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KS Notice 00-00 Oil and Gas Conservation Fees 2006-12-14

What Kansas oil and gas conservation-fee rates took effect December 22, 2006, and how were December reports split?

Short answer: Effective December 22, 2006, Kansas increased the oil conservation assessment to 91.00 mills per barrel and the gas assessment to 12.90 mills per 1,000 cubic feet (one mcf). December 2006 production therefore used the old rate for December 1-21 and the new rate for December 22-31. Producers and purchasers could total both periods into one monthly line entry but had to keep backup records supporting the calculation. Payment for December production was due by February 20, 2007. The severance-tax rate and payment procedure did not change.

Apply this to your situation

This page answers the general question as of 2006. Ezel answers yours, under current Kansas tax law, with citations.

Currency note: this ruling is from 2006
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is official Kansas Department of Revenue correspondence providing general public guidance, not a private ruling issued to one taxpayer. The official prior-notices index and source filename identify it as Notice 00-00, while the document body is an unnumbered December 14, 2006 memorandum to oil and gas producers and purchasers; that source identifier is preserved here. It states historical conservation-fee rates and does not have the force of law; later rates or guidance may change the result. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The Kansas Corporation Commission amended K.A.R. 82-3-206 and 82-3-307 to increase oil and gas conservation assessments effective December 22, 2006.

  • Oil: 91.00 mills per barrel.
  • Gas: 12.90 mills per 1,000 cubic feet, or one mcf.

December 2006 was a split-rate month: the old rates applied to production from December 1-21, and the new rates applied from December 22-31. A producer or purchaser could combine both periods into one line on the monthly oil or gas report, but needed backup information supporting the amounts.

Payment for December 2006 production was due on or before February 20, 2007. The procedure for paying the conservation fee did not change, and the severance-tax rate did not change.

What this means for you

Historical December 2006 reports needed production allocated between the two rate periods, even if the monthly return showed a single combined line.

Common questions

Q: What was the new oil rate?
A: 91.00 mills per barrel.

Q: What was the new gas rate?
A: 12.90 mills per mcf.

Q: When did the new rates begin?
A: December 22, 2006.

Q: Did the severance-tax rate change?
A: No. The notice expressly says it did not.

Citations and references

  • K.A.R. 82-3-206 — oil conservation assessment.
  • K.A.R. 82-3-307 — gas conservation assessment.

Subject

Increase in the Oil and Gas Conservation Fees

Source

Original ruling text

JOAN WAGNON, SECRETARY KATHLEEN SEBELIUS, GOVERNOR
DEPARTMENT OF REVENUE
DIVISION OF TAXATION

To: Kansas Oil/Gas Producers and Purchasers

From: Joan Wagnon
Secretary of Revenue

Date: December 14, 2006

Subject: Increase in the Oil and Gas Conservation Fees

The Kansas Corporation Commission amended K.A.R. 82-3-206 and K.A.R. 82-3-307 increasing the
conservation assessment on both oil and gas production. Effective December 22, 2006 the oil assessment
increases to 91.00 mills per barrel and the gas assessment increases to 12.90 mills per 1000 cubic feet or 1
mcf.

Please note that the beginning date for the Fee increase is December 22, 2006. This means that your
company will have two distinct rates to use for reporting purposes for the month of December, i.e., the
current rate for December 1 – 21, 2006 and the new rate for December 22 – 31, 2006. If there are purchases
made in both time frames, total into a one line entry, as you are doing now on the Monthly Oil and Monthly
Gas reports. Your office should maintain back up information to justify the amounts shown.

Example:
Gas Well #1 had a total gross volume of 350. Of that amount 248 mcf’s was for December 1 – 21, 2006 and
102 mcf’s for December 22– 31, 2006. The conservation fee would be 248 times .00913 or $2.26 plus 102
times .0129 or $1.32, totaling $3.58.

Oil Well #1 has a total gross volume of 425. Of that amount 301.61 barrels was for December 1 – 21, 2006
and 123.39 for December 22 – 31, 2006. The conservation fee would be equal to 301.61 times .0547 or
$16.50 plus 123.39 times .091 or $11.23, totaling $27.73.

The new rate will be applied to December 2006, oil and gas production. The payment due date for
December 2006 production is on or before February 20, 2007. The procedure for paying the fee has not
changed. Those producers and/or purchasers who currently remit the fee and the severance tax will continue
using the same payment method. The severance tax rate has not changed.

If you have any questions regarding calculating or remitting the fee, please contact the Mineral Tax Section
at (785) 368-8222. Select the business tax option and then the motor fuel/mineral tax option.

If you have questions regarding the conservation fee increase, please contact the Kansas Corporation
Commission at (316) 337-6200.

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