HBA-RBT H.B. 2449 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2449
By: Hawley
Energy Resources
4/1/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, with the low prices for oil and gas, the economic viability of
marginally producing wells has been reduced.  Texas has approximately 4,000
marginal wells on state land that have the potential to produce as much as
4.7 million barrels of oil or the gas equivalent.  The 75th Legislature
enacted legislation which allows for the reduction of royalty rates.
Reducing royalty rates may help to postpone the abandonment of marginal
wells and thereby ensure the continued payment of royalties related to such
wells into the Permanent School Fund.  It also may promote additional
investment in rework operations to enhance production.   

H.B. 2449 removes the two-year limit imposed upon the School Land Board
with respect to authorizing reduced royalty rates on state leases, and
allows it to prescribe the duration of such a royalty rate reduction may be
allowed. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 32.067(c) and (d), Natural Resources Code, to
authorize the reduction of the royalty rate for oil and gas produced from a
qualifying reservoir to not less than onesixteenth (6.25 percent) for a
term prescribed by the board, rather than not to exceed two years unless
extended at the reduced rate for additional periods not to exceed two years
on approval by the School Land Board (board).  Authorizes the reduction of
the royalty rate for the state's share under a lease issued under
Subchapter F (Relinquishment), Chapter 52, or Sections 51.195(c)(2) and (d)
(Conditions of Sale; Mineral Awards) to not less than one-thirty-second
(3.125 percent) for a term prescribed by the board, rather than not to
exceed two years unless extended at the reduced rate for additional periods
not to exceed two years on approval by the board.   

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.