Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN
gonorable Ueo. H. Aeppsrd of Fublic Aocountr
Comptrollar Aurtin, Texar;
Derr 3ir:
upinion No. O-3817 tion to the questions ioh we shall teko up Article 6008, Seotion 2(d), Tornonvr Annotated Civil Stetutss, defines E eges well" RS follonrl
"The term 'gss well' i6 eny well (e) which produoota natural gsa not E~ssocl:ted or blended with mudo petroleum oil at the time of production, or (b) which produoe8 more thsn one hundred thoussnd (100,OCO) cubie femt of naturnl g3.s to e&i b;.rl.el of crude petroleum 011 from the sama p:roducinF horizon, or (0) which produce8 nature1 ges from *2 ,i: Honorable Gao. Ii. Sheppud, mga 2
. . 8 fdnmtfon or pradualag horiron roduatita of gas only l naouatored in a wall bore thro u$: rhiah trudo ~tralaum ,' oil also la produaed through tha inaldo o anot of atrlq ,, of oaaing.”
Paragraph (a) of arid Article 6008, Seotlon 2, deflnea an oil wall as followar
“The term @all wall' 10 sny wall which produoos one (1) barrel or more of orudo petroleum 011 to l eah one hundred thouaand (100,000) cubla fret of~natural gas.*
In opinion go. O-1760, addressed to MS. John E. Taylor, Chief s'upenlaor, Oil and Gas Diriaion, Railroad Commission of Texas, we oonatruod the above provlslona of hrtiola 6008 and iield that:
H I l i8o0 the wall pr‘aduoaa oil at a bigbar o:ll-gas ;a:& than 100,000 aubic feat of gas per barrel of arudo- petroleum oil, the well would ba a gas wall aad not an 011 roll, and the gas producod from auoh well would . not ba (oaslnghaad gaa~.R
It is our opinion that a-well which pkduera crude oil with ~ in oxaoaa of lQQ&OLmief_ eqt par barrel of oil I/ 10 a “gas wall" within the maaning of the definition aoatalnad in Article 6008, and auah gas 18 taxable at tha minImum of ll/lsO of 1 sent par W,C,F, provldod in Articla If of H. B.
No, 8, rbould itr market mluo not amount t.2 a8 muoh as I.f+l# per bi.C.F.
Guaation II ‘tine well produori oil cad aa from on0 formation, gma all&y fr? aaothar forpst~on, f .b pr?duct? a=fg* _ from the well; ape thbOugJb t&o tubing, the otAac through tha l paoe botwaon the tubing and o(.sing through a -den- L. heed at tha vail haad. Thrf :ue produced frua aaparatrly
sealed-off fchatlona and ara matered separately. Art5810 0008, Saotlon &(a)., l trt-a that l uah an operation ahall ba ro ardad AS two aaparate wells4 Artlole 6008, Station 3, (lf pmhiblta th 0 paaduatiotr of nature1 ,gea frm~ ah oil well unlass auah gaa is p&cad in a separate string of IS gas from the gea formation conaldorod *natural casing.
gee* undrr tiiolr II of Hour. Bill &or 8, aaci tberafore aubjeot to the mi~i~ma tax rate?P
. . . .
lbnmehle bc. 11. shepperd, page 3
. . . r cent (J$) of the
“A tax equivalent to limrket value of the total OS Ea8 preduced 6&t wwed within t.hi~ SthJ, o- ;
: :.
