Committee advances paired bills to lower oil severance tax, shorten gas exemption to 18 months

Two linked bills to change how Louisiana taxes oil and gas production moved forward after committee debate over competitiveness, fiscal effects and regional impacts.

Sponsors told the committee they prioritized a narrow package to reduce Louisiana’s oil severance tax rate — currently 12.5% — to 6.5 percent and to shorten an existing horizontal-drilling exemption for new wells from 24 months to 18 months. The pair of measures was presented as a coordinated package intended to reduce the state oil rate while offsetting revenue effects by shortening the gas exemption; sponsors said the two bills were modeled together to be near net-neutral over a five-year forecast.

The sponsor said the governor and legislative leadership supported staying ‘‘in a narrow lane’’ and that stakeholders from industry, the speaker’s office and the governor’s office participated in drafting. The committee adopted an amendment set offered by Senator Presley (Amendment set 2807) that the transcript shows was accepted without recorded opposition.

Industry testimony acknowledged tradeoffs. Mike Montclair of the Louisiana Oil and Gas Association testified for information only and said industry does not favor shortening exemptions but recognized the bill left intact several provisions from prior proposals (no sunset, no unitization requirement) and did not increase gas severance rates. Montclair also noted market conditions: at higher natural‑gas prices (above about $3.50 per MMBtu), Haynesville wells often reach payout inside 18 months.

Environmental and cleanup advocates pressed the committee to consider orphan-well cleanup implications. Peter Robbins Brown of the Sierra Club’s Delta chapter said the state still needs to address orphan wells and contended that tax reductions could reduce incentives to remediate legacy wells; sponsors responded that orphan-well cleanup was not directly addressed by the bills before the committee.

Sponsors said fiscal modeling showed the two bills roughly offset on a five‑year forecast: lowering the oil rate while shortening the gas exemption produced a small net fiscal variance within forecasts and stayed within the leadership’s goal of a neutral five-year impact. The committee recorded no roll-call tallies in the transcript; both bills were reported favorable as amended by voice.

The measures drew regional concern. Senators representing northwest Louisiana’s Haynesville play questioned shortening the exemption, warning of potential negative effects on drilling investment in their districts; sponsors said stakeholders from that region participated in negotiations and that the market’s gas-price response could mitigate negative effects.

The committee adopted Amendment set 2807 and reported House Bill 495 and House Bill 600 favorable as amended. The transcript shows motions to report both bills favorable; no roll-call tallies were captured in the hearing record.