Association head defends drilling tax breaks

As lawmakers review the state’s tax breaks, Don Briggs, president of the Louisiana Oil & Gas Association, hopes an incentive for horizontal drilling survives. While some estimates show the incentive costs the state more than $200 million a year, Briggs says that number is unrealistic when there are only about 17 rigs drilling in the Haynesville Shale, as compared to 140 when natural gas prices were high. He says $36 million over the next two years is a more realistic cost estimate. “It’s an important credit, especially with prices as low as they are,” Briggs says. “I know one company just last night told us they were moving four rigs [into the Haynesville Shale], and they’re very concerned about losing this exemption.” The Haynesville, a natural gas play in north Louisiana, is competing with formations in other states, such as the Marcellus Shale in the Northeast, which is rich with liquids as well as natural gas. As for other tax benefits important to his members, Briggs mentions a break on severance taxes for wells that aren’t producing as much as they used to. “Otherwise,” he says, “the severance tax would be so high you couldn’t justify producing the wells.” —David Jacobs