§ 47:633 — Severance tax; rates; administration

Louisiana § 47:633

• Jurisdiction: Louisiana
• Title 47: Revenue and Taxation

Text

§633. Severance tax; rates; administration
A. The taxes on natural resources severed from the soil or water levied by R.S.
47:631 shall be predicated on the quantity or value of the products or resources severed, shall
be computed in accordance with the provisions of this Section, and paid at the following
rates:
(1) On trees and timber, except pulpwood, two and one-quarter percent of the
then-current average stumpage market value of such timber, to be determined annually in
December by the Louisiana Forestry Commission, such value to be effective on the first day
of January in the following year and continuing until the next succeeding January. The
Louisiana Tax Commission may assist in determining the value. The average stumpage
market value shall be applied to the weight or scale of trees and timber as determined
pursuant to the provisions of R.S. 3:4641 and 4642 at the first time the trees and timber are
scaled prior to undergoing the first processing after severance.
(2) On pulpwood, five percent of the then-current average stumpage market value
of such pulpwood, to be determined annually in December by the Louisiana Forestry
Commission, such value to be effective on the first day of January in the following year and
continuing until the next succeeding January. The Louisiana Tax Commission may assist
in determining the value. The average stumpage market value shall be applied to the weight
or scale of pulpwood as determined pursuant to the provisions of R.S. 3:4641 and 4642 at
the first time the pulpwood is scaled prior to undergoing the first processing after severance.
(3)(a) On oil produced from a well completed before July 1, 2025, the rate of tax
shall be twelve and one-half percent of its value at the time and place of severance. On oil
produced from a well completed on or after July 1, 2025, the rate of tax shall be six and
one-half percent of its value at the time and place of severance. For purposes of this
Paragraph, the value of oil shall be the higher of the gross receipts received from the first
purchaser less charges for trucking, barging, and pipeline fees; or the posted field price. In
the absence of an arms length transaction or a posted field price, the value shall be the
severer's gross income from the property as determined by R.S. 47:158(C).
(b) On oil produced from a well classified by the commissioner of conservation as
an oil well, and determined by the secretary of the Department of Revenue to be incapable
of producing an average of more than twenty-five barrels of oil per producing day during the
entire taxable month, and which also produces at least fifty percent salt water per day, the
rate of tax shall be six and one-fourth percent of its value at the time and place of severance
and the well shall be defined, for severance tax purposes, as an incapable well, provided that
the well has been certified by the Department of Revenue as incapable of such production
on or before the twenty-fifth day of the second month following the month of production.
Oil severed from a multiple-well lease or property shall not be subject to the reduced rate of
tax provided for in this Subparagraph unless all wells on the lease or property are certified
as incapable.
(c)(i)(aa) On oil produced from a well classified by the commissioner of conservation
as an oil well, and certified by the Department of Revenue as incapable of producing an
average of more than ten barrels of oil per producing day during the entire taxable month,
the rate of tax shall be three and one hundred twenty-five thousandths percent of its value at
the time and place of severance and the well shall be defined, for severance tax purposes, as
a stripper well, provided that the well has been certified by the Department of Revenue as
a stripper well on or before the twenty-fifth day of the second month following the month of
production. Once a well has been certified and determined to be incapable of producing an
average of more than ten barrels of oil per producing day during an entire month, that well
shall remain certified as a stripper well until it produces an average of more than ten barrels
of oil per day during an entire calendar month.
(bb) Crude oil produced from certified stripper wells shall be exempt from severance
tax in any month in which the average value set forth in Subparagraph (a) of this Paragraph
is less than twenty dollars per barrel.
(ii)(aa) On oil produced from a well in a stripper field classified by the commissioner
of conservation as a mining and horizontal drilling project which utilizes gravity drainage
to a collection point in a downhole operations room, the rate of tax shall be three and one
hundred twenty-five thousandths percent of its value at the time and place of severance;
provided that the well has been classified by the commissioner as a mining and horizontal
drilling project before the lower rate is claimed on a tax return.
(bb) For purposes of this Paragraph, a "stripper field" means those geological
formations as designated by rules and regulations of the secretary which have been
historically recognized as being "stripper fields" and as utilizing stripper wells for oil
production.
