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Committee tees up paired bills to cut oil severance rate and shorten horizontal‑well exemption; supporters say net five‑year fiscal impact is neutral
Summary
Committee members advanced paired measures that would cut the oil severance tax rate from 12.5% to 6.5% and shorten the horizontal drilling exemption from 24 to 18 months, with sponsors saying the two bills together are designed to be roughly revenue neutral over five years.
Lawmakers advanced two linked measures that together would reduce the oil severance tax rate and shorten the tax exemption window for horizontal drilling, a package sponsors said was intended to improve competitiveness for oil production without producing a net fiscal cost over five years.
Sponsors described the package as a narrow change requested by the governor and legislative leadership: lower the state oil severance tax rate from 12.5% to 6.5% (House Bill 600) while shortening the horizontal drilling exemption period from 24 months to 18 months (House Bill 495). "We're the highest in the nation at 12 and a half," the sponsor said. The pair were described in committee as designed to be net neutral over a five‑year forecast once the two measures are considered together.
Senator Presley, representing northwest Louisiana and areas including the Haynesville shale, said he was "perfectly honest" he did not "love this bill" and cautioned about effects on horizontal drilling and local economic development. Industry and stakeholder witnesses said they had negotiated elements of the package and supported the narrower approach compared with more disruptive proposals considered previously. Mike Montclair of the Louisiana Oil and Gas Association said the Haynesville stakeholders "understand the governor and the speaker's initiative of trying to get more competitive" and noted the bill does not raise the gas rate or include previous provisions that had sunset or unitization conditions.
Environmental and conservation testimony raised separate concerns. Peter Robbins Brown of the Sierra Club Delta chapter asked the committee to consider orphan well cleanup obligations and said cutting the severance tax could disincentivize cleanup work; the sponsor and others responded that the measures under consideration did not directly target orphan well remediation.
Senator Presley offered an amendment packet intended to add guardrails; the amendment set was adopted. Committee members then moved both bills favorably as amended. Sponsors and supporters said they planned concurrent consideration of a third measure dealing with auditing and reporting for gas to complete the package.
