ENROLLED
ACT No. 421
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
1 AN ACT
2 To 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.
7 Be 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 * * *
18 (iv) Production from an oil and or gas wells shall be exempt from severance
19 tax for a period of five years when returned to service after being well subsequent
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are additions. HB NO. 461 ENROLLED
1 to the well's having been inactive for two or more years or having thirty days or less
2 of production during the past two years shall be subject to a severance tax rate equal
3 to fifty percent of the rate imposed under this Paragraph or Paragraph (9) of this
4 Section for a period of ten years. Production from an oil or gas wells subsequent to
5 the well's having been designated as an orphan well for longer than sixty months
6 shall be subject to a severance tax rate equal to twenty-five percent of the rate
7 imposed under this Paragraph or Paragraph (9) of this Section for a period of ten
8 years. To qualify for the reduced inactive or orphan well severance tax rate, the oil
9 or gas production must be produced from the same perforated producing interval or
10 from one hundred feet above and one hundred feet below the perforated producing
11 interval for lease wells, and within the correlative defined interval for unitized
12 reservoirs, that the formerly inactive or orphaned well produced from before being
13 inactive or designated as an orphan well. The exemption shall be extended by the
14 length of any inactivity of a well that has commenced production when such
15 inactivity is caused by a force majeure.
16 (aa) To qualify for inactive or orphan well status for purposes of the special
17 rate referenced in this Item, an application for a two-year inactive or orphan well
18 certification shall be made to the Department of Natural Resources, before
19 commencement of production, during the period beginning July 31, 1994 and ending
20 June 30, 2000, for the period beginning July 1, 2002 and ending June 30, 2006, and
21 for the period beginning July 1, 2006 and ending June 30, 2010 July 1, 2018, and
22 ending June 30, 2023. Upon certification that a well is inactive or orphan, all
23 production is shall be exempt from severance tax subject to the special rate for a
24 period of five years as provided in this Item from the date production begins or
25 ninety days from the date of the application, whichever occurs first. If, in any one
26 fiscal year, the secretary of the Department of Revenue estimates that the severance
27 tax paid under the provisions of this Item will be in excess of fifteen million dollars,
28 the secretary shall notify the commissioner of conservation who shall not certify
29 inactive or orphan well status for any other wells for the remainder of that fiscal
30 year. Such certifications may begin again after the beginning of the next fiscal year.
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1 (bb) If the severance tax is paid at the full rate provided by this Section
2 before the Department of Natural Resources approves an application for two-year
3 inactive or orphan well status, the operator is entitled to a credit against taxes
4 imposed by this Section in an amount equal to the tax paid. To receive a credit, the
5 operator must apply to the secretary of the Department of Revenue for the credit not
6 later than the first anniversary after the date the Department of Natural Resources
7 certifies that the well is a two-year an inactive or orphan well.
8 * * *
SPEAKER OF THE HOUSE OF REPRESENTATIVES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
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