(1) Oil and gas field machinery and equipment shall be valued using the cost approach to market value. The taxpayer must provide to the department the acquired cost, the year acquired, and an itemized description of each piece of machinery and equipment. The acquired cost will be trended to current replacement cost and then depreciated according to the schedule mentioned in (2).

(2) The department shall prepare a 15-year trended depreciation schedule for oil and gas field machinery and equipment. Trend factors and depreciation factors published by "Marshall and Swift Publication Company" will be used to develop the trended depreciation schedules. The trend factors shall be the most recent available from the "Chemical Industry Cost Indexes" listed in the above publication.

(3) The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2008.

 

O IL AND GAS FIELD PRODUCTION

EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2008	100%	1.000	100%
2007	95%	1.000	95%
2006	90%	1.053	95%
2005	85%	1.106	94%
2004	79%	1.200	95%
2003	73%	1.242	91%
2002	68%	1.267	86%
2001	62%	1.274	79%
2000	55%	1.286	71%
1999	49%	1.307	64%
1998	43%	1.313	56%
1997	37%	1.327	49%
1996	31%	1.344	42%
1995	26%	1.370	36%
1994	23%	1.421	33%
1993 and older	20%	1.450	29%

 

(4) All downhole equipment in oil and gas wells is exempt from taxation. Downhole equipment includes:

(a) sucker rods;

(b) tubing;

(c) casing; and

(d) submersible pumps.

(5) Downhole equipment which is not in an oil or gas well shall be taxed as class eight property.

(6) This rule is effective for tax years beginning after December 31, 2007.