🔴Relating to a severance tax exemption for oil and gas produced from certain previously inactive restimulation wells; providing a civil penalty.
HB 3159
🔴 HB 3159: Severance Tax Exemption for Restimulation Wells
What it says it does:
HB 3159 provides a tax break for oil and gas companies that bring inactive wells back into production through restimulation. The bill frames this as encouraging energy production and investment in existing infrastructure.
What it actually changes:
The bill allows companies to avoid up to $750,000 in severance taxes per well for up to 36 months. Authority to certify qualifying wells and approve exemptions rests with the Railroad Commission and the Comptroller. Penalties for misuse are capped at $10,000 plus unpaid taxes, leaving oversight limited and revenue losses recurring.
Who is pushing for it:
Major oil companies including ExxonMobil, Chevron, ConocoPhillips, Oxy, Devon, Repsol, Hilcorp, Verdun, and Aethon. Trade associations such as TXOGA, TIPRO, the Permian Basin Petroleum Association, and the Texas Royalty Council. Service providers including Halliburton and Milestone Environmental Services. Infrastructure allies like the Port of Corpus Christi Authority and the Texas Association of Manufacturers.
Who benefits:
Large operators with capital to restimulate inactive wells gain predictable tax relief. Service companies benefit from increased contracts for re-fracturing work. Trade associations secure a long-term precedent for industry carveouts.
Who gets left out or exposed:
Texans who rely on stable funding for schools and highways lose revenue. Small operators without inactive wells do not benefit. Public oversight is reduced, leaving taxpayers and local governments exposed to budget shortfalls.
Why this matters long term:
The bill embeds a durable exemption into the Tax Code, reducing state revenue for essential services. It centralizes power in industry-adjacent agencies, minimizes penalties, and sets a precedent for future carveouts with minimal legislative oversight.
What to watch next:
The number of restimulated wells claiming exemptions, the cumulative revenue lost from the Foundation School Fund and State Highway Fund, and any future proposals that replicate this model for other industry activities.
Bottom line:
HB 3159 shifts public dollars to private oil and gas operators while limiting oversight and accountability. Texans may see fewer resources for schools and infrastructure unless additional protections or reporting requirements are implemented.
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