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Oil and Gas Industry – Non-Taxable List

This is a list of non-taxable items commonly used by the oil and gas industry. Only eligible purchasers can lease or purchase these items tax-exempt unless noted otherwise.

There are also limitations on use:

For the exploration, discovery, or development of petroleum and natural gas deposits, anyone who for commercial purposes, regularly engages in these activities is eligible. The machinery and equipment must be used more than 90% of the time in such activities.

Manufacturers involved in the production or processing of petroleum or natural gas must meet the conditions as set out in the Social Service Tax Act. Please see Bulletin SST 055, Oil and Gas Industry - Producers and Processors, for details on eligibility and use. If you are an eligible manufacturer, the production machinery and equipment must be used directly and more than 50% of the time for a qualifying use.

This is not a complete list. Items not on this list may be found on one of our other lists for the oil and gas industry. The other lists are:

If an item is not on any of these lists and you are unsure how tax applies, please contact us.

A  B  C  D E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z

 A

  • Amine skid used to remove CO2 from the raw natural gas stream at a processing plant or refinery
  • Automated equipment at the well head, processing plant or refinery used to monitor and control production

 B

  • Bags - filter, for exempt equipment that qualifies for the production machinery and equipment exemption
  • Barrel - chemical mixing when used at the well head
  • Batteries - for exempt equipment that qualifies for the production machinery and equipment exemption, however environmental levy still applies.
  • Bits - drill includes PDCs, tricones
  • Blowout ignition system - when used more than 90% of the time by a natural gas producer at the well head to control pollutants attributable to the manufacture or processing of natural gas
  • Blowout preventors (BOP)
  • Building - portable - qualifying buildings manufactured in British Columbia (see our Taxable List - Oil and Gas Industry)

 C

  • Casing - includes casing attachments
  • Catwalks - see Scaffolding
  • Cementing equipment - when sold separately or when sold as part of a single unit and the charge for the equipment is separately stated
  • Centralizers - casing attachment
  • Centrifuge - used to remove fine drill solids from mud systems
  • Chemical mixing barrel - when used at the well head
  • Chemical storage drums - when used at the manufacturing or processing site
  • Coil tubing - when put down a hole in preparation for drilling oil
  • Compressors - located at the well head; used in processing plants or refineries up to the point where the petroleum or natural gas is a marketable product (see our Taxable List - Oil and Gas Industry); compressors located within a gas processing plant used for permanently disposing of waste gas (mainly hydrogen sulphide and carbon dioxide) from a gas processing plant into a depleted well
  • Computers - when used over 50% of the time to monitor exempt production machinery and equipment for the manufacturing of goods (see our Taxable List - Oil and Gas Industry); torque monitoring computer for use in the drilling process
  • Control panels - used to run generators at a well head
  • Custom software - designed for and integrated into eligible production machinery or equipment  (also see entry for Software)

 D

  • Dehydrators - including mole sieve used at the well head; used during the production testing phase
  • Detectors - flame, when used during the production testing phase as an alternative to a flare stack (see our Taxable List - Oil and Gas Industry)
  • Disposal lines - salt water when located within a processing plant; outside of the processing plant they are taxable (see our Taxable List - Oil and Gas Industry)
  • Drifts - when used in the drilling process
  • Drill - bits, includes tricone, PDCs (Polycrystalline Diamond Compact), collars; pipes, rat hole
  • Drill stem - used in exploration and development
  • Drill stem testing equipment - includes instrumentation
  • Drums - for chemical storage when used at the manufacturing or processing site

 E

  • EDR (electronic drilling recorder)
  • EDR system (only an EDR and the embedded dedicated computer equipment that is integrated into the unit) used at the drilling site
  • Electric generators and alternators when used directly and over 50% of the time in processing of petroleum or natural gas at a refinery or processing plant up to the point where the petroleum or natural gas becomes a marketable product.  These cannot be mobile, portable, or stand-by; also see Generators (see our Taxable List - Oil and Gas Industry)
  • Electronic drilling recorder (EDR)
  • Electronic drilling recorder system (only an EDR and the embedded dedicated computer equipment that is integrated into the unit) used at the drilling site
  • Elevators - used in the drilling process, includes YC/YT elevators
  • Emergency gas shut off devices - that are attached to a gas line and automatically shut off the gas supply when significant movement occurs, or that manually turn off a building's gas supply (exempt to everyone)
  • Engines on pump trucks when the engine is used over 90% of the time to power the pumping unit on the truck to extract fluids/muds from the well site; the deck, pump, tank, line controls, winch, manifold drop box and precharge pump are included  (see our Non-Taxable List - Truck-Mounted Service Rigs)
  • Equipment - automated equipment used to monitor and control production at the well head, processing plant or refinery; cementing or fracturing equipment when sold separately or when sold as part of a single unit and the charge for the equipment is separately stated; drill stem testing equipment including instrumentation; gas flow equipment when used downhole to monitor gas flow; measurement while drilling (MWD) equipment used to monitor the drill bit's downhole position; well logging equipment including instrumentation; SCADA equipment (Supervisory Control and Data Acquisition) used to monitor and control production at the well head, processing plant or refinery

