Louisiana House Bill HB461

Louisiana 2017 Regular Session

• Introduced: 3/31/17
• Refer: 3/31/17
• Refer: 4/10/17
• Report Pass: 5/15/17
• Engrossed: 5/24/17
• Refer: 5/30/17
• Report Pass: 6/1/17
• Enrolled: 6/7/17
• Chaptered: 6/26/17
• Passed: 6/26/17

Caption

Provides for severance tax exemptions for certain inactive and orphan wells (EN DECREASE GF RV See Note)

Impact

The changes proposed by HB 461 aim to encourage the revitalization of inactive and orphaned wells, which can ultimately lead to increased oil and gas production. By providing tax exemptions and incentives, the legislation is expected to stimulate economic activity in the oil sector, which is a significant contributor to Louisiana's economy. Supporters believe that reviving these wells can create jobs and enhance state revenues through increased production, which may offset the initial tax reductions provided in the bill.

Summary

House Bill 461 provides modifications to Louisiana's severance tax regulations pertaining to oil and gas production, specifically addressing inactive and orphan wells. The bill amends existing tax provisions to exempt production from wells that have been inactive for two years or more from severance tax for a period of five years once they are returned to service. Additionally, it sets a lower tax rate for production from orphan wells that have been inactive for over sixty months, allowing these wells a severance tax rate of 25% of the normal rate for a period of ten years.

Sentiment

The sentiment surrounding HB 461 appears to be largely positive among its proponents, who view it as a necessary step to reinvigorate Louisiana's oil and gas industries. However, there may be concerns regarding the long-term implications of reduced tax revenues for the state, especially if a significant number of wells take advantage of the exemptions. The general support reflects an understanding of the local economic dependency on the oil and gas sector, with the bill seen as a pragmatic approach to managing inactive resources.

Contention

While the bill has garnered support, it could face contention regarding its impact on state finances. Critics may argue that while incentivizing production from inactive wells is beneficial, the state might suffer from reduced severance tax revenues in the short term. This tension makes it crucial for policymakers to balance the need for economic stimulus in the oil sector against the financial health of state resources dependent on oil and gas tax revenues.