The Real Property Tax Law (RPTL) provides a uniform, statewide method of valuing oil and gas producing properties for real property tax purposes. It mandates the assessment of oil and gas properties in production separately from all other interests in the property (e.g., land, buildings).
The Office of Real Property Services (ORPS) is responsible for determining and certifying the appropriate unit of production value for use in the assessment of oil and gas rights. ORPS annually establishes these units of production values and certifies them to assessors for use in assessing oil and gas economic units. For oil, the unit of production value is a dollar amount per barrel (bbl) of oil produced. For gas, the unit of production value is a dollar amount per 1,000 cubic feet (mcf) of gas produced.
Oil and gas producing properties are assessed as economic units. An economic unit encompasses all real property, associated with the exercise of oil and gas rights, including the unextracted oil and gas, oil and gas rights, and any and all wells, equipment, fixtures and pipeline, necessary to drill, mine, operate, develop, extract, produce, collect, deliver or sell the oil or gas to a point of sale to a commercial purchaser, a pipeline or equipment of a user.
To compute the assessment of an oil and gas economic unit, the assessor must multiply the amount of production by the appropriate unit of production value. The production used in the calculation is from the production year preceding the applicable taxable status date as reported by the producer. The result of this calculation must be multiplied by the most recent state equalization rate.
Valuation and Assessment of Oil and Gas Producing Property in New York State |