 F

  • Filter bags - for exempt equipment that qualifies for the production machinery and equipment exemption
  • Fishing tools for retrieving tools lost downhole
  • Flame detectors - when used during the production testing phase as an alternative to a flare stack (see our Taxable List - Oil and Gas Industry)
  • Flare stacks - includes mobile flare stacks used during the production testing phase
  • Floats - casing attachment
  • Fracturing equipment - when sold separately or when sold as part of a single unit, for example, a truck-mounted unit and the charge for the equipment is separately stated

 G
  • Gas detection monitors that detect hazardous gas and provide a warning (exempt to everyone)
  • Gas dehydration equipment used in processing plants or refineries up to the point where the petroleum or natural gas is a marketable product
  • Gas flow equipment - when used downhole to monitor gas flow
  • Gas lift lines - located at a production wellsite to encourage the flow or transport of gas from the reservoir to the surface, but if located at a storage wellsite they are taxable
  • Gas shut off devices (emergency) - that are attached to a gas line and automatically shut off gas supply when significant movement occurs, or that manually turn off a building's gas supply (exempt to everyone)
  • Gauges - torque, for use in the drilling process
  • Generators or gensets - when located at the well head, these may be portable or permanent types (see our Taxable List - Oil and Gas Industry)
  • Guns - perforating that are used during the production testing phase

 H
  • Hand held tools - when used by manufacturers directly and over 50% of the time to manufacture goods
  • Hardware for use during the drilling process
  • Heaters - line, located at the well head to preheat gas but not line heaters on pipeline; used during the production testing phase

 I
  • Incinerator - when used during the production testing phase in place of a flare stack to burn off excess natural gas

 L
  • Lab testing equipment - used at a manufacturing site where the testing is one step in or occurs immediately after the processing/manufacturing is completed, otherwise it is taxable
  • Line heaters - located at the well head to preheat gas, but not line heaters on the pipeline
  • Lines - salt water disposal lines when located within a processing plant; if located outside of the processing plant they are taxable (see our Taxable List - Oil and Gas Industry)
  • Liquefaction equipment - used in a processing plant or refinery to liquefy CO2  so that it can be transported and marketed

 M
  • Machinery and equipment used to inject substances into a reservoir to aid, assist, enhance or maintain production of petroleum or natural gas from the reservoir
  • Meter skids - see Well meter skids
  • Measurement while drilling (MWD) equipment - used to monitor the drill bit's downhole position
  • Molecular sieve (Mole sieve dehydrators) - used at the well head
  • Molecular sieve (Mole sieve pellets) - when used as a part of exempt dehydrator equipment
  • Monitoring equipment - that monitors or controls the operation of exempt machinery and equipment at the well head, processing plant or refinery; downhole equipment used to monitor gas flow
  • Monitors - hazardous gas detection monitors that provide a warning (exempt to everyone)
  • Motors - used in the production testing phase; mud motors used downhole in the drilling process
  • MWD - "Measurement while drilling" equipment used to monitor the drill bit's downhole position

 O
  • Optical sensors - if they are part of hydrogen sulfide testing equipment and the testing equipment is located within the manufacturing site

 P
  • Packers - used during well stimulation
  • Panels - control that are used to run generators at a well head
  • PDC (Polycrystalline Diamond Compact) drill bits
  • Perforating guns - used during the production testing phase
  • Pipe(s) - when used directly and over 50% of the time at a manufacturing site for manufacturing/processing of oil and gas, but not if it is part of the distribution or transportation system (includes gathering lines) (see our Taxable List - Oil and Gas Industry); pipe including regulators, compressors and other related equipment dedicated to the transmission of waste gas to a depleted well for the waste's permanent disposal from within processing plant or from a gas processing plant to a well head
  • Pipe joint - used downhole in the production and testing phase
  • Pipe racks - used in the drilling process
  • Piping systems - used downhole in the production and testing phase
  • Pit volume totalizer (PVT) - used for monitoring the bore hole
  • Portable building - qualifying buildings manufactured in British Columbia (see our Taxable List - Oil and Gas Industry)
  • Portable toilet rental with services - (see our Taxable List - Oil and Gas Industry) if the agreement is for rental only without any services
  • Pressure piping systems and its components - used during the production testing phase
  • Pump units - submersible trash or sump, used to pump drilling fluids, mud/water
  • Pumpjacks
  • Pumps and motors - used in the production testing phase (see our Taxable List - Oil and Gas Industry re: pumps)
  • PVT (pit volume totalizer) - used for monitoring the bore hole

