American Oil and Gas Reporter - February 2017 - 95

ConventionSection: Louisiana Oil & Gas Association

Operators Seeking Own Budget Relief
BATON ROUGE, LA.-As Louisiana's
elected officials examine their fiscal options for reducing debt levels, the state's
oil and gas operators look for their own
relief from the low commodity prices
that have hindered activities for the past
two years. The industry also considers
the possibility that any recovery will
make it a target for revenue-seeking legislators.
According to media reports, Louisiana's
budget shortfall is just over $300 million,
and Governor John Bel Edwards may
call legislators back to the capital for a
special session.
"Louisiana has a giant issue as it approaches yet another fiscal cliff," observes
Gifford Briggs, acting president for the
Louisiana Oil & Gas Association. "It is
budget crisis after budget crisis, and a
never-ending desire to solve that problem
by raising more revenue.
"The oil and gas industry is not a
direct target because everyone realizes it
is hard to squeeze blood from a turnip.
But indirectly, if the state continues to
move forward with expanding sales taxes
on services, it is very likely many of the
services companies use to drill wells that
are not taxed now may end being subject
to a tax," he says.
A move such as a sales tax expansion
would add to the costs of doing business
in Louisiana at a time when the state already is operating an historic low rig
count, Briggs says. He points out there
were only six rigs running in South
Louisiana and another 13 in the Haynesville Shale as of mid-January. Legislators could ratchet up taxes on operators
all they want, he reasons, but if there is
no drilling and no production, raising
taxes will not bring Louisiana any additional revenue.
LOGA Chairman Bryan Hanks says
if oil and gas prices do move higher in
reaction to global events, Louisiana companies are a likely target for legislators
looking for tax revenues, adding: "We
are not alone. It seems that with this legislature and governor, if you have positive
cash flow, you are a target, regardless of
industry."
On the regulatory side, Hanks notes
LOGA has been pleasantly surprised by
the stance of state officials.
"There are several regulatory efforts
in the works, but this governor and his

agencies at least seem to be attempting
to work with industry, and to get a practical
working knowledge of real-life situations
before they enact too many onerous provisions or regulations. Those regulators
are giving industry an opportunity to
present its case, for the most part," he
says.

Offshore Activity
Hanks says the results of the November
election provide at least a glimmer of regulatory relief for the offshore industry. "With
the new administration, I have heard more
positive talk that there is a better opportunity
to work with the Bureau of Ocean Energy
Management, and to address some of the

FEBRUARY 2017 95

American Oil and Gas Reporter - February 2017

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