Vetoed by Governor John Bel Edwards

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that establishes a severance tax exemption for oil wells.

Highlights:

• Requires the treasurer of Louisiana to certify the date in which the balance in the fund equals or exceeds 25 million dollars (Sec 1).

• Requires there to be an exemption from the severance tax levied on oil production from orphaned, newly drilled, or newly completed wells that are undergoing or has undergone enhancements, including but not limited to the following from which production commences on or after January 1, 2021, and on or before December 31, 2023 (Sec 2):

• Re-entries;

• Workovers; or

• plugbacks.

• Requires the exemption for wells that have undergone enhancements to last for 6 months or until payout of the well cost is achieved, whichever happens first (Sec 2).

• Requires the exemption for new wells to last for 12 months or until payout of the well cost is achieved, whichever happens first (Sec 2).

• Requires the exemption for orphaned wells to last for 24 months or until the payout of the well cost is achieved, whichever happens first (Sec 2).

• Requires the exemption period to begin on the first day of the month after the operator notifies the Department of Revenue that new or post enhancement production has commenced, and specifies that a notification will be sent in a form approved by the secretary revenue (Sec 2).

• Prohibits operators in violation of Statewide Order 29-B from being eligible for the exemption authorized by this bill provided that the office of conservation is authorized to withhold a permit application from the operator (Sec 2).

• Requires operating costs to be limited to those costs directly attributable to the operation of the exempt well, including my limited to (Sec 2):

• Supplies;

• Fuel;

• Direct Labor;

• Contract labor services;

• Repairs;

• Maintenance;

• Property Taxes;

• Insurance; or

• Depreciation.

• Requires the calculation of the above costs to begin from the date that the Department of Natural Resources permitted operation or enhancement is complete and production is established (Sec 2).

• Prohibits operating costs from including any costs that were included in the well cost approved by the office of conservation (Sec 2).

Full Bill Text