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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER CCRUDE OIL PRODUCTION TAX
RULE §3.32Exemption of Oil Incidentally Produced in Association with the Production of Geothermal Energy

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

  (1) Commission--The Railroad Commission of Texas.

  (2) Operator--The person responsible under law or commission rules for the physical operation of a lease.

  (3) Geothermal energy--The energy extracted from heat stored in the earth.

  (4) Incidentally Produced--The amount of oil produced is less than or equal to 10 barrels of oil per day of production per well. The three-month period prior to the exemption beginning date will be used to determine the average amount of production per day per well.

(b) For each oil well qualifying under this section, the comptroller will require the following information from the operator of the well.

  (1) A copy of the monthly production report made to the commission for the lease for the three-month period prior to the exemption beginning date.

  (2) A list of the producing wells on the oil lease and supporting documentation to show the number of days each well was producing during the three-month period, the API number for each well and the monthly production amounts per well.

  (3) A completed comptroller exemption application for the well.

  (4) A statement as to the name and what type of geothermal energy project the oil is being incidentally produced with.

(c) Producers and purchasers reporting a geothermal energy exemption shall designate the oil as being qualified geothermal energy exemption oil, according to instructions contained on the crude oil tax reports.

(d) If the tax is paid at the full rate provided by Tax Code, Chapter 202, on oil produced on or after the effective date of the tax exemption but before the date the comptroller approves an application for the tax exemption, the operator is entitled to a credit on taxes due under Tax Code, Chapter 202, in an amount equal to the credit approved for that period. To receive a credit, the operator or the party remitting the tax must apply to the comptroller by filing amended reports for each well. If a party other than the operator has remitted the tax, the operator must provide the party remitting the tax a copy of the comptroller's approval letter for the exemption identifying the lease that qualifies for the tax exemption.

(e) If the amount of oil produced is greater than 10 barrels of oil per day of production per well for a three-month period after the exemption beginning date, the exemption will be revoked.


Source Note: The provisions of this §3.32 adopted to be effective August 2, 2011, 36 TexReg 4805

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