1. Chapter 25 LTC Rules “Valuing Hydrocarbon Storage Facilities”
Rebuttal to 2017 Proposal
August 10, 2016

2. Discussion Items 2016 Agreement between LMOGA and LAA
2017 LAA Proposal
2017 LMOGA Rebuttal

3. 2016 Workings Between LMOGA and LAA & LTC Adoption
Brief History
Prior to Tax Year 2016, the LTC considered salt domes to be a part of the land and not subject to special assessment rules; therefore, there was no uniform methodology to value and assess salt dome property, including wells associated with the operation of salt domes.
Salt Dome and related equipment were being assessed by various parishes using a methodologies not promulgated by the LTC. The resulting assessment caused appeals and subsequent litigation.
Because of the lack of a uniform appraisal methodology, the LTC (in 2014), adopted a resolution that compelled industry trade groups and the Louisiana Assessor’s Association to form a committee to study the issue and to determine an appropriate methodology for valuing hydrocarbon storage wells and caverns.
During the Spring of 2015, LMOGA appointed representatives to meet with LAA representatives to study the issues and work on a joint proposal for the 2016 Rules and Regulations

4. 2016 Workings Between LMOGA and LAA & LTC Adoption
Brief History (Continued)
On June 25th, 2015, LMOGA and LAA forward “Proposals” for change to Chapter 25 that were essentially the same that supported a 30 year economic life with a 20% depreciation floor for hydrocarbon storage wells and caverns.
The Proposals were presented to the LTC on July 8th, 2015 with few questions and mostly accolades to both parties for working together to achieve a common goal, that being a fair methodology to value hydrocarbon storage wells and caverns
There were no rebuttals to the proposals at the August 5th, 2015 LTC hearing
At the September 2nd, 2015 LTC Adoption hearing, the LTC voted unanimously to adopt changes to Chapter 25 based on the proposals presented by the LAA and LMOGA

5. 2017 LAA Proposal Change service life to 50 years
Removes specific classes of salt dome wells and caverns

6. 2017 LMOGA Rebuttal
Salt domes would not last 50 years without substantial maintenance and upkeep costs
Costs to extend life can be very expensive
Up to $2 million every 5 years due to mandatory inspection surveys
Newer domes require 2 casing strings; grandfathered domes did not