State Rep. Phillip DeVillier says his bill offering a severance tax exemption and incentive to plug orphan wells is a win-win for the state.
The legislation passed the House and Senate in the special session and is now on Gov. John Bel Edwards’ desk.
Edwards can sign it into law, veto it or wait 20 days to let the bill become law without his signature.
DeVillier represents District 41 that include Eunice and most of rural Acadia Parish above Interstate 10.
“The two biggest things that we collect for our state general fund are income taxes, both personal and corporate, and sales tax. That’s 70% of our state general fund balance,” he said.
If his bill becomes law, DeVillier expects there will be an increase in sales and income taxes.
‘You can’t argue the fact you may have an immediate reduction in severance collections, but you are going to have an immediate increase in income tax and sales tax associated with this type of legislation,” he said.
DeVillier said he doesn’t expect the governor will sign the bill unless he hears from the the oil and gas industry.
The industry offered its support in a news release Wednesday.
“Louisiana’s oil and gas industry is hurting, no doubt,” LOGA Interim President Mike Moncla said. “When industry suffers, so does the state. Unemployment ratchets up, other businesses grind to a halt, and local governments suffer too when drilling activity ceases. This bill will increase activity and give operators some much needed incentives that will help put Louisiana’s oil and gas industry back to work.”
The association stated it appreciates DeVillier’s work on the legislation along with Sen. Rick Ward, R-Port Alen.
“We owe a debt of gratitude to Rep. DeVillier and Sen. Ward, who both understand how critical it is for industry to get activity going again in the state,” Moncla said. “The governor’s support on kick-starting the economy when 2020 has been a double whammy for oil and gas is crucial and we look forward to working with him to get HB 29 passed.”
DeVillier shared an email from Tyler Gray, who serves as president and general counsel to Louisiana Mid-Continent’s Oil and Gas Association, that explains:
“HB 29 incentivizes capital investment in Louisiana. It creates a severance tax exemption on oil for any newly drilled well, a completed well undergoing enhancements, or an orphan well. Each exemption is narrowly tailored, lasting 12-months for new wells, six-months for recompleted wells, 24-months for orphan wells or until payout, whichever comes first. The exemption will be available on or after January 1, 2021 ending on December 31, 2023. Lastly, an operator can be reimbursed by the State for plugging and abandoning an orphan well that doesn’t produce in paying quantities.”
