HLS 15RS-780 ORIGINAL
2015 Regular Session
HOUSE BILL NO. 549
BY REPRESENTATIVE THIBAUT
TAX/SEVERANCE-EXEMPTI ON: Modifies exemptions, suspensions, and special rates
from July 1, 2015 to June 30, 2017
1 AN ACT
2To amend and reenact R.S. 47:633(7)(b) and (c)(i) and (iii), and (9)(b), relative to severance
3 tax; to provide with respect to special tax treatment for severance taxes on oil,
4 natural gas, distillate, condensate, and other similar natural resources; to provide for
5 exemptions; to provide for suspensions; to provide for reduced tax rates; to provide
6 for applicability; to provide for effectiveness; and to provide for related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:633(7)(b) and (c)(i) and (iii), and (9)(b) are hereby enacted to read
9as follows:
10 ยง633. Rates of tax
11 The taxes on natural resources severed from the soil or water levied by R.S.
12 47:631 shall be predicated on the quantity or value of the products or resources
13 severed and shall be paid at the following rates:
14 * * *
15 (7)
16 * * *
17 (b) On oil produced from a well classified by the commissioner of
18 conservation as an oil well, and determined by the collector of revenue that such well
19 is incapable of producing an average of more than twenty-five barrels of oil per
20 producing day during the entire taxable month, and which also produces at least fifty
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HB NO. 549
1 percent salt water per day, the tax rate applicable to the oil severed from such well
2 shall be one-half fifty-one percent of the rate set forth in Subparagraph (a) of this
3 Paragraph and such well shall be defined, for severance tax purposes, as an incapable
4 well, provided that such well has been certified by the Department of Revenue as
5 incapable of such production on or before the twenty-fifth day of the second month
6 following the month of production. Oil severed from a multiple well lease or
7 property is not subject to the reduced rate of tax provided for herein, unless all such
8 wells are certified as incapable.
9 (c)(i)(aa) On oil produced from a well classified by the commissioner of
10 conservation as an oil well, and certified by the Department of Revenue that such
11 well is incapable of producing an average of more than ten barrels of oil per
12 producing day during the entire taxable month, the tax rate applicable to the oil
13 severed from such well shall be one-quarter twenty-six percent of the rate set forth
14 in Subparagraph (a) of this Paragraph and such well shall be defined, for severance
15 tax purposes, as a stripper well, provided that such well has been certified by the
16 Department of Revenue as a stripper well on or before the twenty-fifth day of the
17 second month following the month of production. Once a well has been certified and
18 determined to be incapable of producing an average of more than ten barrels of oil
19 per producing day during an entire month, such stripper well shall remain certified
20 as a stripper well until the well produces an average of more than ten barrels of oil
21 per day during an entire calendar month.
22 (bb) Crude oil produced from certified stripper wells shall be exempt from
23 severance tax taxed at a rate of one percent in any month in which the average value
24 set forth in Subparagraph (a) of this Paragraph is less than twenty dollars per barrel.
25 * * *
26 (iii) All severance tax shall be suspended The severance tax shall be one
27 percent, for a period of twenty-four months or until payout of the well cost is
28 achieved, whichever comes first, on any horizontally drilled well, or, on any
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HB NO. 549
1 horizontally drilled recompletion well, from which production commences after July
2 31, 1994.
3 (aa) For the purposes of this Section "horizontal drilling" shall mean high
4 angle directional drilling of bore holes with fifty to three thousand plus feet of lateral
5 penetration through productive reservoirs and "horizontal recompletion" shall mean
6 horizontal drilling in an existing well bore.
7 (bb) Payout of well cost shall be the cost of completing the well to the
8 commencement of production as determined by the Department of Natural
9 Resources.
10 * * *
11 (9)
12 * * *
13 (b) In the case of gas produced from an oil well designated as such by the
14 office of conservation, which has been determined by the secretary to have a
15 wellhead pressure of fifty pounds per square inch gauge or less under operating
16 conditions, or, in the case of gas rising in a vaporous state through the annular space
17 between the casing and tubing of such oil well and released through lines connected
18 with the casinghead gas which has been determined by the secretary to have a
19 casinghead pressure of fifty pounds per square inch gauge or less under operating
20 conditions, the rate shall be three four cents per thousand cubic feet. For purposes
21 of applying this reduced rate an oil well being produced by the method commonly
22 known as gas lift shall be presumed in the absence of a determination to the contrary
23 by the secretary, to have a wellhead pressure of fifty pounds per square inch or less
24 under operating conditions. To qualify for the reduced rate an oil well must have a
25 casinghead pressure of fifty pounds or less per square inch for the entire taxable
26 month.
27 Section 2. The provisions of this Act shall be applicable for production occurring
28on or after July 1, 2015, and on or before June 30, 2017.
29 * * *
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HB NO. 549
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 549 Original 2015 Regular Session Thibaut
Abstract: Modifies exemptions, suspensions, and special rates for various types of mineral
production activity subject to severance taxes from July 1, 2015 through June 30,
2017.
Present law imposes a severance tax on oil and condensate at a capable rate of 12.5%.
Present law limits the severance tax on oil produced from a well classified as an oil well
incapable of producing an average of more than 25 barrels of oil per producing day during
the entire taxable month to 50% of the severance tax rate imposed under present law.
Proposed law retains present law except changes the special rate from 50% to 51%
Present law limits the severance tax on oil produced from a well classified as incapable of
producing an average of more than 10 barrels of oil per producing day during the entire
taxable month to 25% of the severance tax rate imposed pursuant to present law.
Proposed law retains present law except changes the special rate from 25% to 26%
Present law exempts crude oil produced from certified stripper wells in any month in which
the average value of oil is less than twenty dollars per barrel.
Proposed law changes present law by changing the tax treatment of oil from stripper wells
from exempt to a tax rate of 1%.
Present law exempts all production from a horizontally drilled well for 24 months or payout.
Proposed law changes present law by changing the tax treatment of oil from horizontal well
from exempt to a tax rate of 1%.
Present law imposes a severance tax on natural gas at a capable rate of 16.3 cents per MCF
from July 1, 2014 to July 1, 2015.
Present law provides for a reduced severance tax rate of three cents per thousand cubic feet
for gas produced from an oil well designated to have a wellhead pressure of fifty pounds per
square inch gauge or less under operating conditions, or, in the case of gas rising in a
vaporous state through the annular space between the casing and tubing of such oil well and
released through lines connected with the casinghead gas which has been determined to have
a casinghead pressure of 50 pounds per square inch gauge or less under operating conditions.
Proposed law changes present law by increasing the special rate from three to four cents per
thousand cubic feet.
Proposed law is applicable to production occurring on and after July 1, 2015 and on or
before June 30, 2017.
Effective July 1, 2015.
(Amends R.S. 47:633(7)(b) and (c)(i) and (iii) and (9)(b))
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