HLS 24RS-611 ENGROSSED
2024 Regular Session
HOUSE BILL NO. 418
BY REPRESENTATIVES BEAULLIEU AND JACOB LANDRY
TAX/SEVERANCE TAX: Reduces severance tax rates on oil and gas produced from
inactive wells and orphan wells
1 AN ACT
2To amend and reenact R.S. 47:633(7)(c)(iv), relative to severance tax; to reduce the rate of
3 severance tax on oil and gas produced from wells with inactive or orphan well status;
4 to provide for an effective date; and to provide for related matters.
5Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 47:633(7)(c)(iv) is hereby amended and reenacted to read as follows:
7 ยง633. Rates of tax
8 The taxes on natural resources severed from the soil or water levied by R.S.
9 47:631 shall be predicated on the quantity or value of the products or resources
10 severed and shall be paid at the following rates:
11 * * *
12 (7)
13 * * *
14 (c)
15 * * *
16 (iv) Production from an oil or gas well subsequent to the well's having been
17 inactive for two or more years or having thirty days or less of production during the
18 past two years shall be subject to a severance tax rate equal to fifty twenty-five
19 percent of the rate imposed under this Paragraph or Paragraph (9) of this Section for
20 a period of ten years. Production from an oil or gas well subsequent to the well's
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions. HLS 24RS-611 ENGROSSED
HB NO. 418
1 having been designated as an orphan well for longer than sixty months shall be
2 subject to a severance tax rate equal to twenty-five twelve and one half percent of the
3 rate imposed under this Paragraph or Paragraph (9) of this Section for a period of ten
4 years. To qualify for the reduced inactive or orphan well severance tax rate, the oil
5 or gas production must be produced from the same perforated producing interval or
6 from one hundred feet above and one hundred feet below the perforated producing
7 interval for lease wells, and within the correlative defined interval for unitized
8 reservoirs, that the formerly inactive or orphaned well produced from before being
9 inactive or designated as an orphan well. The exemption shall be extended by the
10 length of any inactivity of a well that has commenced production when such
11 inactivity is caused by a force majeure.
12 * * *
13 Section 2. This Act shall become effective on October 1, 2024.
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 418 Engrossed 2024 Regular Session Beaullieu
Abstract: Reduces severance tax rates on oil and gas produced from wells with inactive or
orphan well status.
Present law provides for the levy of a tax, known as severance tax, on natural resources
severed from the soil or water. Provides that the rate of the severance tax is predicated on
the quantity or value of the products or resources severed.
Present law establishes general severance tax rates. Proposed law retains present law.
Present law provides for special, reduced rates of severance tax on production from oil and
gas wells with inactive or orphan well status conferred by the Dept. of Energy and Natural
Resources. Provides that the special rates shall be as follows:
(1)Production from an oil or gas well subsequent to the well's having been inactive for
two or more years, or having 30 days or less of production during the past two years,
shall be subject to a severance tax rate equal to 50% of the general severance tax rate
imposed by present law for a period of ten years.
(2)Production from an oil or gas well subsequent to the well's having been designated
as an orphan well for longer than 60 months shall be subject to a severance tax rate
equal to 25% of the general severance tax rate imposed by present law for a period
of ten years.
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HB NO. 418
Proposed law lowers the special rate on production from an oil or gas well subsequent to the
well's having been inactive for two or more years, or having 30 days or less of production
during the past two years, from 50% of the general severance tax rate to 25% of that rate.
Proposed law lowers the special rate on production from an oil or gas well subsequent to the
well's having been designated as an orphan well for longer than 60 months from 25% of the
general severance tax rate to 12.5% of that rate.
Proposed law retains the ten-year period for each special rate.
Effective Oct. 1, 2024.
(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. Change the effective date of proposed law from July 1, 2024, to Oct. 1, 2024.
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.