The Louisiana Department of Revenue has issued Revenue Information Bulletin (RIB) No. 10-010 concerning the severance tax rate on natural gas to be paid during the period July 1, 2010 through June 30, 2011. The tax rate is calculated in accordance with La. R.S. 47:633(9)(d)(i).
Revenue Information Bulletin No. 10-010
May 4, 2010
The natural gas severance tax rate effective July 1, 2010, through June 30, 2011, has been set at 16.4 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.
This tax rate is set each year by multiplying the natural gas severance tax base rate of 7 cents per MCF by the “gas base rate adjustment” determined by the Secretary of the Department of Natural Resources in accordance with R.S. 47:633(9)(d)(i). The “gas base rate adjustment” is a fraction, of which the numerator is the average of the New York Mercantile Exchange (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, 2009, through March 31, 2010, to be 234.39 percent. Applying this gas base rate adjustment to the base tax rate of 7 cents per MCF produces a tax rate of 16.4 cents per MCF effective July 1, 2010, through June 30, 2011. The reduced natural gas severance tax rates provided for in R.S. 47:633(9)(b) and (c) remain the same.
Revised reporting forms will be distributed as soon as they are available. Questions concerning the natural gas severance tax rate should be directed to the Department of Revenue at 225-219-7462.