Louisiana House Bill HB474

Louisiana 2013 Regular Session

• Introduced: 4/8/13
• Refer: 4/8/13
• Report DNP: 5/6/13
• Engrossed: 5/13/13
• Refer: 5/14/13

Caption

Provides relative to the exemption from severance tax for inactive wells (RE +$22,700,000 GF RV See Note)

Impact

The impact of HB 474 is particularly pertinent to the oil and gas industry and its economic implications on state revenues. By providing tax relief for inactive wells, the bill aims to incentivize production from previously dormant sources, potentially reviving economic activity in areas reliant on these resources. It effectively shifts the tax burden and may encourage operators to resume production that would have otherwise remained inactive, which can contribute positively to local economies and generate state revenue through increased activity.

Summary

House Bill 474 introduces modifications to the severance tax rates applied to oil and gas production specifically for inactive wells. The bill is significant as it allows for reduced severance tax rates for oil and gas extracted from wells designated as inactive, provided certain conditions are met. The proposed changes include a lowered severance tax rate of 3.125% on oil and 25% on gas produced from these inactive wells during an initial exemption period. Furthermore, upon the expiration of this period, there would be an additional opportunity for a further five years under which a reduced rate would still apply.

Sentiment

General sentiment surrounding HB 474 appears to be supportive, especially from stakeholders within the oil and gas sector who see the financial relief as beneficial for revitalizing operations that have been sidelined. However, the sentiment may vary among legislators and environmental groups who might express concerns about the long-term implications of such tax reductions on state revenue and resource management. The balance between economic development and regulatory oversight is a recurring theme in the discussions about this bill.

Contention

Notable points of contention regarding HB 474 include the appropriateness of tax reductions on extractive industries given the potential loss of state revenue and the implications for environmental management. While proponents argue that the bill is vital for restoring productivity to inactive wells, critics question whether the benefits to the industry outweigh the potential negative impacts on the state’s financial landscape. Also, there are concerns about the environmental oversight and the long-term sustainability of increased production from these wells, particularly in light of existing regulations and public sentiment on energy conservation.