The bill, HB 418, proposes amendments to the severance tax rates on oil and gas production from inactive and orphan wells. It establishes reduced severance tax rates of 25% for production from inactive wells and 12.5% for production from orphan wells, applicable if production commences before October 1, 2028. For production that begins on or after that date, the rates will be 50% and 25%, respectively. The bill also extends the deadline for applications for inactive or orphan well certification from June 30, 2023, to June 30, 2028, allowing more time for operators to qualify for the special tax rates.

Additionally, the bill includes provisions for the conditions under which wells can qualify for the reduced tax rates, including stipulations regarding the production history of the wells and the necessary certifications from the Department of Energy and Natural Resources. It also clarifies that if the severance tax is paid at the full rate before certification, operators can apply for a credit against future taxes. The proposed changes aim to incentivize the production of oil and gas from previously inactive or orphaned wells, thereby potentially increasing resource extraction and revenue. The effective date for these changes is set for October 1, 2024.

Statutes affected:
HB418 Original: 47:633(7)
HB418 Engrossed: 47:633(7)
HB418 Enrolled: 47:633(7)
HB418 Act 695: 47:633(7)