HBA-LJP H.B. 3099 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3099 By: Counts Ways & Means 3/30/2001 Introduced BACKGROUND AND PURPOSE The legislature created the high-cost gas severance tax incentive program in 1989 to encourage natural gas producers to drill expensive and technically difficult gas wells. The legislature also created the two-year inactive well severance tax incentive program in 1993 to encourage producers not to plug inactive wells. Extension of these programs may encourage Texas oil and gas producers to invest in the Texas economy during the current downturn in the oil and gas industry. House Bill 3099 extends the high-cost gas severance tax incentive program and the incentive well severance program and provides exemptions. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 3099 amends the Tax Code to extend, from August 31, 2001 to August 31, 2005, the end of the time period that certain high-cost natural gas produced from a well that is spudded or completed between May 24, 1989 and September 1, 1996 is exempt from the gas production tax. The bill extends, from August 31, 2001 to August 31, 2005, the end of the time period that high-cost gas produced from any oil well regardless of spud date or completion date is eligible for refunds of tax paid and exemption from the gas production tax. The bill also reduces, from September 1, 2010 to September 1, 2001, the end of the time period in which high-cost gas that is spudded or completed after August 31, 1996 is entitled to a reduction of gas production tax for a certain time period. The bill provides that certain high-cost natural gas produced from a well that is spudded or completed after August 31, 2001, and before September 1, 2005, is exempt from the gas production tax for the first 120 consecutive calender months beginning the first day of production. The bill requires that any oil produced in this state that qualifies for the recovered oil tax rate on or before August 31, 2001 continue to be taxed at the recovered oil tax rate until August 31, 2005 or for ten years beginning the first day of the month following the date the Railroad Commission of Texas certifies that a positive production response has occurred, whichever is later. The bill also requires that all production from certified three-year inactive wells be exempt from oil production taxes until August 31, 2005. EFFECTIVE DATE September 1, 2001.