Tax Exemption for Oil wells Outside North Dakota Core Areas Approved by State Senate

(Jeff Beach/North Dakota Monitor)

(By: Jeff Beach. North Dakota Monitor) – A bill to create tax incentives for oil drilling outside of North Dakota’s primary production areas passed the Senate on Monday, along with a possible study of the rising number of low-producing wells and their tax status.

The Senate Finance and Taxation Committee amended House Bill 1483 to increase the amount of oil that could be produced under the tax break and lengthen the time period that the break would be in effect.

Most of North Dakota’s oil comes from the Bakken and Three Forks formations. The bill would encourage development in other geologic formations.

Ron Ness, president of the North Dakota Petroleum Council, previously testified that North Dakota has 10 other formations with oil production potential.

The first 300,000 barrels of oil produced during the first 36 months after a well is completed outside the Bakken and Three Forks formations would be taxed at a lower rate — 2% of the gross value of the oil. The typical oil extraction tax rate is 5%.