New Louisiana Natural Gas Severance Tax Rate

There is a new Louisiana natural gas severance tax that is effective July 1, 2019 through June 30, 2020.

The rate has been set at 12.5 cents per thousand cubic feet (MCF) measured at a base pressure of 15.025 pounds per square inch absolute and at the temperature base of 60 degrees Fahrenheit.

The natural gas severance tax rate is set every year by taking the natural gas severance tax base rate of 7 cents per McF and multiplying it by the “gas base rate adjustment”. This adjustment is determined every year by the Secretary of the Department of Natural Resources in accordance with Louisiana statutes.

The “gas base rate adjustment” is a fraction, of which the numerator is the average of the NYMEX Henry Hub settled price on the last trading day for the month, as reported in the Wall Street Journal for the previous 12 month period ending on March 31, and the denominator is the average of the monthly average spot market prices of gas fuels delivered into the pipelines in Louisiana as reported by the Natural Gas Clearing House for the 12 month period ending March 31, 1990 (1.7446 $/MMBTU).

Based on this computation, the Secretary of the Department of Natural Resources has determined the natural gas severance “gas base rate adjustment” for April 1, 2018 through March 31, 2019, to be 1.7897 percent. Read the full update here.