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Oklahoma Administrative Code (Last Updated: March 11, 2021) |
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TITLE 165. Corporation Commission |
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Chapter 10. Oil & Gas Conservation |
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Subchapter 21. Applications for Tax Exemptions |
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Part 17. SALES TAX EXEMPTION FOR ELECTRICITY AND ASSOCIATED DELIVERY AND TRANSMISSION SERVICES SOLD FOR OPERATION OF RESERVOIR DEWATERING PROJECT AND/OR UNIT |
SECTION 165:10-21-90. General
Latest version.
- (a) Scope. This Part deals with the classification by the Oklahoma Corporation Commission (Corporation Commission or Commission) of a reservoir dewatering project and/or unit for the purpose of an exemption, beginning January 1, 2004, from sales taxes levied on electricity and associated delivery and transmission services sold to an oil and gas operator for reservoir dewatering projects and associated operations commencing on or after July 1, 2003, as provided in 68 O.S. 2002 Supp., §1357(31).(b) Distinction from designation as reservoir dewatering oil spacing unit or other spacing application. The classification of an area and reservoir(s) as a "reservoir dewatering project" and/or a "reservoir dewatering unit" pursuant to this Part shall be separate and distinct from the designation of a reservoir dewatering oil spacing unit for oil allowable purposes pursuant to OAC 165:10-15-18. Corporation Commission approval of an area and reservoir(s) for the instant sales tax exemption shall be made by application under this Part and not as a result of a spacing application filed for oil allowable purposes under OAC 165:10-15-1 and OAC 165:10-15-18, a spacing application filed for gas allowable purposes under OAC 165:10-17-2 through 10-17-16, a spacing application filed for horizontal drilling purposes under OAC 165:10-3-28, or any spacing application filed under OAC 165:10-1-22.(c) Reservoir Dewatering Projects for Oil Production. Any reservoir that is the subject of an application pursuant to this Part, which produces predominantly oil, shall be evaluated to determine the initial water-to-oil ratio is equal to or greater than five-to-one (5-to-1).(d) Reservoir Dewatering Projects for Gas Production. Any reservoir that is the subject of an application pursuant to this Part, which produces predominantly gas, shall be evaluated to determine the initial five-to-one (5-to-1) water-to-oil ratio using a gas conversion factor of one (1) barrel of oil converted to an MCF of natural gas based on an initial natural gas formation volume factor, BTU or price calculation or conversion accepted by the Conservation Division.