Sales Tax Issues for Upstream Oil and Gas Operators: Smell that? That’s the smell of money!

On any windy day in the Permian Basin, Eagle Ford Shale or the Barnet shale areas, the unmistakable smell of oil and gas is clearly evident in the air.  To oil and gas producers that is the smell of money.  However, it can also signal a possible leak on a flow line, gathering line, tank battery or other lease site equipment.  When money is flowing in hand over fist, it is easy to overlook the expense side of oil production, the development of a lease, building roads, building a pad, drilling the well, casing the well and completing the well site with flow lines, processing equipment and storage tanks for produced water and oil. However, this equipment on the lease site is subject to exposure to the elements along with exposure to the corrosive nature of the produced water, oil and gas, thus requiring ongoing maintenance and detection of leaks in the wellbore, casing, flow lines, etc. (more…)