(cc) The tax rate provided in Subitem (aa) of this Item shall apply only to the
working interest and only until the cumulative value of hydrocarbon production from the
mining and horizontal drilling project is equal to two and one-third times the total private
investment, invested by the working interest owners, in the project.
(dd) For purposes of this Item, "private investment" shall mean those costs associated
with project design, fabrication, installation of equipment, drilling and completion cost of
wells, and any other costs directly associated with the project. A "working interest owner"
shall mean the owner of a mineral right who is under an obligation to share in the costs of
drilling and completing a mining and horizontal drilling project. A person who does not
invest and take a financial or economic risk in the drilling for and actual production of oil
shall not be a working interest owner pursuant to the provisions of this Item.
(iii)(aa) Production from an oil or gas well subsequent to the well having been
inactive for two or more years or having thirty days or less of production during the past two
years shall, in the case of oil, be subject to a severance tax rate of three and one hundred
twenty-five thousandths percent of its value at the time and place of severance and, in the
case of gas, be subject to a severance tax rate equal to twenty-five percent of the rate imposed
by Paragraph (5) of this Subsection for a period of ten years if the production commences
before October 1, 2028. Production from an oil or gas well subsequent to the well having
been designated as an orphan well for longer than sixty months shall, in the case of oil, be
subject to a severance tax rate of one and five hundred sixty-five thousandths percent of its
value at the time and place of severance and, in the case of gas, be subject to a severance tax
rate equal to twelve and one half percent of the rate imposed by Paragraph (5) of this
Subsection for a period of ten years if the production commences before October 1, 2028.
(bb) Production from an oil or gas well subsequent to the well having been inactive
for two or more years or having thirty days or less of production during the past two years
shall, in the case of oil, be subject to a severance tax rate of six and one-fourth percent of its
value at the time and place of severance and, in the case of gas, be subject to a severance tax
rate equal to fifty percent of the rate imposed by Paragraph (5) of this Subsection for a period
of ten years if the production commences on or after October 1, 2028. Production from an
oil or gas well subsequent to the well having been designated as an orphan well for longer
than sixty months shall, in the case of oil, be subject to a severance tax rate of three and one
hundred twenty-five thousandths percent of its value at the time and place of severance and,
in the case of gas, be subject to a severance tax rate equal to twenty-five percent of the rate
imposed by Paragraph (5) of this Subsection for a period of ten years if the production
commences on or after October 1, 2028.
(cc) To qualify for a reduced inactive or orphan well severance tax rate on oil or gas
provided for in Subitem (aa) or (bb) of this Item, the oil or gas must be produced from the
same perforated producing interval or from one hundred feet above and one hundred feet
below the perforated producing interval for lease wells, and within the correlative defined
interval for unitized reservoirs, that the formerly inactive or orphaned well produced from
before being inactive or designated as an orphan well. The exemption shall be extended by
the length of any inactivity of a well that has commenced production when such inactivity
is caused by a force majeure.
(dd) To qualify for inactive or orphan well status for purposes of the special rates
provided for in this Item, an application for inactive or orphan well certification shall be
made to the Department of Conservation and Energy during the period beginning July 1,
2018, and ending June 30, 2028. Upon certification that a well is inactive or orphan,
production shall be subject to the special rate as provided in this Item from the date that
production begins or ninety days from the date that of the application, whichever occurs first.
If, in any one fiscal year, the secretary of the Department of Revenue estimates that the
severance tax to be paid pursuant to the provisions of this Item will be in excess of fifteen
million dollars, the secretary shall notify the commissioner of conservation who shall not
certify inactive or orphan well status for any other wells for the remainder of that fiscal year.
Certification of wells as inactive or orphan wells may begin again in the next fiscal year.
(ee) If the severance tax on oil or gas is paid at the full rate provided by this Section
before the Department of Conservation and Energy approves an application for inactive or
orphan well status, the operator shall be entitled to a credit against taxes imposed by this
Section in an amount equal to the tax paid. To receive a credit, the operator must apply to
the secretary of the Department of Revenue for the credit not later than the first anniversary
after the date that the Department of Conservation and Energy certifies that the well is an
inactive or orphan well.
