By Michael A. Mahone, Jr.
The Louisiana Mineral and Energy Board is currently reviewing an incentive proposal that would offer a “royalty relief incentive” on new drilling leases along the Louisiana coast. Specifically, the proposal would offer royalties for a period of three years for wells drilled to a depth of fifteen thousand feet along the coastal zone. The royalties would begin at one-sixth and then switch to eighteen percent once production volume reaches five billion cubic feet. The purpose of the incentive is to stimulate drilling in southern Louisiana, which has been declining as of late due to the rapid investment in natural gas plays in the northern portion of the State, most notably in the Haynesville Shale gas field. This proposal would also better position Louisiana to compete for investment and drilling with other states, such as Texas and Pennsylvania. Discussion and a possible vote on this proposal are expected at the next Board meeting on May 12.