LA HORIZONTAL WELL INCENTIVE PROGRAM: HAS IT OUTLIVED ITS ORIGINAL PURPOSE? - GoHaynesvilleShale.com2024-03-28T18:15:25Zhttps://gohaynesvilleshale.com/forum/topics/la-horizontal-well-incentive-program-has-it-outlived-its-original?feed=yes&xn_auth=nococodrie man, I agree. The S…tag:gohaynesvilleshale.com,2015-03-16:2117179:Comment:34749582015-03-16T22:43:29.781ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>cocodrie man, I agree. The Stelly Plan was a reasonable trade off and was debated quite thoroughly before passage. The later revision of the law was a mistake IMO. When the state was flush with federal funds after the hurricanes too many legislators gave into the temptation to cut taxes. Sounds good at the time. Looks like a big mistake later when times get lean and revenue falls short of covering basic services.</p>
<p>cocodrie man, I agree. The Stelly Plan was a reasonable trade off and was debated quite thoroughly before passage. The later revision of the law was a mistake IMO. When the state was flush with federal funds after the hurricanes too many legislators gave into the temptation to cut taxes. Sounds good at the time. Looks like a big mistake later when times get lean and revenue falls short of covering basic services.</p> I think a "practical debate h…tag:gohaynesvilleshale.com,2015-03-16:2117179:Comment:34747772015-03-16T13:49:53.860Zcocodrie manhttps://gohaynesvilleshale.com/profile/charlesjenkins
<p>I think a "practical debate how how the state solves its revenue problem. . ." in which "everything should be on the table . . ." ought to involve a careful consideration of the Stelly Plan. The Baton Rouge <span style="text-decoration: underline;">Advocate</span> called the elimination of the Stelly Plan "Jindal's original sin." The State of Louisiana would get a larger share of my declining royalty income but that tax cost would be somewhat offset by lower sales taxes. Such tax…</p>
<p>I think a "practical debate how how the state solves its revenue problem. . ." in which "everything should be on the table . . ." ought to involve a careful consideration of the Stelly Plan. The Baton Rouge <span style="text-decoration: underline;">Advocate</span> called the elimination of the Stelly Plan "Jindal's original sin." The State of Louisiana would get a larger share of my declining royalty income but that tax cost would be somewhat offset by lower sales taxes. Such tax restructure would greatly benefit the middle and lower income earners in Louisiana. I know such will not happen under the current administration but I hope that in some future circumstance the voting public of Louisiana will seriously consider so doing. </p>
<p></p> You're opinion noted, Joe, I…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34742212015-03-14T22:54:16.363ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>You're opinion noted, Joe, I think it will be an interesting debate. How much debate it prompts will be one indicator of just how dire legislators consider the state's financial plight. There are few options to raise the kind of revenue that is required to avoid deep cuts to critical services. I think it's a good time to consider that the energy industry has changed materially and that the existing tax structure is no longer a good fit.</p>
<p>You're opinion noted, Joe, I think it will be an interesting debate. How much debate it prompts will be one indicator of just how dire legislators consider the state's financial plight. There are few options to raise the kind of revenue that is required to avoid deep cuts to critical services. I think it's a good time to consider that the energy industry has changed materially and that the existing tax structure is no longer a good fit.</p> This legislation would be a n…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34744642015-03-14T22:31:48.563ZJoe Aldridgehttps://gohaynesvilleshale.com/profile/JoeAldridge
<p>This legislation would be a nightmare to administer. Anyone down line from the first taxpayer could be considered libel for the tax at any point.</p>
<p>Also, they are dedicating fixed amounts (over 1 Billion dollars) to agencies with a guarantee that the legislature will continue to support the agencies at the current rate. The Act clearly states that if any part of the Act fails then the rest of the Act stands. So if the collection of the Tax is stricken down the appropriation stands. This…</p>
<p>This legislation would be a nightmare to administer. Anyone down line from the first taxpayer could be considered libel for the tax at any point.</p>
<p>Also, they are dedicating fixed amounts (over 1 Billion dollars) to agencies with a guarantee that the legislature will continue to support the agencies at the current rate. The Act clearly states that if any part of the Act fails then the rest of the Act stands. So if the collection of the Tax is stricken down the appropriation stands. This is very dangerous. Where would the State get this money to fund these agencies at this level?</p> SLS 15RS-175 ORIGINAL
2015 Re…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34742872015-03-14T21:37:25.084ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>SLS 15RS-175 <b>ORIGINAL</b></p>
<p>2015 Regular Session</p>
<p>SENATE BILL NO. 15</p>
<p>BY SENATOR NEVERS AND REPRESENTATIVE RITCHIE</p>
<p> </p>
<p>TAX/TAXATION. Constitutional amendment to levy a tax on the use of hydrocarbon</p>
<p>processing facilities and to dedicate the proceeds. (2/3 - CA13s1(A)) (1/1/16)</p>