(ff) Notwithstanding any provision of law to the contrary, oil production from any
orphan well as defined by R.S. 30:88.2(A) that is undergoing or has undergone well
enhancements that required a Department of Conservation and Energy permit, including but
not limited to re-entries, workovers, or plugbacks, from which production commences on or
after October 1, 2021, and before June 30, 2031, shall be exempt from severance tax. To
qualify for the exemption, an application for certification shall be made to the Department
of Conservation and Energy. Upon certification that a well qualifies for the exemption, the
operator shall retain an amount equal to the severance tax otherwise due for the initial three
months of the exemption. Beginning in the fourth month following certification, the operator
shall report, on forms prescribed by the secretary, and remit to the Department of Revenue
an amount equal to the severance tax applicable to the well pursuant to this Paragraph, which
shall be credited to the associated site-specific trust account provided for in R.S. 30:88.2 and
shall be subject to all due date, interest, and penalty provisions applicable to the oil severance
tax.
(d)(i) Subject to the requirements and limitations of this Subparagraph, there shall
be an exemption from severance tax for production from any horizontally drilled well, or on
any horizontally drilled recompletion well, from which production occurs on or after July 1,
2015. The exemption for oil shall extend for a period of twenty-four months or until payout
of the well cost is achieved, whichever comes first. The exemption for gas produced from
a well completed before July 1, 2025, shall extend for a period of twenty-four months or until
payout of the well cost is achieved, whichever comes first. The exemption for gas produced
from a well completed on or after July 1, 2025, shall extend for a period of eighteen months
or until payout of the well cost is achieved, whichever comes first. For purposes of this
Paragraph, "horizontal drilling" shall mean high angle directional drilling of bore holes with
fifty to three thousand plus feet of lateral penetration through productive reservoirs, and
"horizontal recompletion" shall mean horizontal drilling in an existing well bore. Payout of
well cost shall be the cost of completing the well to the commencement of production as
determined by the Department of Conservation and Energy.
(ii) The secretary shall determine the oil price upon which the exemption for a
horizontal well that produces oil shall be based on July first of each year for the ensuing
twelve months based upon the average New York Mercantile Exchange Price per barrel of
crude oil per month at the close of business on June thirtieth for the prior twelve months. The
amount of the exemption for a horizontal well that produces oil shall be as follows:
(aa) The exemption shall be one hundred percent if the price of oil is at or below
seventy dollars per barrel.
(bb) The exemption shall be eighty percent if the price of oil is above seventy dollars
and at or below eighty dollars per barrel.
(cc) The exemption shall be sixty percent if the price of oil is above eighty dollars
and at or below ninety dollars per barrel.
(dd) The exemption shall be forty percent if the price of oil is above ninety dollars
and at or below one hundred dollars per barrel.
(ee) The exemption shall be twenty percent if the price of oil is above one hundred
dollars and at or below one hundred ten dollars per barrel.
(ff) There shall be no exemption in effect if the price of oil exceeds one hundred ten
dollars per barrel.
(iii) The secretary shall determine the natural gas price upon which the exemption
for a horizontal well that produces natural gas shall be based on July first of each year for the
ensuing twelve months based upon the average New York Mercantile Exchange Price per
million BTU per month at the close of business on June thirtieth for the prior twelve months.
The amount of the exemption for a horizontal well that produces natural gas shall be as
follows:
(aa) The exemption shall be one hundred percent if the price of natural gas is at or
below four dollars and fifty cents per million BTU.
(bb) The exemption shall be eighty percent if the price of natural gas is above four
dollars and fifty cents per million BTU and at or below five dollars and fifty cents per million
BTU.
(cc) The exemption shall be sixty percent if the price of natural gas is above five
dollars and fifty cents per million BTU and at or below six dollars per million BTU.
(dd) The exemption shall be forty percent if the price of natural gas is above six
dollars per million BTU and at or below six dollars and fifty cents per million BTU.
(ee) The exemption shall be twenty percent if the price of natural gas is above six
dollars and fifty cents per million BTU and at or below seven dollars per million BTU.
(ff) There shall be no exemption in effect if the price of natural gas exceeds seven
dollars per million BTU.
(e) For purposes of this Paragraph, the following terms shall have the meaning
ascribed in this Subparagraph:
(i) "Payout of well cost" shall be the cost of completing the well to the
commencement of production as reflected in the well cost statement submitted to the
Department of Conservation and Energy.
(ii) "Qualified accountant" means a certified public accountant who maintains an
active certified public accountant license in good standing.
