HLS 19RS-601 ORIGINAL
2019 Regular Session
HOUSE BILL NO. 256
BY REPRESENTATIVES JIM MORRIS AND ABRAMSON
TAX/SEVERANCE TAX: Provides with respect to the rate and exemption for the
severance tax on oil produced from incapable wells
1 AN ACT
2To amend and reenact R.S. 47:633(7)(b), relative to severance tax; to provide with respect
3 to the severance tax on oil produced from an incapable well; to provide certain tax
4 rates; to exclude oil produced from an incapable well from severance tax under
5 certain conditions; to provide for an effective date; and to provide for related matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 47:633(7)(b) is hereby amended and reenacted to read as follows:
8 ยง633. Rates of tax
9 The taxes on natural resources severed from the soil or water levied by R.S.
10 47:631 shall be predicated on the quantity or value of the products or resources
11 severed and shall be paid at the following rates:
12 * * *
13 (7)
14 * * *
15 (b)(i) On oil produced from a well classified by the commissioner of
16 conservation as an oil well, and determined by the collector of revenue that such well
17 is incapable of producing an average of more than twenty-five barrels of oil per
18 producing day during the entire taxable month, and which also produces at least fifty
19 percent salt water per day, the tax rate applicable to the oil severed from such well
20 shall be one-half of the rate set forth in Subparagraph (a) of this Paragraph and such
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 19RS-601 ORIGINAL
HB NO. 256
1 well shall be defined, for severance tax purposes, as an incapable well, provided that
2 such well has been certified by the Department of Revenue as incapable of such
3 production on or before the twenty-fifth day of the second month following the
4 month of production. Oil severed from a multiple well lease or property is not
5 subject to the reduced rate of tax provided for herein in this Item, unless all such
6 wells are certified as incapable.
7 (ii) Notwithstanding Item (i) of this Subparagraph, beginning on July 1, 2019
8 through June 30, 2029, oil produced from certified incapable wells shall be exempt
9 from severance tax in any month in which the average value set forth in
10 Subparagraph (a) of this Paragraph is less than seventy-five dollars per barrel.
11 * * *
12 Section 2. This Act shall become effective upon signature by the governor or, if not
13signed by the governor, upon expiration of the time for bills to become law without signature
14by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
15vetoed by the governor and subsequently approved by the legislature, this Act shall become
16effective on the day following such approval.
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 256 Original 2019 Regular Session Jim Morris
Abstract: Establishes a severance tax exemption, effective July 1, 2019-June 30, 2029, for
oil produced from incapable wells when the average price of oil is less than $75 per
barrel.
Present law imposes a tax on natural resources severed from the soil or water based upon
quantity or value of the products or resources severed.
Present law establishes a severance tax on oil at a rate of 12.5% of its value at the time and
place of severance. The value is determined to by the higher of: (1) gross receipts received
from the first purchaser, less charges for trucking, barging and pipeline fees, or (2) the
posted field price.
Present law defines incapable well as an oil well that is incapable of producing an average
of more than 25 barrels of oil per day and that produces at least 25% salt water per day.
Present law establishes a severance tax rate on oil produced from incapable wells at 6.25%.
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 19RS-601 ORIGINAL
HB NO. 256
Proposed law retains present law. However, beginning July 1, 2019-June 30, 2029,
proposed law provides an exemption from severance taxes on oil produced from incapable
wells when the average value of oil is less than $75 per barrel.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:633(7)(b))
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.