Oil, gas industry survived legislative session, leaders say

06 17, 2013 by Daily Advertiser

Close observers of the Louisiana Legislature agree that oil and gas interests were well represented in the session that ended last weekend. But oh, what might have been.

“Anytime you have a fiscal session and you have bills to raise taxes on oil and gas and you get out without raised taxes, it’s a success,” State Rep. Stuart Bishop, R-Lafayette, said.

As vice chairman of the Natural Resources and Environment Committee, Bishop had a better view than most of the fits and starts that oil and gas legislation encountered during the session. In fact, his House Bill 474 — which would have created incentives for reopening old wells — was eyed as the most attractive bill in the session by both oil and gas organizations. It died in the Senate.

Mike Lyons, general counsel for the Louisiana Mid-Continent Oil and Gas Association, said his organization was pleased with the session’s results. Some bad bills were defeated, he said, citing one that would have limited the use of dispersants after oil spills. Another bill would have prohibited permits to create or convert salt dome caverns for storage, an overreaction to the Bayou Corne sinkhole situation, he said. It failed.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, suggested the session was a wash. “Nothing really good happened. Nothing really bad happened.”

But Briggs and Lyons said both their organizations were most interested in Bishop’s HB 474, which left the House without dissent but died in the Senate. The bill would have restored incentives for oil and gas producers to work on inactive wells — there are thousands of them in the state — with some significant tax exemptions. The incentives are necessary, proponents say, because the financial risk of going back into wells is great for producers.

The bill would have benefited the state by generating some income from wells that now provide no revenue to the state, backers said. The state might have realized some $20 million a year for the state in fiscal years 2014 and 2015 and $10 million in 2016.

But the bill encountered difficulty in the Senate because it arrived as budget talks were most heated, and lawmakers became skittish about providing too many incentives. “People were fearful,” Bishop said.

“It was a difficult sale because everyone was talking about how much the state was giving away,” Lyons said. “Right now, the wells are not producing anything.”

Tax revenue that might have been raised by the legislation “would have patched some holes” in the state budget, Lyons said. Both Briggs and Lyons said they expect Bishop’s legislation to return, perhaps in the next fiscal session in 2015.

Bishop and Briggs said the state benefited from Senate Bill 128, which Bishop and state Sen. R.L. “Bret” Allain II pushed. That bill protected funding for the state’s Rigs to Reef Program, which has been funded by oil companies for 27 years.

The program enables oil companies to donate their obsolete rigs for use as artificial reefs, which are beneficial to fish habitat. The companies also donate money to a state fund for the program, which Bishop said was not protected from being raided in lean budget years.

“The fund has been stripped over the years, perhaps by $50 million,” Bishop said.

The bill protected the Rigs to Reef funding for the next fiscal year and allows voters to decide on the Nov. 4, 2014 ballot whether the Rigs to Reef funding should be constitutionally protected.

Five days after session’s end, Bishop said he still was not fully aware of what happened to all the bills that pertained to oil and gas and he intended to fully review the session’s results and meet with oil and gas organizations this week.

Lyons, too, said the session’s results demand more review.

“Sometimes you don’t know until two months later,” when amendments to bills are more fully known, what a session’s impact is, he said.