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High-Cost Natural Gas Tax Rate Incentive Study
Historical Data
The following table presents historical high-cost natural gas data, including production, average tax rates, and the costs of the high-cost gas program. As the natural gas production tax is a tax on the value of production (generally, price times production) it should be noted that the high-cost gas program cost figures below respond to both changes in price and/or production. Note that in the period following the last recession and corresponding with the opening of the Eagle Ford Shale (a predominately oil play) the cost figures generally declined as prices dropped (never regaining their previous levels) and production followed a natural decline in existing high-cost wells and fewer new wells were being drilled. Also note that, as the program has a maximum time limit of 10 years per well, only wells first taking the rate reduction in 2005 or, thereafter, would be included in the 2014 cost figure.
| Fiscal Year | H-C Wells Submitted to Comptroller | H-C Average Tax Rate* | H-C Taxable Production (Mcf) | H-C Share of Total Taxable Production | Cost of H-C Rate Reduction |
|---|---|---|---|---|---|
| 1997 | 559 | 1.45% | 168,889,339 | 3% | $22,833,506 |
| 1998 | 1,714 | 1.16% | 678,138,262 | 13% | $95,191,380 |
| 1999 | 1,413 | 1.06% | 1,019,239,081 | 21% | $120,481,661 |
| 2000 | 1,150 | 1.31% | 1,253,491,342 | 25% | $210,540,431 |
| 2001 | 1,888 | 1.45% | 1,512,895,659 | 29% | $470,126,351 |
| 2002 | 2,943 | 1.36% | 1,850,608,829 | 36% | $283,167,835 |
| 2003 | 2,966 | 1.64% | 1,974,548,381 | 38% | $505,039,972 |
| 2004 | 3,467 | 1.90% | 2,188,664,203 | 41% | $596,071,963 |
| 2005 | 4,297 | 1.79% | 2,402,241,501 | 44% | $808,802,827 |
| 2006 | 4,392 | 1.42% | 2,743,103,257 | 47% | $1,300,354,421 |
| 2007 | 7,406 | 1.18% | 3,231,149,020 | 51% | $1,293,536,442 |
| 2008 | 6,253 | 1.32% | 4,146,520,207 | 56% | $1,974,204,232 |
| 2009 | 9,774 | 1.48% | 4,748,150,593 | 61% | $1,481,625,687 |
| 2010 | 6,111 | 1.65% | 4,453,473,268 | 61% | $989,419,185 |
| 2011 | 3,350 | 1.63% | 4,704,948,871 | 62% | $1,079,717,312 |
| 2012 | 3,516 | 1.44% | 4,755,614,578 | 62% | $906,806,900 |
| 2013 | 3,092 | 1.32% | 4,323,609,415 | 56% | $810,493,709 |
| 2014 | 2,670 | 1.44% | 3,516,210,409 | 46% | $812,295,780 |
* These rates reflect, for each year, the average reduced tax rate associated with all high-cost wells and the aggregate value of production from those wells.