 R
  • Racks - pipe used in the drilling process

 S
  • Safety valves - used for well logging, drill stem testing or the production testing phase (see our Non-Taxable List - Truck-Mounted Service Rigs and Non-Taxable List - Drilling Rigs)
  • Salt water disposal lines - when located within a processing plant, if outside of the processing plant they are taxable (see our Taxable List - Oil and Gas Industry
  • SCADA equipment - (Supervisory Control and Data Acquisition) used at the well head, processing plant or refinery
  • Scaffolding, walkways, catwalks and similar items - when they are an integral part of exempt machinery and are included as part of that machinery when it is purchased or leased (see our Taxable List - Oil and Gas Industry; see our Non-Taxable List - Truck-Mounted Service Rigs and Non-Taxable List - Drilling Rigs re: catwalks)
  • Screw pilings - for drilling rig - includes removal types
  • Sensors - optical, if they are part of hydrogen sulfide testing equipment and the testing equipment is located within the manufacturing site
  • Separator vessels - used during the production testing phase
  • Shot - gun (equipment used during the production testing phase) but not the explosive used during the production testing phase
  • Slickline - see Wireline
  • Slips - used in the drilling process
  • Snubbing unit - composed of a blowout preventor stack, a hydraulic jack and a power unit to run the hydraulics
  • Software - on computers that monitor the operation of exempt production machinery and equipment if it is essential for the computer's functioning, or is a program specifically designed for monitoring or operating the exempt production machinery and equipment; custom software
  • Solder - along with welding rods when used in the manufacture of a product for resale as they become a component of the finished product
  • Spiders - casing used in the drilling process
  • Stabbing guides - used in the drilling process
  • Storage tanks - used at a refinery or processing plant to store natural gas before the gas is a marketable product
  • Submersible sump pump unit - used to pump drilling fluids, mud/water
  • Submersible trash pump unit - used to pump drilling fluids, mud/water
  • Sulphur recovery equipment - used in processing plants and refineries up to the point where the petroleum or natural gas has become a marketable product
  • Systems - piping, used downhole in the production and testing phase

 T
  • Tanks - storage - used at a refinery or processing plant to store natural gas before the gas is a marketable product; storage tanks that hold water or frac fluids that are connected to a drilling rig or frac pump and are used to continuously supply water or frac fluids during the drilling or fracturing process; tanks that are a component part of a frac truck; storage tanks integrated with exempt equipment that have direct involvement in the production process (see our Taxable List - Oil and Gas Industry)
  • Tanks - water storage - when they qualify as a portable building and are manufactured in British Columbia; when they qualify as a portable building and are manufactured out-of-province if the manufacturer or dealer is a registered British Columbia vendor and has paid tax on their cost of the unit (see our Taxable List - Oil and Gas Industry)
  • Thread protectors - used in the drilling process
  • Tools - fishing tools for retrieving tools lost downhole; hand held when used by manufacturers directly and over 50% of the time to manufacture tangible personal property (goods)
  • Tongs - power also called rotary or casing tongs, power tongs and jaws, backup and integral tongs
  • Torque gauges - used in the drilling process
  • Transformers, as well as converters, inverters, regulators, breakers and switches designed for use and used with transformers - purchased by an eligible manufacturer when certain criteria are met (see Bulletin SST 055, Oil and Gas Industry - Producers and Processors)
  • Tricones - drill bits
  • Tubing - includes coil - used in the drilling process

 V
  • Vacuum tanks or systems - truck- or trailer-mounted - used to remove drilling mud from rigs for disposal when sold separately or when sold as part of a single unit with the charge for the equipment separately stated on the invoice
  • Valves - safety - used for well logging, drill stem testing or the production testing phase (see our Non-Taxable List - Truck-Mounted Service Rigs and Non-Taxable List - Drilling Rigs)
  • Vessels - separator - used during the production testing phase

 W
  • Walkways - see Scaffolding
  • Waste gas transmission - see Pipes
  • Waste management bins - when rented with services (see our Taxable List - Oil and Gas Industry)
  • Water - natural, distilled, de-ionized (exempt to everyone)
  • Water disposal lines - includes associated machinery and equipment that are located within the processing plant, but not if they are located outside of the processing plant
  • Water storage tanks - when they qualify as a portable building and are manufactured in British Columbia; when they qualify as a portable building and are manufactured out-of-province if the manufacturer or dealer is a registered British Columbia vendor and has paid tax on their cost of the unit (see our Taxable List - Oil and Gas Industry)
  • Welding rods and solder - when used in the manufacture of a product for resale as they become a component of the finished product
  • Well logging equipment - includes instrumentation
  • Well meter skids - as protective coverings that are so closely integrated with the equipment they protect that they are a part of that equipment
  • Wireline (or slickline) unit - skid- or truck-mounted - includes accompanying drawworks, measuring equipment and downhole tools when used to determine downhole conditions or measurements for the testing phase, or used in other gas and oil well production downhole monitoring and analysing situations

 Y
  • YC/YT elevators - used in the drilling process

Last Revised: February 2009

 

  
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