Oil well pump jacks. (Jeff Beach/North Dakota Monitor)
(North Dakota Monitor) – Nearly half of North Dakota oil wells now qualify for a tax exemption as low-producing wells, contributing to a reduction in tax revenue projections for the upcoming budget cycle.
But even if technology advancements lead to higher oil production, those wells would continue to qualify for the tax exemption under current state policy.
Lawmakers on Thursday discussed the state revenue forecast, which is largely driven by oil tax revenue.
Oil producers pay a 5% oil extraction tax and a 5% gross production tax. Low-producing wells, referred to as “stripper wells,” aren’t subject to the 5% oil extraction tax. A well in the Bakken or Three Forks formations can qualify as a stripper well after 12 consecutive months of producing no more than 35 barrels per day.
