When is an oil drilling workover rig exempt from Kansas vehicle registration, and how do you claim it?

Plain-English summary

This 1997 memorandum from the Division of Vehicles' Titles and Registration Bureau answered "numerous inquires" about whether oil drilling workover rigs are exempt from Kansas vehicle registration. The short version: a rig can be exempt from registration only if it meets a strict single-purpose design test, and even then the exemption is from registration — not from personal property tax.

• The design test for an exempt rig. "According to our Legal Staff, in order to be exempt from registration, vehicles must be specially designed and constructed for a single purpose, that is to insert and extract tubing, rods and downhole equipment." Further, "[a]n exempt rig must be operated directly from the base of the derrick rather than from the base of a truck," "must be designed to carry only one person, the operator, and no passengers, (must be single cab)," and "can only be driven from one job site to another or to or from places of storage, delivery or repair."
• What is not exempt. "Truck-mounted well drilling rigs are not exempt from registration."
• How to claim the exemption. "To qualify for exempt status, a Non-Highway title must be applied for using the code 'E' (Vehicle Exempt from Registration Requirements) on the VIPS system." "A photograph of the rig along with a completed Non-Highway affidavit must be attached to the Non-Highway title application." If the rig "was previously registered, and now has a Non-Highway title, the license plate must be removed before the vehicle is operated on public roads or highways."
• Refund of 1997 fees. "Vehicles registered for 1997 that qualify for exemption may apply for a refund of the registration fees," again applying for a Non-Highway title with the photograph and affidavit.
• Property tax still applies. "Registration exemption for workover rigs does not include exemption from personal property taxes."

What this means for you

Oil and gas operators with workover rigs

Not every rig qualifies. To skip registration, your rig must be a dedicated single-purpose workover unit operated from the base of the derrick, single-cab (operator only), and used only to move between job sites or storage/repair. A general truck-mounted well drilling rig does not qualify.

Claiming and keeping the exemption

Apply for a Non-Highway title with code "E," and attach a photo of the rig plus the Non-Highway affidavit. If the rig was already registered, pull the plate before driving it on public roads, and — for 1997 — you could apply for a refund of registration fees already paid.

Don't confuse registration relief with a property-tax break

The memo is explicit: exemption from registration does not exempt the rig from personal property taxes. You may still owe property tax on the equipment even if it never carries a plate.

Common questions

Q: Is an oil workover rig exempt from Kansas vehicle registration?
A: Only if it is specially designed and constructed for the single purpose of inserting and extracting tubing, rods, and downhole equipment, is operated from the base of the derrick, is single-cab (operator only), and is driven only between job sites or to storage, delivery, or repair.

Q: Are truck-mounted well drilling rigs exempt too?
A: No. The memo states that truck-mounted well drilling rigs are not exempt from registration.

Q: If my rig is exempt from registration, is it also exempt from property tax?
A: No. The memo says the registration exemption does not include exemption from personal property taxes.

Citations and references

• Non-Highway title, code "E" (Vehicle Exempt from Registration Requirements) — the mechanism, applied for on the VIPS system with a photograph and a completed Non-Highway affidavit, by which a qualifying single-purpose oil workover rig claims exemption from registration; the memo attributes the design test to its Legal Staff and does not cite a specific K.S.A. section.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: MEMO-OilWorkoverRigs

Original ruling text

Memorandum

Body:

Division of Vehicles
MEMORANDUM

TO: County Treasurers

FROM: Marge Bailey
Chief of Titles and Registration Bureau

DATE: February 19, 1997

SUBJECT: Oil Workover Rigs

This office has received numerous inquires regarding exemption of registration on oil drilling workover rigs.

According to our Legal Staff, in order to be exempt from registration, vehicles must be specially designed and constructed for a single purpose, that is to insert and extract tubing, rods and downhole equipment. An exempt rig must be operated directly from the base of the derrick rather than from the base of a truck. The rig must be designed to carry only one person, the operator, and no passengers, (must be single cab). The rig can only be driven from one job site to another or to or from places of storage, delivery or repair.

Truck-mounted well drilling rigs are not exempt from registration. Enclosed are examples of both the exempt and non-exempt rigs.

To qualify for exempt status, a Non-Highway title must be applied for using the code “E” (Vehicle Exempt from Registration Requirements) on the VIPS system. A photograph of the rig along with a completed Non-Highway affidavit must be attached to the Non-Highway title application which will be submitted to the state. If the vehicle was previously registered, and now has a Non-Highway title, the license plate must be removed before the vehicle is operated on public roads or highways.

Vehicles registered for 1997 that qualify for exemption may apply for a refund of the registration fees. Application for a Non-Highway title must be made when applying for the refund. A photograph of the rig along with a completed Non-Highway affidavit must be attached to the Non-Highway title application which will be submitted to the state.

Registration exemption for workover rigs does not include exemption from personal property taxes. If you should have any further questions or concerns, feel free to contact this office for assistance.

Date Composed: 02/24/1998 Date Modified: 10/09/2001

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