:
37	37	(a) used to produce petrochemicals or
38	38	fertilizer;
39	39	(b) converted into liquid fuels;
40	40	(c) used to generate electricity for
41	41	onsite use or supply to the electrical grid;
42	42	(d) used to produce computational
43	43	power; or
44	44	(e) used in another beneficial
45	45	process approved by the commission;
46	46	(E) is not installed on:
47	47	(i) a marginal well; or
48	48	(ii) a well that is connected to a pipeline
49	49	with available takeaway capacity or that may be connected to such a
50	50	pipeline in a technically and commercially feasible manner; and
51	51	(F) is not a:
52	52	(i) system that supports the normal
53	53	production operations of a well;
54	54	(ii) system that consumes gas as part of the
55	55	normal production operations of a well, such as a heater treater, a
56	56	separator, or a method of electrical dissipation through a load
57	57	bank; or
58	58	(iii) system or application traditionally
59	59	considered an on-pad use.
60	60	(5) "Qualifying well" means a well:
61	61	(A) that is:
62	62	(i) connected to a pipeline on which
63	63	pipeline takeaway capacity is unavailable;
64	64	(ii) not connected to a pipeline and for
65	65	which connection to a pipeline is technically or commercially
66	66	unfeasible but is operated by a well operator who has contractually
67	67	dedicated the well, the gas produced from the well, or the land or
68	68	lease on which the well is located to a pipeline operator; or
69	69	(iii) not connected to a pipeline and is
70	70	operated by a well operator who has not contractually dedicated the
71	71	well, the gas produced from the well, or the land or lease on which
72	72	the well is located to a pipeline operator; and
73	73	(B) on which a qualifying onsite flare mitigation
74	74	system is installed.
75	75	(6) "Sour gas" has the meaning assigned by Section
76	76	86.002, Natural Resources Code.
77	77	(b) The person responsible for paying the tax imposed by
78	78	this chapter on gas produced from a qualifying well is entitled to a
79	79	credit against that tax. Subject to Subsection (i), the amount of
80	80	the credit to which the person is entitled is:
81	81	(1) $1 per million British thermal units of flare
82	82	mitigation that results from the operation of the qualifying onsite
83	83	flare mitigation system installed on the qualifying well; or
84	84	(2) if the qualifying well produces sour gas, $2 per
85	85	million British thermal units of flare mitigation that results from
86	86	the operation of the qualifying onsite flare mitigation system
87	87	installed on the qualifying well.
88	88	(c) A well operator and a pipeline operator, as applicable,
89	89	may apply to the commission in the manner provided by Subsection
90	90	(d), (e), or (f) for certification that a well is a qualifying well
91	91	and, if applicable, that the well produces sour gas.
92	92	(d) An application that relates to a well described by
93	93	Subsection (a)(5)(A)(i) must:
94	94	(1) attest to the lack of pipeline takeaway capacity;
95	95	(2) if applicable, attest that the well produces sour
96	96	gas; and
97	97	(3) be submitted jointly by the well operator and the
98	98	pipeline operator.
99	99	(e) An application that relates to a well described by
100	100	Subsection (a)(5)(A)(ii) must:
101	101	(1) attest that:
102	102	(A) the well is not connected to a pipeline; and
103	103	(B) it is technically or commercially unfeasible
104	104	to connect the well to a pipeline;
105	105	(2) if applicable, attest that the well produces sour
106	106	gas; and
107	107	(3) be submitted jointly by the well operator and the
108	108	pipeline operator.
109	109	(f) An application that relates to a well described by
110	110	Subsection (a)(5)(A)(iii) must:
111	111	(1) attest that the well:
112	112	(A) is not connected to a pipeline; and
113	113	(B) is operated by a well operator who has not
114	114	contractually dedicated the well, the gas produced from the well,
115	115	or the land or lease on which the well is located to a pipeline
116	116	operator;
117	117	(2) if applicable, attest that the well produces sour
118	118	gas; and
119	119	(3) be submitted by the well operator.
120	120	(g) The commission may require an applicant described by
121	121	Subsection (c) to provide the commission with any information the
122	122	commission determines is relevant to determining whether a well is
123	123	a qualifying well and, if applicable, whether the well produces
124	124	sour gas. If the commission approves an application submitted
125	125	under Subsection (c), the commission shall issue a certificate
126	126	designating the well as a qualifying well and, if applicable,
127	127	indicate on the certificate that the well produces sour gas.
128	128	(h) To qualify for the credit provided by this section, the
129	129	person responsible for paying the tax imposed by this chapter must
130	130	apply to the comptroller. The application must contain the
131	131	certificate issued by the commission under Subsection (g). The
132	132	comptroller may require a person applying for the credit to provide
133	133	any additional information the comptroller determines is relevant
134	134	to determining whether the person is eligible to receive the
135	135	credit.
136	136	(i) A person may not claim an amount of credit on a report
137	137	that exceeds the amount of tax due on the report.
138	138	(j) The commission, well operator, or pipeline operator
139	139	shall notify the comptroller in writing immediately if a well
140	140	certified under this section is no longer a qualifying well.
141	141	(k) The commission and the comptroller may adopt rules
142	142	necessary to implement and administer this section.
143	143	SECTION 2. The change in law made by this Act does not
144	144	affect tax liability accruing before the effective date of this
145	145	Act. That liability continues in effect as if this Act had not been
146	146	enacted, and the former law is continued in effect for the
147	147	collection of taxes due and for civil and criminal enforcement of
148	148	the liability for those taxes.
149	149	SECTION 3. This Act takes effect September 1, 2023.