(iii) "Well cost statement" means a report issued by a qualified accountant who is
independent from the operator and the report shall meet all of the following conditions:
(aa) Be performed in accordance with the attestation standards established by the
American Institute of Certified Public Accountants.
(bb) Contain the qualified accountant's name, address, and telephone number.
(cc) Contain a statement of acknowledgment that the qualified accountant is
independent from the operator.
(dd) Be dated as of the date of completion of the qualified accountant's field work.
(ee) Contain a statement of acknowledgment by the qualified accountant that the state
is relying on the well cost statement in the allowance of an exemption under the provisions
of this Section.
(4) On distillate, condensate, or similar natural resources severed from the soil or
water either with oil or gas, twelve and one-half percent of gross value at the time and place
of severance. For the levy of this tax, gross value shall be determined in accordance with the
provisions of Subparagraph (3)(a) of this Subsection. However, natural gasoline, casinghead
gasoline and other natural gas liquids, including but not limited to ethane, methane, butane,
or propane, all of which occur naturally or which are recovered through processing gas after
separation of oil, distillate, condensate, or similar natural resources shall not be subject to the
levy provided for in this Paragraph, but rather shall be subject to the levy provided for in
Paragraph (5) of this Subsection.
(5)(a)(i) Subject to adjustment as provided in Subparagraph (d) of this Paragraph,
on natural gas and, based on equivalent gas volumes, natural gasoline, casinghead gasoline,
and other natural gas liquids, including but not limited to ethane, methane, butane, or
propane, ten cents per thousand cubic feet measured at a base pressure of 15.025 pounds per
square inch absolute and at the temperature base of sixty degrees Fahrenheit; provided that
whenever the conditions of pressure and temperature differ from the foregoing bases,
conversion of the volume from these conditions to the foregoing bases shall be made in
accordance with the Ideal Gas Laws with correction for deviation from Boyle's Law, which
correction must be made unless the pressure at the point of measurement is two hundred
pounds per square inch gauge, or less, all in accordance with methods and tables generally
recognized by and commonly used in the natural gas industry. For all purposes of computing
standard cubic feet of gas pursuant to this Paragraph, the barometric pressure shall be
assumed to be 14.7 pounds per square inch absolute at the place of measurement.
(ii) The rate as set forth in Item (i) of this Subparagraph shall be in effect until June
30, 1992. Effective July 1, 1992, the rate shall be seven cents per thousand cubic feet, and
this rate shall also be subject to the annual rate adjustment as provided in Item (d)(i) of this
Paragraph.
(b) In the case of gas produced from a well designated as an oil well by the office of
conservation, which has been determined by the secretary to have a wellhead pressure of fifty
pounds per square inch gauge or less under operating conditions, or, in the case of gas rising
in a vaporous state through the annular space between the casing and tubing of the oil well
and released through lines connected with the casinghead gas which has been determined by
the secretary to have a casinghead pressure of fifty pounds per square inch gauge or less
under operating conditions, the rate shall be three cents per thousand cubic feet. For
purposes of applying this reduced rate, an oil well being produced by the method commonly
known as gas lift shall be presumed, in the absence of a determination to the contrary by the
secretary, to have a wellhead pressure of fifty pounds per square inch or less under operating
conditions. To qualify for the reduced rate, an oil well must have a casinghead pressure of
fifty pounds or less per square inch for the entire taxable month.
(c) In the case of gas produced from a well designated as a gas well by the office of
conservation and determined by the secretary to be incapable of producing an average of
250,000 cubic feet of gas per day, the tax rate applicable to the gas severed from the well
shall be one and three-tenths cents per thousand cubic feet. To qualify for the reduced rate,
a gas well must be incapable of producing 250,000 cubic feet of gas per day during the entire
taxable month.
