Oklahoma Administrative Code
Title 710 - Oklahoma Tax Commission
Chapter 65 - Sales and Use Tax
Subchapter 13 - Sales and Use Tax Exemptions
Part 23 - GAS AND ELECTRICITY
Section 710:65-13-123 - Exemption for sales of electricity for use in enhanced recovery methods of oil production

(a) General provisions. Beginning July 1, 2006, sales of electricity to the operator of a spacing unit or lease where oil is produced or is attempted to be produced using enhanced recovery methods shall be exempt from the levy of sales tax. Enhanced recovery methods include but are not limited to increased pressure in a producing formation through the use of water or saltwater if the electrical usage is associated with and necessary for the operation of equipment required to inject or circulate fluids in a producing formation for the purpose of forcing oil or petroleum into a wellbore for eventual recovery and production from the wellhead.

(b) Where to file for exemption. To qualify for the exemption, the operator of the enhanced recovery methods on a spacing unit or lease must apply in writing to the Business Tax Services Division, Oklahoma Tax Commission, Oklahoma City, OK 73194, requesting an exemption letter.

(c) Supporting documentation required. The request must set out the name of the operator, the physical location of the project, the federal identification number of the operator, the date the project commenced, and the electric service account number associated with services provided to the project and the Production Unit Number and Merge Number of the project. A copy of the application [Form 1535] filed with and approved by the Oklahoma Corporation Commission must accompany the request.

(d) Review and approval procedure. Upon review and approval, a letter of exemption shall be issued to the operator, who must forward the exemption letter to the electric utility, to document the sales tax exemption on their purchases of electricity. The letter, when provided to the utility along with a statement by the operator that the purchases of electricity are exempt, shall constitute "properly completed documentation certified by the Oklahoma Tax Commission" as that phrase is used in 710:65-7-6.

(e) Eligibility. In order to be eligible for the exemption set forth in this Section, the total content of oil recovered after the use of the enhanced recovery methods must not exceed one percent (1%) by volume.

(f) Limitations. The exemption shall apply only to the state sales tax rate and not to any county or municipal sales tax rate.