A. Producers of natural gas and casinghead gas who incur marketing costs of the gas produced may deduct such costs from the gross value when computing the gross value subject to the taxes levied pursuant to Sections 1001 and 1101 of Title 68 of the Oklahoma Statutes.

B. Marketing costs are nonproduction costs incurred by the producer to enable the transport of gas from the well to the market, including:

1. Costs for compressing the gas sold;

2. Costs for dehydrating the gas sold;

3. Costs for sweetening the gas sold; and

4. Costs for delivering the gas to the purchaser.

C. Marketing costs do not include:

1. Costs incurred in producing the gas;

2. Costs incurred in normal lease separation of the oil, gas or condensate; or

3. Insurance premiums on the marketing facility.

D. Marketing costs are determined by adding:

1. Charges for depreciation of the marketing facility being used, provided that, if the facility is rented, the actual rental fee is added;

2. A return on the producer-owned investment equal to six percent (6%) per year on the average depreciable balance;

3. Costs of direct or allocated labor associated with the marketing facility;

4. Costs of materials, supplies, maintenance, repairs, and fuel associated with the marketing facility; and

5. Ad valorem taxes paid on the marketing facility.

E. If the facility is used for a purpose other than marketing the gas being sold, the cost shall be allocated accordingly.

F. If the facility is handling gas for outside parties, the average cost for handling all of the gas shall be applied against the facility owner's gas.

G. The actual cost being charged a producer by an outside party for marketing functions may be used for tax purposes if no other benefit or value accrues to the producer.

H. A producer receiving a cost reimbursement from the gas purchaser shall include the reimbursement in the gross value and is entitled to deduct the actual marketing costs incurred.

I. The Oklahoma Tax Commission shall promulgate rules which establish guidelines to implement the provisions of this section including requirements to submit any additional information as deemed necessary to implement and administer this deduction.

Added by Laws 2007, c. 250, § 3, eff. Jan. 1, 2008.