(d)(i) The gas tax rate provided in Subparagraph (a) of this Paragraph shall be
adjusted annually on July first for the ensuing twelve calendar months as set forth hereafter
in this Subparagraph but shall never be less than seven cents per thousand cubic feet. On or
before April 30, 1991, and annually thereafter, the secretary shall determine, using the "gas
base rate adjustment" provided for in this Subparagraph, the new gas tax rate for the twelve
calendar months beginning July 1, 1991, and respectively for each twelve-month period
beginning annually thereafter. The new gas tax rate shall be the rate provided in
Subparagraph (a) of this Paragraph multiplied by the gas base rate adjustment. The "gas base
rate adjustment" shall be determined by the secretary of the Department of Conservation and
Energy. The "gas base rate adjustment" for the applicable twelve-month period is a fraction,
the numerator of which shall be the average of the New York Mercantile Exchange
(NYMEX) Henry Hub settled price on the last trading day for the month, as reported in the
Wall Street Journal for the previous twelve-month period ending on March thirty-first, and
the denominator of which shall be the average of the monthly average spot market prices of
gas fuels delivered into the pipelines in Louisiana as reported by the Natural Gas Clearing
House for the twelve-month period ending March 31, 1990 (1.7446 $/MMBTU). For the
twelve-month period ending March 31, 2003, the monthly average gas prices used in making
the numerator of the "gas base rate adjustment", the average gas prices for the months April,
2002 through September, 2002 shall be the monthly average spot market price of gas fuels
delivered into the pipelines into Louisiana as reported in the Natural Gas Clearing House,
and the average gas prices for the months October, 2002 through March, 2003 shall be the
New York Mercantile Exchange (NYMEX) Henry Hub settled price on the last trading day
for the month, as reported in the Wall Street Journal. The secretary of the Department of
Revenue shall publish the "gas base rate adjustment" and the "gas tax rate", as determined
in accordance with this Subparagraph, in the official journal of the state of Louisiana by May
first of each year and shall provide the "gas base rate adjustment" and the "gas tax rate" to
affected producers by written notice mailed sixty days prior to the effective date thereof;
however, failure to publish the information or give notice thereof as required by this Item
shall not be a condition for the new gas tax rate which shall nevertheless be effective.
(ii) If publication of the NYMEX Henry Hub average monthly gas price data is
discontinued, the "gas tax rate" shall remain the last rate established pursuant to this
Subparagraph until a comparable method for determining the "gas tax rate" is adopted by the
legislature.
(iii) If the base data of the NYMEX Henry Hub average monthly gas price is
substantially revised, the secretary of the Department of Conservation and Energy shall make
appropriate adjustment to ensure that the "gas base rate adjustment" is reasonably consistent
with the result which would have been attained had that revision not been made. If the
secretary is unable to make reasonable changes sufficient to ensure a consistent result, the
"gas tax rate" shall remain the last rate established pursuant to this Subparagraph until a
comparable method for determining the "gas tax rate" is adopted by the legislature.
(iv) The provisions of this Subparagraph shall affect only the determination of the
rate of the tax on the severance of a quantity of natural gas. They are not intended, nor shall
they be construed, to affect any other determination whatsoever including but not limited to
the determination of any royalty due under mineral leases.
(v) Production of natural gas, gas condensate, and oil from any well drilled to a true
vertical depth of more than fifteen thousand feet, where production commences after July 31,
1994, shall, from the date commercial production begins, be exempt from severance tax for
twenty-four months or until payout of the well cost, whichever comes first. For the purpose
of this exemption, the date commercial production begins shall be the first day the well
produces into the permanent production equipment and the facilities have been constructed
to process and deliver natural gas, gas condensate, or oil to a sales point. The date of a
drill-stem test, production test, or any other related production shall not be considered,
construed, or deemed the date commercial production begins regardless of whether such
activities are classified as active production by the office of conservation. The date
commercial production begins may be a date subsequent to the well completion date.
(e)(i) The gas severance tax shall not accrue on any of the following:
(aa) Gas which is subsequently injected into a formation in the state of Louisiana for
the purpose of storing by the producer. Gas injected into a formation in the state of
Louisiana for the purpose of recycling, repressuring, or pressure maintenance, or for any
other purpose which increases the ultimate recovery of oil or other hydrocarbons, shall be
taxable at the time of initial severance, but the taxpayer injecting the gas, regardless of
whether he is the initial severer, shall be allowed a credit against any tax otherwise currently
due at the current tax rate for the volume of gas injected. If gas for which an exemption or
credit as provided in this Subitem has been allowed is subsequently severed from the earth,
the tax imposed by this Paragraph shall accrue on that gas unless otherwise excluded.
