American Oil and Gas Reporter - February 2020 - 75

LOGA Seeks Better Business Climate
BATON ROUGE, LA.-In the national
race to attract dollars for oil and gas development, Louisiana suffers from a
hostile business climate, laments Gifford
Briggs, president of the Louisiana Oil &
Gas Association.
"Louisiana has the highest severance
tax rate on oil in the country. Anytime
anyone is making an investment, they
look at the regulatory climate and the
economic outlook," he says. "If you are
drilling an oil well in Louisiana, that
well has a severance tax rate of 12.5%.
Look at Texas or anywhere else in the
country, and rates are 8%, 7% or 6%
lower. That makes the economic equation
not very favorable to Louisiana."
Briggs says LOGA continues to work
on lowering the state's severance tax to
make investment decisions much more
attractive. Legislators considered two bills
during the 2019 session to provide severance tax exemptions for marginal wells
when oil prices fell below $75 a barrel,
but both HB 188 and HB 256 failed to
advance.
Ironically, he notes, lowering severance
taxes may not be a legislative priority,
simply because operators aren't drilling
many oil wells in Louisiana right now.
"The state's rig count has plummeted
in many ways. If changing the severance
tax rate does not affect existing production,
new severance taxes only affecting new
wells mean the additional investment associated with that new rate should offset
any potential loss. This should drive an
increase in revenue to the state, to communities, royalty owners and everyone
else," Briggs assesses.
Louisiana remains in a competitive
race with Texas for investment dollars,
assesses LOGA Chairman Arthur Price.
Winning that fight is a tall order for
Louisiana right now, he says.
"Louisiana needs to get its house in
order," urges Price, president of Badger
Oil Corp. in Lafayette, La. "The state
must improve the legal climate and increase stability in the regulatory and tax
environments. Instability is the antithesis
of business, because business runs from
instability. We need to send the message
that Louisiana is open for investment and
open for business, and that once you
come here you will be treated fairly."
Attracting Businesses
There have been several infrastructure
announcements in Louisiana in recent
months. Briggs points to continued investments in liquefied natural gas terminals
and other facilities, including Venture

Global LNG Inc. making its final investment decision and closing of project financing for its Calcasieu Pass LNG terminal in Cameron Parish, La. That project
is expected to begin commercial operations
in 2022.
"I expect to see a lot of construction
on that facility, and I believe the Driftwood
LNG facilities are under construction south
of Lake Charles, La., as well. There are
companies still trying to navigate the everchanging world of the Industrial Tax Exemption Program (ITAP) changed by the
Edwards administration," Briggs describes.
Louisiana Economic Development
says the state's ITAP program offers tax
incentives to manufacturers who commit
to creating jobs in Louisiana. Companies
are eligible for as much as an 80%
property tax abatement on their qualifying
capital investment for an initial five-year
term, and the option to renew for another
five years.
"ITAP had been in place in Louisiana
as a major business tool for several years,"
Briggs says. "One of the first things Governor Edwards did in office was issue an
executive order that significantly changed
the program. Basically, he gave veto
power to some political subdivisions.
That has muddied the water on what the
process involves and the amount of work
that goes into it. This has done a lot to
deter investment from outside Louisiana.
We have seen many cases where the
ITAP abatements have not been granted,
and Louisiana has lost investment dollars
to Texas," he reports.
To feed those LNG terminals, operators
are focusing again on the Haynesville
Shale play, indicates Price, who reports
many operators are absolutely excited

about play's prospects.
"Investment in the Haynesville is great
for the state. It is not only good for the
local economy in North Louisiana; it is
good for the state overall. It increases
state revenues with respect to severance
and sales taxes, as well as property taxes,"
he describes. "That increase in activity is
good for all of us, and we would like to
see that expand throughout the state.
South Louisiana has been extremely dormant. LOGA believes that is in large
part because of the coastal lawsuits, so
when we get a legislative fix for the
coastal lawsuits, we will see a resurgence
in South Louisiana as well."
As companies operating in the Haynesville improve their drilling and completion technologies, they can drill more
rock for less money, Price says, pointing
out operators now are recovering more
natural gas per foot of lateral than ever
before.
"And, Louisiana has the pipeline network to get that natural gas to the coasts,
and liquefied natural gas facilities that
currently are operating, as well as many
that are being permitted to be built. I see
LNG as a very strong element of the
future for Louisiana," Price predicts.
Briggs adds the Haynesville is very
much in the manufacturing stage, adding.
"We see continued investments; I don't
know if we are seeing a big investment
spike, but we are seeing development
within companies active in the Haynesville.
We also see some mergers and some acquisitions, including BPX getting into
the play. There is consistent investment
and drilling. That stability really is important for Louisiana, and the communities
and service companies in that area." ❒

Importance Of Permian Basin
Is Delineated In TIPRO Report
AUSTIN, TX.-Annual crude oil production in the Permian Basin has grown
by 1.2 billion barrels since 2009, marking
a 371% increase in oil output during the
past decade, according to A Decade of
the Permian Basin, released in January
by the Texas Independent Producers &
Royalty Owners Association.
"This growth has allowed the Permian
to become the world's top-producing oil
field with higher output than Saudi Arabia's
Ghawar Field, and has enabled America
to officially take the title as the world's

large oil producer," affirms TIPRO President Ed Longanecker.
A Decade of the Permian Basin is the
latest in TIPRO's "State of Energy Report"
series, developed to quantify and track
the economic impact of domestic oil and
natural gas production at the state and
national levels.
Since 2009, according to the report,
oil production in the 63 Texas and New
Mexico counties comprising the Permian
Basin has increased from less than 1.0
million barrels a day to more than 4.0
FEBRUARY 2020 75



American Oil and Gas Reporter - February 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2020

Contents
American Oil and Gas Reporter - February 2020 - Intro
American Oil and Gas Reporter - February 2020 - 1
American Oil and Gas Reporter - February 2020 - 2
American Oil and Gas Reporter - February 2020 - Contents
American Oil and Gas Reporter - February 2020 - 4
American Oil and Gas Reporter - February 2020 - 5
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