Wmt~hembfilevied ah&l be n UabUiw of the producer of $eh , .n ,
8inec Kay 1, l$M& eaarbaa_beea q&?&J&- House Dill 40. 8, Acts, Wgular 5%an+ u n the various formlae dlscu8eed in &-3g6, '
We come now to the questfon .of whether a produoer af gm is exempt fron the papent of Wan ooc:.pati tax on the blle~ss or aooupatim of prodlleing gas" by VELof - the iactthat ,mch gas maybe u&l or <!zdto amuni&ality,
'exa6 in f#bi~ thg d-r y&f h3 S.W. 2 w & a PbaoUOQli B tax of 4# per pllen on d&h SC hot&$& in thi State'of New Mexico and aged &n-the operatim of ito police uar8, etu., in the city lSmit8, in ' te of Artkle VIII, Sootion 1, of ihe T.#xzs Comtitut&m, we WI rlso&l in partr
.Wwarable Cleo. H. Shexmd, pegs 5
'AB find thnt 0 w; thus nloRaur8 an ocaupaticm tw, -t 9 even when liltor stat4BtF'ansactioIis are t&en i!lts'awHl!unt; ;g vm reco&kition in G.H.&.A. Ry. Co. v. Tour,
rs. 217. . . .
uInre~~ct to that
u on0 of the factors for
tL tax,Graybur~OilCoPpany~~
S~totee mid purchaser. The rf3Uer (a Texa8 had m ml&ion with tht? federal
mated la the agreement for the
*Uvee and mcwe~ and haa ltr being' beyond the field
agencies such aa apwared %a lWW.l& This decision of A the Tmaa CWsion by m nwersed on 929,
r 278.U. S. nyamal to-be on
ST?? IL S. 2118.
Ccmrt oxpro
unan(lmu8 opi on wrltt 3
Kin& and 5oowr, not of * rex8.i ccklmkas
would tbrefore appe In A‘lAhm*7* &%ooeer,mgra,the~ted t&J Supwm Court, in ho ding that a cOftrclct0T wb0 la8 contra a fedmaIL pro ect on a ncont plU0 n,aot tll "tr the ~~m.mn of a 2% atote tie i tax on WMr, oxarsDt ?Ln - - *6 bnoroble Oeo, 11. Shepperd, pege 6
*So far a8 uwhenondlacri.minatory stat43 tuupoa the controctor~0ntere into the cost of the meterlab to the Qovernmnt that2 yAat;2 lnoidont to tbr org4dcation d of two indecent t of the on to
a 00~ T h e l a8ertod -l&b ~~s~~thn,the other does nctepellimramct+
the added o osts l tlr rfbutahle to ths tmat%on 9 d theee ofb rniB hsup pll~rtoth e~rnluentand~
huna been ~anSe4 au tax imimnity.”
Where ma is prooaswd by a ir payable under that prrt of the ect de * $%!d%?h?5% OUT Opinion No, O-5516,.\1Nch reads’
Honorable Ueo. Ii. Sheppnt, page 7 ’ In our opinion l?o, w stated that that
therein
Ch8 re&ue of whioh ti used antshauldktaxadunder
tlwydl* widerat on is pert of Bxtraated Products P 8, tion) rather &ma under ~~~~~~~~~~~~~~~~~id~~~~~~M~~r~
tion w.have reached the ooaclwion th& we ,?p3,adnBO holding. The use of a mall Of the rd e gas for Are1 in the 0 ation of the recyc p"t phnt i.8 we fmo advfsed, 0 pmictice and the use 7 o ouch fuel constituted an UJliVOl- Bar aaential and into
t@g&m n'ilertrl
%5 the effect tha extraction of ll
c use6 for Fuel
on tbu buiiineas or
Who proboer or
pramted in this
Qf tall, groer v&due
the mqmling process
operator of the recyciing plants
QUE3TIOB VI Whore a reoydllng plant has contrwte for the gas by the*latter reooi products extraoted t&en in 2 ii%
Flant&gees-tom be goduaerm!
she pro eta, buad on th. fo owing p’4.e~ I
"Distillate-pricr~prr bumlof Refugio on&& oil per daily quot tionr
9utane-14 pr gallon8 :
*The plant then sells theeo products, to&-ether kth tbir mm fifty per oent of the products at appcOJdm&trly price of klfu&o erado"wa :50# profit per barrel v t ue of the pro&ota lhe6 the tax aocsud ~0z.i the 3 produoer or on the gross v&e Of *8 &prbred sec. 3, lw.
waver aellars
tirst Assistant
Attorney General
Approved: Cpiition Cocmi+tee ~&2...&- .