Untitled Texas Attorney General Opinion

OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN gonorable Ueo. H. Aeppsrd Comptrollar of Fublic Aocountr 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:tedor blended with mudo petroleum oil at the time of production, or (b) which produoe8more thsn one hundred thoussnd (100,OCO) cubie femt of naturnl g3.sto e&i b;.rl.elof crude petroleum 011 from the sama p:roducinFhorizon, or (0) which produce8 nature1 ges from Honorable Gao. Ii.Sheppud, mga 2 ,i: .. 8 fdnmtfon or pradualag horiron roduatita of gas only lnaouatored in a wall bore throu$: rhiah trudo ~tralaum ,' oil also la produaed through tha inaldo o anot of atrlq ,, of oaaing.” Paragraph (a) of arid Article 6008, Seotlon 2, deflnea an oil wall as followar “The term @all wall' 10 sny wall which produoos one (1) barrel or more of orudo petroleum 011 to leah one hundred thouaand (100,000)cubla fret of~natural gas.* In opinion go. O-1760,addressed to MS. John E. Taylor, Chief s'upenlaor, Oil and Gas Diriaion, Railroad Commission of Texas, we oonatruod the above provlslona of hrtiola 6008 and iield that: H I li8o0 the wall pr‘aduoaaoil at a bigbar o:ll-gas;a:& than 100,000 aubic feat of gas per barrel of arudo-petroleum oil, the well would ba a gas wall aad not an 011 roll, and the gas producod from auoh well would not ba (oaslnghaadgaa~.R . It is our opinion that a-well which pkduera crude oil with ~ in oxaoaa of lQQ&OLmief_ eqt par barrel of oil I/ 10 a “gas wall" within the maaning of the definition aoatalnad in Article 6008, and auah gas 18 taxable at tha minImum of ll/lsO of 1 sent par W,C,F, provldod in Articla If of H. B. No, 8, rbould itr market mluo not amount t.2 a8 muoh as I.f+l# per bi.C.F. Guaation II ‘tine well produori oil cad aa from on0 formation, gma all&yfr? aaothar forpst~on, f.b pr?duct? a=fg* _ from the well; ape thbOugJbt&o tubing, the otAac through L. tha lpaoe botwaon the tubing and o(.singthrough a -den- heed at tha vail haad. Thrf :ue produced frua aaparatrly sealed-off fchatlona and ara matered separately. Art5810 0008, Saotlon &(a).,ltrt-a th a tluah an operation ahall ba ro ardad AS two aaparate wells4 Artlole 6008, Station 3, (lf pmhiblta th0 paaduatiotr of nature1 ,geafrm~ ah oil well unlass auah gaa is p&cad in a separate string of casing. IS gas from the gea formation conaldorod *natural gee* undrr tiiolr II of Hour. Bill &or 8, aacitberafore aubjeot to the mi~i~ma tax rate?P . ... lbnmehle bc. 11.shepperd, page 3 . . . “A tax equivalentto r cent (J$) of the limrketvalue of the total OS Ea8 preduced6&t wwed within t.hi~SthJ, o- ; : :. Wmt~hembfilevied ah&l be n UabUiw of the producerof $eh , .n 8inec Kay 1, l$M& eaarbaa_beeaq&?&J&- , House Dill 40. 8, Acts, Wgular 5%an+ u n the various formlae dlscu8eedin &-3g6, ' We come now to the questfon.ofwhethera 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 ,mchgas maybe u&l or zdto amuni&ality, 'exa6in h3 S.W. w2 f#bi~thg d-r y&f & 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 ' 8 te of Artkle VIII, Sootion1, of ihe T.#xzsComtitut&m, weWI rlso&lin partr .Wwarable Cleo.H. Shexmd, pegs 5 'ABfind thnt 0 w; thus nloRaur8 an ocaupaticmtw, even when -t liltor 9 stat4BtF'ansactioIis are t&en i!lts'awHl!unt; ;g vm reco&kitionin G.H.&.A. Ry. Co. v. Tour, rs. 217. . . . uInre~~ct to that u on0 of the factorsfor tL tax,Graybur~OilCoPpany~~ S~totee mid purchaser. The rf3Uer (a Texa8 had m ml&ion with tht?federal mated la the agreementfor the *Uvee and mcwe~ and haa ltr being' beyond the field agenciessuch aa apwared %a lWW.l& This decision by the Tmaa CWsion of A m nwersed on r 929, 278.U. S. nyamal to-be on ST??IL S. 2118. Ccmrt oxpro unan(lmu8opi3 on wrltt Kin& and 5oowr, not of * rex8.i ccklmkas would tbrefore appe In A‘lAhm*7* &%ooeer,mgra,the~ted t&J Supwm Court, in9ho ding that a cOftrclct0T wb0 la8 tll a fedmaILpro ect on a ncont plU0 contra n,aot oxarsDt ?Ln - i of a 2% atote tie tax on"tr the -~~m.mn WMr, bnoroble Oeo,11.Shepperd, pege6 *So far a8 uwhenondlacri.minatory stat43tuupoa the controctor~0ntereintothe cost of the meterlabto the Qovernmnt that2 yAat;2 lnoidontto tbr org4dcation d of two indecent a 00~T h ela 8er-to l&dbt of the on to ~~s~~thn,the otherdoes nctepellimramct+ the addedo o stsltlr r fb utato h thle stma t%o n 9 o fb r niB h sup p ll~r to th e ~r nluenta nd~ d theee huna been ~anSe4 au tax imimnity.” Wherema is prooaswdby a ir payableunder that prrt of the ect 3 de $%!d%?h?5% * OUT Opinion No, O-5516,.\1Nchreads’ HonorableUeo.Ii.Sheppnt, page7 ’ In our opinion l?o, therein w stated that that Ch8 re&ue of whioh ti used tlwydl* antshauldktaxadunder widerat Pon is pert of BxtraatedProducts 8, tion) rather &ma under ~~~~~~~~~~~~~~~~~id~~~~~~M~~r~ tion w.have reachedthe ooaclwion th& we ,?p3,adnBO holding. The use of a mall Of the rd e gas for Are1 in the 0 ation of the recycp"t phnt i.8 we fmo advfsed,0 Bar pmicticeand the use7o ouch fuel constituted an UJliVOl- aaentialand into t@g&m n'ilertrl 0 %5 the effect tha c extractionof ll use6 for Fuel on tbu buiiineasor Who proboer or pramted in this Qf tall, groer v&due the mqmling process operatorof the recyciingplants QUE3TIOBVI Whore a reoydllngplant has contrwte for the gas by the*latterreooi 2 ii% productsextraotedt&en in Flant&gees-tom be goduaerm! she pro eta, buad on th. fo owing p’4.e~ "Distillate-pricr~prr bumlof Refugio on&& oil I 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 :50# profit per barrel v t price of klfu&o erado"wa lhe6 the tax aocsud ~0z.i the 3 ue of the pro&ota produoeror on the gross v&e Of &prbred sec. 3, lw. waver aellars tirst Assistant AttorneyGeneral Approved: Cpiition Cocmi+tee ~&2...&- .