“No Easy Answers for Taxes Related to Hydraulic Fracturing”
When considering tax issues regarding hydraulic fracturing, there are often more questions than answers, tax practitioners said.
“The state laws and federal tax rules have been geared toward the vertical well rule. With horizontal wells, those rules have to adapt,” Todd Keator, a partner with Thompson & Knight LLP, said during a Nov. 20 panel discussion at the University of Texas Law School Oil and Gas Tax Conference.
Hydraulic fracturing involves the high-pressure injection of water, sand and chemical additives into geologic formations to break up the shale and release oil and gas for recovery, and is done using wells drilled horizontally—not vertically like traditional oil and gas wells.