Texas Administrative Code
Title 34 - PUBLIC FINANCE
Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3 - TAX ADMINISTRATION
Subchapter B - NATURAL GAS
Section 3.24 - Exemption of Gas Incidentally Produced in Association with the Production of Geothermal Energy

Universal Citation: 34 TX Admin Code § 3.24

Current through Reg. 50, No. 13; March 28, 2025

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commission--The Railroad Commission of Texas.

(2) Operator--The person responsible under law or commission rules for the physical operation of a lease.

(3) Geothermal energy--The energy extracted from heat stored in the earth.

(4) Incidentally produced--The amount of gas produced is less than or equal to 60 mcf of gas per day per lease. The three-month period prior to the exemption beginning date will be used to determine the amount of production per day per lease.

(b) For each lease qualifying under this section, the comptroller will require the following information from the operator of the lease.

(1) A copy of the monthly production report made to the commission for the lease for the three-month period prior to the exemption beginning date.

(2) A list of the producing wells on the lease and supporting documentation to show the number of days each well was producing during the three-month period, the API number for each well and the monthly production amounts per well.

(3) A completed comptroller exemption application for the lease.

(4) A statement as to the name and what type of geothermal energy project the gas is being incidentally produced with.

(c) Producers and purchasers reporting a geothermal energy exemption shall designate the gas as being qualified geothermal energy exemption gas, according to instructions contained on the natural gas tax reports.

(d) If the tax is paid at the full rate provided by Tax Code, Chapter 201, on gas produced on or after the effective date of the tax exemption but before the date the comptroller approves an application for the tax exemption, the operator is entitled to a credit on taxes due under Tax Code, Chapter 201, in an amount equal to the credit approved for that period. To receive a credit, the operator or the party remitting the tax must apply to the comptroller by filing amended reports. If a party other than the operator has remitted the tax, the operator must provide the party remitting the tax a copy of the comptroller's approval letter for the exemption identifying the lease that qualifies for the tax exemption.

(e) If the amount of gas produced is greater than 60 mcf of gas per day of production per lease for a three-month period after the exemption beginning date, the exemption will be revoked.

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