deep drilling gets us house approval

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Deep drilling breaks get House approval

Jeremy Alford


Published: Sunday, June 14, 2009 at 6:01 a.m.
Last Modified: Sunday, June 14, 2009 at 12:00 a.m.
BATON ROUGE - The House passed legislation this week that would incentivize oil and gas drilling projects with a true vertical depth of 15,000 feet or more.

A coalition of business and industry groups are backing House Bill 683 as way to reduce dependence on foreign resources, create new jobs and, in the long run, generate billions of dollars in new revenue for Louisiana.

The legislation, authored by Rep. Nickie Monica, R-LaPlace, would create a special break on the royalty payments that companies send to the state based on the property taxes they pay to parish governments for their deep drilling projects.

If adopted, the law would take effect July 1.

While the state won't have to spend any money to get the program moving and parishes would probably see an increase in property taxes on the local level, the state would suffer a loss of royalty revenues, based on an estimate by the Department of Natural Resources.

According to a review by the Legislative Fiscal Office, that loss could amount to $12 million over the next five years.

That reduction, however, would be offset by the new drilling that takes place, argues the Renewed Energy Economy for Louisiana.

Also known as REEL, it's an economic development coalition that's pushing an energy package this session.

"As U.S. citizens, we must become good stewards of our environment and energy resources," said Michael Hecht, one of the group's organizers and the CEO of Greater New Orleans, Inc, a chamber organization. "The REEL legislation allows us to bring environmental solutions to the table, and, at the same tame, create tremendous additional revenue and jobs for Louisiana."

While REEL also is standing behind legislation that ushers in the next generation of carbon-dioxide-enhanced drilling, deeper explorations are the real thrust.

Southern Louisiana has an estimated 30 trillion cubic feet of probable natural-gas reserves below 15,000 feet, Hecht said.

This "virgin territory" is virtually unexplored due to Louisiana's multiple layers of higher taxes.

By reducing royalties, he said, <0x000A>the REEL bill makes Louisiana a competitive alternative in the energy field.