<p><a href="https://www.legis.la.gov/legis/ViewDocument.aspx?d=926486" target="_blank">https://www.legis.la.gov/legis/ViewDocument.aspx?d=926486</a></p>
<p>SLS 15RS-175 <b>ORIGINAL</b></p>
<p>2015 Regular Session</p>
<p>SENATE BILL NO. 15</p>
<p>BY SENATOR NEVERS AND REPRESENTATIVE RITCHIE</p>
<p> </p>
<p>TAX/TAXATION. Constitutional amendment to levy a tax on the use of hydrocarbon</p>
<p>processing facilities and to dedicate the proceeds. (2/3 - CA13s1(A)) (1/1/16)</p>
<p><a href="https://www.legis.la.gov/legis/ViewDocument.aspx?d=926486" target="_blank">https://www.legis.la.gov/legis/ViewDocument.aspx?d=926486</a></p> State Senator Foster Campbell…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34740582015-03-14T20:49:35.816ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>State Senator Foster Campbell promoted a tax on transportation and processing 10 years or so ago. It wasn't unconstitutional then and I doubt it is now. It is being discussed by legislators as I post this response. I doubt that what is being contemplated is prohibited or it would not be under discussion. Its possible that the tax does not fall under the definition of duties or imposts. I don't think it is a "green conspiracy". I think it is one of a number of revenue measures that will…</p>
<p>State Senator Foster Campbell promoted a tax on transportation and processing 10 years or so ago. It wasn't unconstitutional then and I doubt it is now. It is being discussed by legislators as I post this response. I doubt that what is being contemplated is prohibited or it would not be under discussion. Its possible that the tax does not fall under the definition of duties or imposts. I don't think it is a "green conspiracy". I think it is one of a number of revenue measures that will be considered in this legislative session. The LSU economics professor didn't start this debate, merely comments on it.</p> Skip,
That concept of taxing…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34740552015-03-14T20:11:55.304ZJoe Aldridgehttps://gohaynesvilleshale.com/profile/JoeAldridge
<p>Skip,</p>
<p>That concept of taxing oil and gas that is transported through the State I think was shot down years ago. That would be clearly unconstitutional. I think the US Constitution clearly states that taxes or tariffs or Imposts or Duties cannot be enacted by any State on good imported or exported across State lines. That would inhibit the free flow of goods between States. That would inhibit commerce. The Constitution clearly states in Article I Section 10 Paragraph 2: <em>"No State…</em></p>
<p>Skip,</p>
<p>That concept of taxing oil and gas that is transported through the State I think was shot down years ago. That would be clearly unconstitutional. I think the US Constitution clearly states that taxes or tariffs or Imposts or Duties cannot be enacted by any State on good imported or exported across State lines. That would inhibit the free flow of goods between States. That would inhibit commerce. The Constitution clearly states in Article I Section 10 Paragraph 2: <em>"No State shall, without the consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the use of the Treasury of the United States ; and all such Laws shall be subject to the Revision and Controul of the Congress</em>". A tax of that type is not going to happen. We've been there done that 40 years ago and it was shot down. </p>
<p>The very people that are pushing this Severance Tax repeal is the Green Crowd and their agenda is to stop fracking by any means. As for LSU losing funding from the State - I have no sympathy. They have set themselves up as an elitist university. If that's what they want then let the elite fund it. As we can see with the LSU Foundations and their shenanigans that is not happening. </p> Joe, I'm interested in a prac…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34743592015-03-14T15:36:46.803ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>Joe, I'm interested in a practical debate on how the state solves its revenue problem and how O&G revenues fit into that debate. I don't see this as a conspiracy to inhibit fracking. And I don't think that the number of "anti-fracking people" in LA is enough to be concerned with. As usual a few vocal activists garner an unwarranted amount of media attention and actually represent a very small segment of voters. The public debate will be largely among citizens and elected officials…</p>
<p>Joe, I'm interested in a practical debate on how the state solves its revenue problem and how O&G revenues fit into that debate. I don't see this as a conspiracy to inhibit fracking. And I don't think that the number of "anti-fracking people" in LA is enough to be concerned with. As usual a few vocal activists garner an unwarranted amount of media attention and actually represent a very small segment of voters. The public debate will be largely among citizens and elected officials who generally support the industry and don't want to see any tax changes that reduce development. There should be absolutely no hesitancy however to reduce the severance tax if that revenue loss is off set by a tax on oil and gas produced outside of the state boundaries but transported and processed within the state.</p>
<p>I expect we'll see a lot of opinions about a wide range of "incentives" that have never been fully analyzed as to their cost/benefit reality. One of the first that the media has covered is the film tax credits. As much as we like having movies and television series shot in LA we may have to admit that the money spent is greater than the return realized. Everything should be on the table with the realization that we will be inundated with public relations efforts by every special interest that currently receives incentive support or may be the subject of new taxes.</p> Skip,
