This chart from the Texas Comptroller’s Office shows the past 18 year period tax rate for High Cost Natural Gas Wells that enjoy reduced tax rates from our normal 7.5% tax rate on natural gas per our Tax Code…
From 1991-2001 there was a 100% tax exemption for these High Cost Natural Gas Wells.
At least the bleeding stops with this reduced tax rate (and resumes to the 7.5% rate) after ten years or when the tax incentive is half of the cost of the well which ever comes first.
The TexasTribune reported that in 2015, 850 oil wells were reclassified from oil wells (taxed at 4.6%) to high-cost natural gas wells (taxed at reduced rate that averaged 1.44%), whereas in 2013 there were only 145 reclassifications to NG.
Also in our tax code in Sec. 201.059. there is relief in CREDITS FOR QUALIFYING LOW-PRODUCING WELLS. …gee the welfare never ends for them!
Per this fabioandmerrill article that I boldfaced for emphasis the “white oil” (SCAM?) cases of Hufo Oils v. Railroad Commission had an interesting feature on SP AC I N G R E Q U I R E M E N T S for oil vs gas wells, “….Hufo was principally concerned with whether “white oil” should be treated the same as “oil” under the statutory definitions. “White oil” was defined in Hufo as “casinghead gas reduced to a liquid state (natural gasoline) by a LTX unit (low temperature extraction unit) located at the well site.” …The classification of a well as an oil well or a gas well has profound economic consequences for several reasons: 1) Spacing requirements are different for oil wells and gas wells. In the Panhandle, the spacing rule for gas wells is one well for each 640 acres, whereas oil wells may be spaced as close as one well for each ten acres. Accordingly, up to sixty-four oil wells may be drilled on the acreage required for one gas well…”
Too bad they didn’t have those spacing requirements in the Barnett Shale Hell of Urban Drilling Gas Wells.