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.