HLS 17RS-921 ENGROSSED
2017 Regular Session
HOUSE BILL NO. 461
BY REPRESENTATIVES BISHOP, BAGLEY, BROADWATER, COUSSAN, DAVIS,
DEVILLIER, DWIGHT, EDMONDS, HENSGENS, HORTON, NANCY LANDRY,
MAGEE, MIGUEZ, AND SCHEXNAYDER AND SENATORS CHABERT,
CORTEZ, AND HEWITT
TAX/SEVERANCE-EXEMPTI ON: Provides for severance tax exemptions for certain
inactive and orphan wells
1 AN ACT
2To amend and reenact R.S. 47:633(7)(c)(iv), relative to state severance taxes on oil and gas;
3 to provide with respect to incentives relating to inactive and orphan wells; to provide
4 for eligibility and the extent of tax exemptions; to provide for requirements and
5 limitations; to provide for the duration of the exemption; and to provide for related
6 matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:633(7)(c)(iv) is hereby amended and reenacted to read as follows:
9 ยง633. Rates of tax
10 The taxes on natural resources severed from the soil or water levied by R.S.
11 47:631 shall be predicated on the quantity or value of the products or resources
12 severed and shall be paid at the following rates:
13 * * *
14 (7)
15 * * *
16 (c)
17 * * *
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are additions. HLS 17RS-921 ENGROSSED
HB NO. 461
1 (iv) Production from an oil and or gas wells shall be exempt from severance
2 taxa period of five years when returned to service after being well subsequent to the
3 well having been inactive for two or more years or having thirty days or less of
4 production during the past two years shall be subject to a severance tax rate equal to
5 fifty percent of the rate imposed under this Paragraph or Paragraph (9) of this Section
6 for a period of ten years. Production from an oil or gas well subsequent to the well
7 having been designated as an orphan well for longer than sixty months shall be
8 subject to a severance tax rate equal to twenty-five percent of the rate imposed under
9 this Paragraph or Paragraph (9) of this Section for a period of ten years. The
10 exemption shall be extended by the length of any inactivity of a well that has
11 commenced production when such inactivity is caused by a force majeure.
12 (aa) To qualify for inactive or orphan well status for purposes of this
13 exemption, an application for a two-year inactive or orphan well certification shall
14 be made to the Department of Natural Resources, before commencement of
15 production, during the period beginning July 31, 1994 and ending June 30, 2000, for
16 the period beginning July 1, 2002 and ending June 30, 2006, and for the period
17 beginning July 1, 2006 and ending June 30, 2010 July 1, 2018, and ending June 30,
18 2022. Upon certification that a well is inactive or orphan, all production is shall
19 be exempt from severance tax for a period of five years as provided in this Item from
20 the date production begins or ninety days from the date of the application, whichever
21 occurs first.
22 (bb) If the severance tax is paid at the full rate provided by this Section
23 before the Department of Natural Resources approves an application for two-year
24 inactive or orphan well status, the operator is entitled to a credit against taxes
25 imposed by this Section in an amount equal to the tax paid. To receive a credit, the
26 operator must apply to the secretary of the Department of Revenue for the credit not
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HB NO. 461
1 later than the first anniversary after the date the Department of Natural Resources
2 certifies that the well is a two-year an inactive or orphan well for purposes of the
3 exemption authorized in this Item.
4 * * *
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 461 Engrossed 2017 Regular Session Bishop
Abstract: Re-establishes a severance tax exemption for production from a certified inactive
oil and gas well for a 50% tax exemption for 10 years, and establishes an exemption
for production from a certified orphan well for a 75% exemption for 10 years, both
exemptions would be effective from July 1, 2018, through June 30, 2022.
Present law authorizes a five year exemption from severance tax for production from oil and
gas wells that are returned to service after being inactive for two or more years or having
thirty days or less of production during the past two years (inactive well), effective July 1,
2006, through June 30, 2010.
Proposed law changes present law by changing the extent and duration of the exemption for
production from an inactive well from five years at 100% to 10 years at 50% and by
establishing a new effective period beginning July 1, 2018, through June 30, 2022.
Proposed law changes present law by establishing an exemption for production from a well
with orphan well designation for at least 60 months, which exemption provides a 50% rate
reduction for a duration of 10 years, effective for the period from July 1, 2018, through June
30, 2022.
(Amends R.S. 47:633(7)(c)(iv))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Add a limit on the duration of the exemptions, July 1, 2018, through June 30,
2022.
2. Add technical changes regarding administration.
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