New Mexico Administrative Code
Title 19 - NATURAL RESOURCES AND WILDLIFE
Chapter 15 - OIL AND GAS
Part 6 - TAX INCENTIVES
Section 19.15.6.7 - DEFINITIONS

Universal Citation: 19 NM Admin Code 19.15.6.7

Current through Register Vol. 35, No. 24, December 23, 2024

A. "Average daily production" means the number derived by dividing the total volume of oil or gas production from the stripper well property reported to the division during a calendar year by the sum of the number of days each eligible well within the property produced or injected during that calendar year.

B. "Eligible well" means an oil or gas well that produces or an injection well that injects and is integral to production, for any period of time during the preceding calendar year.

C. "Expansion or expanded use" means a significant change or modification as the division determines in:

(1) the technology or process used for the displacement of oil from an oil well or division-designated pool; or

(2) the expansion, extension or increase in size of the geologic area or adjacent geologic area that could reasonably be determined to represent a new or unique area of activity.

D. "Operator":

(1) for purposes of 19.15.6.8 NMAC, means the person responsible for an EOR project's actual physical operation; and

(2) for purposes of 19.15.6.9 NMAC, means the person responsible for an oil or gas well's actual physical operation.

E. "Positive production response" means that the rate of oil production from the wells or pools an EOR project affects is greater than the rate that would have occurred without the project.

F. "Project area" means a pool or a portion of a pool that EOR operations directly affect.

G. "Primary recovery" means the displacement of oil from an oil well or division-designated pool into the well bore by means of the natural pressure of the oil well or pool, including artificial lift.

H. "Production restoration incentive tax exemption" means the severance tax exemption for natural gas or oil produced from an approved production restoration project found in NMSA 1978, Section 7-29-4.

I. "Production restoration project" means returning to production a gas or oil well, including an injection well that has previously produced, which had no more than 30 days of production in a period of 24 consecutive months beginning on or after January 1, 1993 the division has approved and certified.

J. "Recovered oil tax rate" means the tax rate set forth in NMSA 1978, Section 7-29-4, on oil produced from an EOR project.

K. "Routine maintenance" means repair or like-for-like replacement of downhole equipment or other procedure an operator performs to maintain the well's current production.

L. "Secondary recovery project" means an EOR project that:

(1) occurs subsequent to the completion of primary recovery and is not a tertiary recovery project;

(2) involves the application, in accordance with sound engineering principles of carbon dioxide miscible fluid displacement, pressure maintenance, water flooding or other division accepted and approved secondary recovery method that can reasonably be expected to result in an increase, determined in light of the facts and circumstances, in the amount of oil that may ultimately be recovered; and

(3) encompasses a pool or portion of a pool the boundaries of which can be adequately defined and controlled.

M. "Stripper well property" means an oil or gas producing property that the taxation and revenue department assigns a single production unit number (PUN) and:

(1) if an oil producing property, produced a daily average of less than 10 barrels of oil per eligible well per day for the preceding calendar year;

(2) if a gas producing property, produced a daily average of less than 60,000 cubic feet of gas per eligible well per day during the preceding calendar year; or

(3) if a property with wells that produce both oil and gas, produced a daily average of less than 10 barrels of oil per eligible well per day for the preceding calendar year, as determined by converting the volume of gas the well produced to barrels of oil by using a ratio of 6000 cubic feet to one barrel of oil.

N. "Stripper well incentive tax rates" means the tax rates set for stripper well properties by NMSA 1978, Sections 7-29-4 and 7-31-4.

O. "Termination" means the operator's discontinuance of an EOR project.

P. "Tertiary recovery project" means an EOR project that:

(1) occurs subsequent to a secondary recovery project's completion;

(2) involves the application, in accordance with sound engineering principles, of carbon dioxide miscible fluid displacement, pressure maintenance, water flooding or other division accepted and approved tertiary recovery method that can reasonably be expected to result in an increase, determined in light of the facts and circumstances, in the amount of oil that may ultimately be recovered; and

(3) encompasses a pool or portion of a pool the boundaries of which can be adequately defined and controlled.

Q. "Well" means a well bore with single or multiple completions, including all horizons and producing formations from the surface to total depth.

R. "Well workover incentive tax rate" means the tax rate NMSA 1978, Section 7-29-4 imposes on gas or oil produced from a well workover project.

S. "Well workover project" means a procedure the operator of a gas or oil well undertakes that is intended to increase production from the well and that the division has approved and certified.

T. "Workover" means a procedure the operator undertakes that is intended to increase production but is not routine maintenance and includes:

(1) re-entry into the well to drill deeper, to sidetrack to a different location, to recomplete for production or to restore production from a zone that has been temporarily abandoned;

(2) recompletion by re-perforation of a zone from which gas or oil has been produced or by perforation of a different zone;

(3) repair or replacement of faulty or damaged casing or related downhole equipment;

(4) fracturing, acidizing or installing compression equipment; or

(5) squeezing, cementing or installing equipment necessary for removal of excessive water, brine or condensate from the well bore in order to establish, continue or increase production from the well.

Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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