HOUSE BILL 450
56th legislature - STATE OF NEW MEXICO - first session, 2023
Joseph L. Sanchez and George K. Muñoz
RELATING TO TAXATION; PROVIDING AN OIL AND GAS SEVERANCE TAX EXEMPTION FOR RE-STIMULATION WELLS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Oil and Gas Severance Tax Act is enacted to read:
"[NEW MATERIAL] EXEMPTION--RE-STIMULATION WELLS.--
A. Excess products produced after August 31, 2023 from a re-stimulation well are entitled to an exemption from the oil and gas severance tax for sixty consecutive calendar months, beginning on the first day of production following completion of re-stimulation treatment of the well, up to a maximum of two million dollars ($2,000,000); provided that, if water is used in the re-stimulation treatment, the water shall be recycled water or treated water, as those terms are defined in the Produced Water Act.
B. A taxpayer shall submit a report to the department on forms and in the manner prescribed by the department. The report may be submitted at any time after the first day of production following completion of the re-stimulation treatment of the well and shall include:
(1) the name of the operator and well and the identification number assigned to the well by the oil conservation division of the energy, minerals and natural resources department;
(2) the average monthly production from the well for the twelve-month period occurring prior to the completion of the re-stimulation treatment;
(3) the date the re-stimulation treatment was completed;
(4) documentation of the re-stimulation treatment and, if water was used in the re-stimulation treatment, that the water is recycled water or treated water, as those terms are defined in the Produced Water Act; and
(5) facts showing that the well meets the requirements of a re-stimulation well pursuant to this section.
C. A taxpayer that claims the exemption provided by this section shall annually report the amount of exemption to the department.
D. As used in this section:
(1) "excess products" means the amount of products produced from a re-stimulation well that exceeds the average monthly production from the well in the twelve-month period prior to the date when the re-stimulation treatment is completed;
(2) "re-stimulation treatment" means recompletion or rework activities that use the existing wellbore of a well for the purpose of initiating or propagating fractures in a target geologic formation to enhance or cause production of products; provided that, if water is used during the treatment, the water is recycled water or treated water, as those terms are defined in the Produced Water Act; and
(3) "re-stimulation well" means a completed crude oil or natural gas well that, following production of products for a period of at least five years, receives re-stimulation treatment. "Re-stimulation well" does not mean a well that is part of an enhanced recovery project pursuant to the Enhanced Oil Recovery Act or a converted existing vertical wellbore that is converted to a horizontal wellbore."
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