34 Tex. Admin. Code § 3.37 - Enhanced Oil Recovery Projects
(a)
Enhanced oil recovery projects.
(1) Producers
producing crude oil from an enhanced oil recovery project approved and
certified by the Texas Railroad Commission may file with the comptroller an
application for a reduced tax rate.
(2) An application for taxation at the
reduced tax rate must be filed.
(A) The
operator shall make application on forms prescribed by the comptroller for the
reduced tax rate on qualified oil produced and sold by the operator. The
operator shall be responsible for advising the comptroller whenever the status
of the enhanced oil recovery project changes in a manner that would affect the
imposition of the tax due on the oil produced from the project area.
(B) A nonoperator taking production in-kind
from a project area for which the operator has filed an application for tax
relief shall also file an application for tax relief on forms prescribed by the
comptroller for the qualified oil produced and sold by the
nonoperator.
(3) The
application for tax relief filed by the operator shall include an approved copy
of Texas Railroad Commission Form H-12, Enhanced Oil Recovery Project and Area
Designation Approval Application, and a copy of the Certificate of Positive
Production Response issued by the Texas Railroad Commission.
(4) The application for tax relief filed by a
nonoperator must contain the project name as designated by the operator, and
the project number as designated by the Texas Railroad Commission. The
application for tax relief filed by a nonoperator will not be granted until the
operator has complied with paragraph (3) of this subsection.
(5) When an application for tax relief has
been approved by the comptroller, a producer may file amended reports to
recover the additional tax paid by the producer on qualified oil for periods
after the effective date of the reduced tax rate and prior to the actual date
of approval. In order to obtain a refund, the amended reports must be filed
within one year after the date the Texas Railroad Commission certifies that a
positive production response has occurred.
(6) Producers obtaining an approval for
relief from the comptroller shall furnish to any first purchaser required to
report a purchase of the enhanced recovery oil a copy of the comptroller's
approval. Any first purchaser paying tax on qualified oil for periods after the
effective date of the reduced rate and prior to the actual date of approval
shall file amended reports to recover the additional tax paid. In order to
obtain a refund, the amended reports must be filed within one year after the
date the Texas Railroad Commission certifies that a positive production
response has occurred.
(7)
Producers and purchasers reporting enhanced recovery oil shall designate the
oil as being qualified secondary recovery oil, or oil recovered by any other
approved enhanced recovery method, according to instructions contained on the
crude oil tax reports.
(8) The
reduced tax rate does not apply until an amount of oil equal to the oil
produced and stored on the lease prior to the effective date of the tax relief
is removed from the lease.
(9) Any
crude oil produced and stored on the lease during a period in which the reduced
tax rate applies, but removed from the lease after the reduced tax rate period
has expired, qualifies for the reduced tax rate. The reduced tax rate will
apply until the volume of oil removed equals the volume of qualified oil
stored.
(10) Producers delivering
to a first purchaser oil which contains a volume of qualified secondary
recovery oil, and/or a volume of qualified oil produced by any other approved
recovery method, and a volume of oil not eligible for the reduced tax, or any
combination of these, shall furnish to the first purchaser the volume
information necessary to enable the purchaser to file proper reports.
(b) Enhanced oil recovery projects
using anthropogenic carbon dioxide.
(1)
Entitles producers producing crude oil from an approved enhanced oil recovery
project to an additional 50% reduction in the crude oil tax rate stated in Tax
Code, §
202.052(b),
if in the recovery of the oil the enhanced oil recovery project uses carbon
dioxide that is captured from an anthropogenic source in this state; which
would otherwise be released into the atmosphere as industrial emission; is
measurable at the source of capture; and is sequestered in one or more
geological formations in this state following the enhanced oil recovery
process.
(2) In the event that a
portion of the carbon dioxide used in the enhanced oil recovery project is
anthropogenic carbon dioxide that satisfies the criteria under paragraph (1) of
this subsection and a portion of the carbon dioxide used in the project fails
to satisfy the criteria of paragraph (1) of this subsection because it is not
anthropogenic, the additional tax reduction provided by paragraph (1) of this
subsection, is required to be reduced to reflect the proportion of the carbon
dioxide used in the project that satisfies the criteria of paragraph (1) of
this subsection.
(3) An application
for the additional tax reduction must be filed with the comptroller. The
operator shall make application on forms prescribed by the comptroller for the
additional tax reduction on qualified oil produced and sold by the
operator.
(4) The application for
additional tax reduction filed by the operator shall include an approved
certification from the agency identified under Tax Code, §
202.0545(c)(2).
(5) When an application for additional tax
reduction has been approved by the comptroller, a producer must file amended
reports to recover the additional tax reduction paid by the producer on
qualified oil for periods after the effective date of the additional tax
reduction and prior to the actual date of approval. To receive the additional
credit, the amendments must be filed with the comptroller for the credit not
later than the first anniversary of the date the oil is produced.
(6) Producers obtaining an approval for
additional tax reduction from the comptroller shall furnish to any first
purchaser required to report a purchase of the enhanced recovery oil, a copy of
the comptroller's approval. Any first purchaser paying tax on qualified oil for
periods after the effective date of the additional tax reduction and prior to
the actual date of approval must file amended reports to recover the additional
tax paid. In order to receive the additional credit, the amendments must be
filed with the comptroller for the credit not later than the first anniversary
of the date the oil is produced.
(7) Producers and purchasers reporting
anthropogenic carbon dioxide enhanced recovery oil shall designate the oil as
being qualified oil according to instructions contained on the crude oil tax
reports.
(8) Any crude oil produced
and stored on the lease during a period in which the additional tax reduction
applies, but removed from the lease after the additional tax reduction period
has expired, qualifies for the additional tax reduction. The reduction in tax
rate will apply until the volume of oil removed equals the volume of qualified
oil stored.
(9) Producers
delivering to a first purchaser, oil which contains a volume of qualified oil,
and a volume of oil not eligible for the additional tax reduction, or any
combination of these, shall furnish to the first purchaser the volume
information necessary to enable the purchaser to file proper reports.
Notes
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