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Bill to let operators offset inactive-well fees with plugging credits deferred after revenue concerns
Summary
Representative McCormick’s bill would let operators apply a credit (about $4.50 per foot) against the portion of inactive‑well fees that go to the Oil Site Restoration (OSR) Fund when they plug wells, but the measure was voluntarily deferred after the Department of Conservation warned of potential OSR revenue reduction and questions about long‑term plugging liabilities.
Representative McCormick described HB 596 as a measure to reduce orphan well liabilities by allowing operators to offset part of their inactive‑well assessment fees with a plugging credit. He said the bill flows from a study group and aims to enable operators to plug more wells at lower cost than the state can.
Secretary Dustin Davidson of the Department of Conservation and Energy told the committee the OSR fund is financed largely by industry fees and that reducing revenue to the fund could affect the state’s ability to plug legacy orphan wells. He estimated the total cost to plug all assets at roughly $1 billion and said the bill’s fiscal note — a reduction in OSR revenue on the order of $2 million after amendment — reflected narrower short‑term impacts. Committee members debated balance between incentives for operators and protecting the OSR fund; Representative McCormick voluntarily deferred the bill to continue negotiations with the department and smaller producers.
Why this matters: Louisiana has a legacy of inactive and orphan wells, and the debate balances incentivizing private plugging with preserving a fund dedicated to orphan‑well remediation.
Next steps: Sponsors will continue work with the Department of Conservation to refine incentive structures and fiscal impacts before reintroducing the measure.