I agree that the severa…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34741982015-03-14T15:18:10.475ZJoe Aldridgehttps://gohaynesvilleshale.com/profile/JoeAldridge
<p>Skip,</p>
<p>I agree that the severance tax is too high and should be lowered. I don't think that will happen with the money problems that the State has now or at any point in the future. </p>
<p>The problem, as I see it, is none of the people against the severance tax exemption are being forth right in the true benefits that the exemption brings to the State. What I think it comes down to is a way for the anti-fracking people to stop the development of shale drilling. If "John Q Public" can…</p>
<p>Skip,</p>
<p>I agree that the severance tax is too high and should be lowered. I don't think that will happen with the money problems that the State has now or at any point in the future. </p>
<p>The problem, as I see it, is none of the people against the severance tax exemption are being forth right in the true benefits that the exemption brings to the State. What I think it comes down to is a way for the anti-fracking people to stop the development of shale drilling. If "John Q Public" can be convinced that the companies are getting away with not paying taxes then the shale drilling will stop because the exemption is killed. If no one explains this then the public will not know the true intent of the kill the exemption push.</p> Contrary opinions noted. And…tag:gohaynesvilleshale.com,2015-03-14:2117179:Comment:34740272015-03-14T13:40:11.452ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p>Contrary opinions noted. And it is appropriate to look at the TMS and the HA as special circumstances. Here's the problems. </p>
<p>Fluctuations in the price of hydrocarbons are a given. Marcellus gas that may come to the Gulf Coast market and compete with HA gas will not be as cheap as it is currently for long. The challenge in that region is connection to markets especially the populous NE. Having built pipelines through the dry gas region of the Marcellus I can tell you that those…</p>
<p>Contrary opinions noted. And it is appropriate to look at the TMS and the HA as special circumstances. Here's the problems. </p>
<p>Fluctuations in the price of hydrocarbons are a given. Marcellus gas that may come to the Gulf Coast market and compete with HA gas will not be as cheap as it is currently for long. The challenge in that region is connection to markets especially the populous NE. Having built pipelines through the dry gas region of the Marcellus I can tell you that those historic lines served a limited number of commercial/industrial customers. That is changing as new pipelines are being built and although the process has been slow for a number of reasons there is no doubt that connections to most of the upper NE will be in place by the end of the decade. Marcellus gas, especially from the dry gas window, will cease to be as cheap because it can be sold for a higher price at hubs that serve the far greater NE markets. </p>
<p>Keep in mind that the deep oil well incentive is tied to the exemption of state severance tax. In the case of the TMS that is the new oil category which is 12.5% tax. The highest of any state as far as I know. If the intent is to incentivize development investment and reward operators that drill LA wells, a reduction in the severance tax is a much better approach than the current severance tax exemption. One of the reasons that the horizontal well and deep well incentives were originally passed was to mitigate the high severance tax. </p>
<p>Tax reform in the state of LA will likely touch the O&G industry in some way. That process should look at the industry as it exists and operates today and make changes across the board. Onshore and shallow GOM operators should get a lower severance tax rate. Hydrocarbons transported through or processed in the state from production outside the state's boundary especially the GOM limits should, IMO, pay a tax. That tax rate would be very low and spread over many companies but would generate a significant amount of revenue.</p>
<p>If the state had not been aggressive to create so many business incentives and to roll back certain taxes we wouldn't be in such dire straits. So now revenues will need to be raised or important institutions and public services will suffer past the point that the average Louisianian will abide. Many high decline wells producing from unconventional reservoirs will produce 70 to 80% of their lifetime total in their first two years and the 12.5% severance tax effectively becomes 2.5% of their total production. The incentives could be dropped and the severance tax rate cut to 5% on new oil. That would benefit not just the major and mid-major operators that drill those expensive deep and horizontal wells but all the smaller companies that do not. </p>
<p>There is always a political agenda. And legislators will not over look all the ancillary economic benefits of drilling. The deep well and horizontal well incentives are only part of the debate to be had.</p>
<p>Link to LA severance tax on oil and gas:</p>
<p><a href="http://dnr.louisiana.gov/assets/TAD/data/severance/la_severance_tax_rates.pdf" target="_blank">http://dnr.louisiana.gov/assets/TAD/data/severance/la_severance_tax_rates.pdf</a></p>