La. Admin. Code tit. 61 § V-1001

Current through Register Vol. 50, No. 11, November 20, 2024

Section V-1001 - Guidelines for Ascertaining the Fair Market Value of Brine Operation Properties

A. The assessment of brine operation properties shall be made in accordance with the Louisiana Constitution of 1974, Article VII, Section 18, and in accordance with guidelines adopted by the Tax Commission and applied uniformly throughout the state.

B. The Well

1. The well includes all the equipment and any other taxable property located below the wellhead, as well as the casinghead, wellhead and/or xmas tree.

2. Each string of casing runs from the surface down. There will always be at least two sizes of casing; the surface pipe which seals off freshwater zones, and the production string. The larger surface pipe usually extends only a few feet, depending on the depth of usable underground water, while the small production string extends to the depth of the brine operation formations. However, in some wells, and, in particular the deeper wells, it may be necessary to set more than two strings of casing, each of which extends to a specific depth.

3. Each well is assessed in accordance with guidelines establishing "fair market value".

C. Explanations

Inactive Wells-wells that are shut-in. Shut-in status becomes effective on the date the application for shut-in status is filed, consistent with the Louisiana Office of Conservation requirements.

Injection Wells-wells completed as single, or wells reclassified by the Louisiana Office of Conservation after a conversion of another well. Wells are used for water injection or for disposal wells.

Production Depth-is the depth in feet from the surface to the end of the inner-most long-string casing set into the salt dome.

Brine Operation Wells-wells used to inject fluid into a subsurface salt formation for the purpose of extracting a brine-laden solution which is then further processed at separate surface facilities for production of salt. This type of well is categorized as Class III for underground injection control (UIC) regulatory purposes. The term "brine mining well" does not include a well used to inject fluid for the purpose of disposal of waste or leaching a cavern for the underground storage of hydrocarbons or other products.

Service Wells-wells used for ancillary non-income producing purposes such as water source wells or injection of fluid for the purpose of disposal of brine waste.

D. Well Fair Market Value Classifications. Each individual well must be listed separately by ward, field name and Louisiana Office of Conservation field code number, location (Sec.-Twp.-Range), lease name, well serial number, lease well number, well type and production depth (active lower perforation of each zone), in accordance with guidelines established by the Tax Commission.

E. Permanently Abandoned Wells. Must be reported only the first tax year after abandonment, however, no assessment shall be made on such well. A PandA permit number, issued by the Louisiana Office of Conservation, must be provided. A copy of the PandA report (Conservation Form # PandA) may be requested of the taxpayer, if necessary. A work permit or well history report is not acceptable.

La. Admin. Code tit. 61, § V-1001

Promulgated by the Office of the Governor, Division of Administration, Tax Commission, LR 49, Amended LR 491055 (6/1/2023), Amended LR 50, exp. 4/30/2024(Emergency), Amended LR 50379 (3/1/2024).

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:1837 and R.S. 47:2326.