HLS 17RS-921 REENGROSSED
2017 Regular Session
HOUSE BILL NO. 461
BY REPRESENTATIVES BISHOP, AMEDEE, BACALA, BAGLEY, BARRAS,
BROADWATER, CHAD BROWN, TERRY BROWN, CONNICK, COUSSAN,
CREWS, DAVIS, DEVILLIER, DWIGHT, EDMONDS, GISCLAIR, GUINN,
HENSGENS, HORTON, JONES, NANCY LANDRY, MAGEE, MIGUEZ, JIM
MORRIS, PIERRE, REYNOLDS, RICHARD, SCHEXNAYDER, SCHRODER,
STAGNI, STEFANSKI, TALBOT, THIBAUT, AND ZERINGUE 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 certain special rate provisions; to provide for
5 requirements and limitations; to provide for effectiveness; 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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HB NO. 461
1 (iv) Production from an oil and or gas wells shall be exempt from severance
2 tax for a period of five years when returned to service after being well subsequent
3 to the well having been inactive for two or more years or having thirty days or less
4 of production during the past two years shall be subject to a severance tax rate equal
5 to fifty percent of the rate imposed under this Paragraph or Paragraph (9) of this
6 Section for a period of ten years. Production from an oil or gas well subsequent to
7 the well having been designated as an orphan well for longer than sixty months shall
8 be subject to a severance tax rate equal to twenty-five percent of the rate imposed
9 under 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 Item,
13 an application for a two-year inactive or orphan well certification shall be made to
14 the Department of Natural Resources, before commencement of production, during
15 the period beginning July 31, 1994 and ending June 30, 2000, for the period
16 beginning July 1, 2002 and ending June 30, 2006, and for the period beginning July
17 1, 2006 and ending June 30, 2010 July 1, 2018, and ending June 30, 2023. Upon
18 certification that a well is inactive or orphan, all production is shall be exempt from
19 severance tax subject to the special rate for a period of five years as provided in this
20 Item from the date production begins or ninety days from the date of the application,
21 whichever 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.
3 * * *
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 Reengrossed 2017 Regular Session Bishop
Abstract: Establishes 10 year severance tax rate reductions for production from an inactive
or orphan oil and gas well from July 1, 2018, through June 30, 2023, with production
from an inactive well subject to a severance tax rate of 50% of the normal rate, and
production from an orphan well subject to a severance tax rate of 75% of the normal
rate.
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.
Present law provides for a severance tax rate on oil and gas production of 12%.
Proposed law changes present law by changing the incentive for production from an inactive
well from a five year exemption to a 50% rate reduction for 10 years, and by establishing
a new effective period beginning July 1, 2018, through June 30, 2023.
Proposed law establishes an incentive for production from a well with orphan well
designation for at least 60 months. Production would be taxed at 75% of the normal rate for
10 years, effective for the period from July 1, 2018, through June 30, 2023.
(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.
The House Floor Amendments to the engrossed bill:
1. Change the expiration date from June 30, 2022 to June 30, 2023.
2. Add technical changes clarifying that the incentive is a special rate.
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