(bb) Gas originally produced without the state of Louisiana which has been injected
into the earth within the state of Louisiana for the purpose set forth in Item (i) of this
Subparagraph.
(cc) Gas produced from oil wells and vented or flared directly into the atmosphere
if that gas is not otherwise sold.
(dd) Gas used for drilling fuel in the field where produced, whether used as drilling
fuel by the producer of the gas, the operator of a lease, or another person, and gas used by the
operator as described in R.S. 47:640 on leases operated by the operator for fuel in connection
with the operation and development for or production of oil and gas in the field where
produced. Gas used for fuel by an operator shall include gas used for heating, separating,
producing, dehydrating, compressing, and pumping of oil and gas in the field where the gas
is produced if that gas is not otherwise sold. Gas used for drilling fuel in the field where the
gas is produced shall include gas used by the operator or by any other person engaged in
drilling in the field where the gas is produced.
(ee) Gas consumed in the production of natural resources in the state of Louisiana.
(ff) Gas produced from gas wells and vented or flared directly into the atmosphere
if that gas is not otherwise sold.
(gg) Gas used in the manufacture of carbon black.
(ii) Gas injected into an oil well to be used in lifting oil by the method commonly
known as gas lift shall not be deemed to be produced from the gas lift well, but the gas shall
not be taxable unless it is subsequently used for purposes not exempt by any provisions of
this Subsection.
(6) On sulphur, one dollar and three cents per long ton of two thousand, two hundred
forty pounds.
(7) On salt, six cents per ton of two thousand pounds.
(8) On coal, ten cents per ton of two thousand pounds.
(9) On lignite, twelve cents per ton of two thousand pounds.
(10) On ores, ten cents per ton of two thousand pounds.
(11) On marble, twenty cents per ton of two thousand pounds.
(12) On stone, three cents per ton of two thousand pounds.
(13) On sand, six cents per ton of two thousand pounds.
(14) On shells, six cents per ton of two thousand pounds.
(15) On salt content in brine extracted or produced in solution from the soil or water,
when used in the manufacture of other products and not marketed as salt, one-half cent per
ton of two thousand pounds.
B. The Louisiana Forestry Commission may base its determination of the market
value of trees, timber, and pulpwood as provided in Paragraphs (A)(1) and (2) of this Section
with consideration of sales of timber as reported to the Department of Revenue and in the
"Quarterly Report of Forest Products" published by the Department of Agriculture and
Forestry, and with consideration of any other information as the commission deems
appropriate.
NOTE: See Acts 2015, No. 120, §2, re: applicability.
NOTE: See Acts 2023, No. 431, §§2 and 3 re: applicability.

Legislative History

Acts 1989, 2nd Ex. Sess., No. 13, §1, eff. Jan. 1, 1990; Acts 1990, No. 313, §1, eff. July 8, 1990; Acts 1990, No. 387, §1, eff. July 1, 1990; Acts 1990, No. 551, §1, eff. Aug. 1, 1990; Acts 1991, No. 629, §1; Acts 1994, No. 2, §1, eff. June 1, 1994; Acts 1996, No. 16, §1, eff. June 27, 1996; Acts 1997, No. 40, §2; Acts 1998, No. 7, §1, eff. June 22, 1998; Acts 1998, No. 43, §1, eff. June 24, 1998; Acts 2002, No. 74, §1, eff. June 25, 2002; Acts 2003, No. 1, §1, eff. April 30, 2003; Acts 2005, No. 492, §1, eff. July 12, 2005; Acts 2006, No. 38, §1, eff. July 1, 2006; Acts 2013, No. 185, §1; Acts 2015, No. 120, §1, eff. July 1, 2015; Acts 2015, No. 330, §1; Acts 2017, No. 421, §1; Acts 2021, No. 391, §2, eff. June 16, 2021; Acts 2022, No. 165, §1, eff. May 26, 2022; Acts 2023, No. 150, §18, eff. Jan. 10, 2024; Acts 2023, No. 431, §1, eff. June 27, 2023; Acts 2024, No. 695, §1, eff. October 1, 2024; Acts 2024, 3rd Ex. Sess., No. 18, §1, eff. Dec. 4, 2024; Acts 2025, No. 284, §1, eff. July 1, 2025; Acts 2025, No. 295, §1, eff. July 1, 2025; Acts 2025, No. 373, §1.