Brief ⁽¹⁾

SB 51, as amended, would amend KSA 2000 Supp. 79-4217 relating to the seven-year exemption from severance tax for incremental production of oil or gas which is produced as a result of a production enhancement project.

The current price caps of $20.00 per barrel of oil and $2.50 per mcf of natural gas would be deleted. Incremental production of both oil and gas would be eligible for the exemption regardless of price.

The definition of "production enhancement project" would be expanded to include production of natural gas or oil from a coal bed. The definition of "base production" also would be clarified.

Background

As introduced, the bill also would have expanded the definition of "production enhancement project" to include production from a horizontally drilled well as defined in the bill. The Committee heard testimony that such production already was being qualified for the exemption, and removed the language providing for that expansion.

Another amendment was editorial in nature, to clarify that certain pre-existing language relating to production decline applies to oil wells rather than gas wells.

According to the fiscal note, enactment of this bill as introduced would reduce receipts by approximately $775,000 in FY 2002. Of this total, approximately $720,000 would accrue to the State General Fund, and approximately $55,000 would accrue to the Special County Mineral Tax Production Fund.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi