SECTION 165:10-21-92. Qualification procedure

(a)   Applicable operations. The provisions of this Section establish criteria for determining if an area and reservoir(s) can be classified a reservoir dewatering project and/or a reservoir dewatering unit, beginning January 1, 2004, for the purpose of an exemption from sales taxes levied on electricity and associated delivery and transmission services sold to an oil and gas operator for a reservoir dewatering project and associated operations commencing on or after July 1, 2003.

(b)   Application to the Oklahoma Corporation Commission. An oil and gas operator seeking the classification of an area and reservoir(s) as a reservoir dewatering project and/or reservoir dewatering unit pursuant to this Part shall file an application with the Corporation Commission on a Form 1535 for a determination that the project and/or unit qualifies for the exemption, as provided in 68 O.S. 2002 Supp., §1357(31). The operator shall attach to the Form 1535 a copy of the following information:

(1)   A production test or other appropriate data showing the initial water-to-oil ratio is greater than or equal to five-to-one (5-to-1) or is greater than or equal to the appropriate gas-to-water ratio calculated using the gas conversion factor outlined in OAC 165:10-21-90(d). For this purpose, a Corporation Commission Form 1013 may be filed with the sales tax exemption application to demonstrate the initial 5-to-1 water-to-oil ratio for the reservoir.

(2)   Geological structure and isopach maps for the applicable reservoir showing its geological characteristics; and any additional engineering and geological data or information deemed necessary by the Conservation Division to evaluate the application.

(3)   A schematic diagram of the electrical grid and dewatering and water disposal equipment associated with the reservoir dewatering project covered by the application.

(c)   Administrative approval and determination.

(1)   If the application is administratively approved, copy shall be forwarded to the operator.

(2)   To obtain the tax exemption, the operator should contact the Director's Office, Taxpayer Assistance Division, Oklahoma Tax Commission, 2501 N. Lincoln Blvd., Oklahoma City, Ok. 73194.

(3)   Any data, maps and other information submitted with the Form 1535 for determination that an area and reservoir qualify for the exemption provided in this Part shall be held as confidential information by the Conservation Division and/or Corporation Commission, and shall be returned to the applicant or destroyed upon approval of the application.

[Source: Added at 20 Ok Reg 1479, eff 4-24-03 (emergency); Added at 20 Ok Reg 1543, eff 7-1-03; Amended at 23 Ok Reg 2229, eff 7-1-06; Amended at 36 Ok Reg 534, eff 8-1-19]