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...&-
.