Acadiana Business

Oversight committee throws out property tax for oil and gas industry

by Heather Miller

Oil and gas industry execs claim horizontal pipe assessment would hurt drilling levels in North Louisiana. Legislative oversight committees shunned a new tax Monday that would have levied property taxes on pipes used in horizontal oil and gas drilling, siding with the oil and gas industry and further supporting what one tax assessor calls "another example of preferential treatment to the oil and gas industry."

Gannett's Mike Hasten reports that the Tax Commission introduced a new rule that would have assessed property taxes on horizontal drilling pipes, like those used to drill the Haynesville Shale in North Louisiana, the same way vertical drilling wells are assessed.

Tax assessors from around the state, who convinced the Tax Commission to bring property tax before the oversight committees, testified that in all fairness, all other types of oil and gas wells are assessed, also noting that Louisiana's oil and gas operators pay the lowest property taxes out of all the top oil and gas producing states.

Lincoln Parish Tax Assessor Pam Jones says drilling wells are not among the property tax exemptions listed in the Louisiana Constitution:

Industry officials claimed that assessing property tax on horizontal drilling would adversely affect drilling for new gas sources, especially since horizontal drilling is the only way to extract natural gas from the Haynesville Shale in north Louisiana.

The Tax Commission changes had to come before the legislative committees that oversee the agencies, in this case the House and Senate committees on natural resources. The panels agreed Monday with the oil and gas industry and rejected the proposed horizontal drilling tax.
Plaquemines Parish Tax Assessor Robert Gravolet says in a phone interview Tuesday morning that the previous Tax Commission was led to believe that the pipes used for horizontal drilling were not taxable, though a report from the American Petroleum Institute proves otherwise.

Gravolet says the Legislature's backing of the industry in the proposed property tax and two other taxing issues brought before the oversight committees Monday offers "tremendous preferential benefits afforded to the oil and gas industry."

"The tax assessment playing field is definitely not level," Gravolet says. "The taxing bodies of Louisiana come up on the short end. The assessors statewide have the smallest dog in the hunt in regard to property taxes, and fortunately or unfortunately, we take on the burden of trying to preserve and protect tax bases around the state, for our schools, city governments, fire departments, recreations departments and many other services. The system works a lot better when everyone pays their fair share. When you give preferential treatment to one class, you shift the tax burden. We're sorry the Legislature took that position; certainly they need to receive the credit for doing that."

Read more on Monday's oversight committee hearings here.