Updates
January 12, 2016:
current North Dakota oil and gas tax structure.
Original
For The Archives
No Longer Current
Current As Of Date Originally Posted
I received the following from a reader (and a huge thank-you to the reader). I posted his note as I received it (with some editing of verbs in the "not passed section).
I did not post the links (I will post those later -- for some reason the PDF links were not downloading -- probably a slow server where I am right now). You can probably find the bills by starting here: http://www.legis.nd.gov/.
As usual, I post these things quickly and there will be typographical/factual errors. If this is important to you, go to the source (and I will get the links as soon as I can, but it might not be today).
It will take me awhile to "digest" all of this. I'm sure some of this language -- as clear as it is -- will still result in quite a few questions. My hunch is
The Bismarck Tribune and
The Dickinson Press will write about these bills. Stay tuned.
HB1476: With only a few days left in the session HB1476 was proposed and passed out of the House. Several amendments were then passed by the Senate and the House concurred with the amendments. The Governor has signed the bill.
Some of the major provisions of the bill are (please read the bill to ensure you understand all the changes):
a) It does not matter if the big trigger takes effect or not, the extraction tax will go to 5% on January 1, 2016;
b) The triggers will be eliminated. Any well completed prior to December 1, 2015 that is eligible for any exemption will only be able to take advantage of the reduced rate until November 30, 2015;
c) If the average price of a barrel of oil is above $90 (indexed for inflation) for three consecutive months, the extraction tax will increase to 6%;
d) The rate will trigger back down to 5% following three consecutive months below $90;
e) Removes the tertiary recovery project using CO2 exemption for wells in the Bakken or Three Forks formations, and for those wells outside of the Bakken, the exemption would be for a period of five years;
SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties.
The bill passed and was signed by the Governor.
SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties. The bill passed and was signed by the Governor.
SB2318 - This bill creates a tax exemption for materials used in compressing, gathering, collecting, storing, transporting or injecting carbon dioxide for use in enhanced recovery of oil or natural gas. The bill was heard in committee and amended to include a study on the CO2 exemption during the 2015-16 interim. It passed the Senate, was amended and passed by the House, and the House amendment was concurred with by the Senate. The bill was signed by the Governor.
SB2343 would have initially required an operator to pay royalties and taxes on any gas flared after 14 days from the initial production, was amended twice to require any orders proposed by the NDIC that could potentially have a fiscal impact on the state of $20 million or more be approved either by the Legislature or the Budget Section.
It no longer includes any restrictions on flaring. The bill passed the Senate, was heard in the House, amended and received a “
Do Not Pass” vote from the committee.” It was then amended by the House to make it retroactive back to 7/1/2013 and then passed. The House amendment was concurred with by the Senate. The Governor then signed the bill.
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NOT PASSING
HB1187 - This bill would have voided any rules enacted by the NDIC that did not undergo the administrative rulemaking process, which would include the recent flaring and conditioning issues. The bill was amended to change the effective date from July 31, 2014 to July 31, 2015 (thus making it prospective only), and it passed the House but was
unanimously voted down in the Senate.
HB1437 - would have extended
the little trigger 4 more years to July 1, 2019. The bill was amended to extend the incentive only 2 years and it passed the House. The bill was then amended in the Senate to extend the trigger back to 4 years (to June 30, 2019), and a provision was added to prevent the small trigger from taking effect until 12 months after the large trigger exemption comes off – which allows the state to collect some tax revenue between triggers. The bill then passed the Senate and went to conference committee. With the passing of HB1476,
this bill was voted down by the House 89-1.
SB2287 would have reduced the initial period of flaring allowed after first production to 90 days. It also prohibits exemptions unless the volumes of flared gas are less than or equal to 50,000 cubic feet per day. The bill was heard in committee and
voted down by the Senate.
SB2319 - would have required an operator to notify each force pooled royalty owner of associated costs of drilling and completing a well before certifying a horizontal, horizontal reentry or two-year inactive well for a tax incentive. It would also have extended the eligibility for cost-free royalty interest to unleased interests pooled after December 31, 2014 and gives nonparticipating owners the option to become a paying owner and adjusts the royalties based on their decision. It was
voted down by the full Senate.
SB2337 would have created a permanent extraction tax exemption for 18 months for Non-Bakken wells completed after June 30, 2015. It passed the full Senate, was amended in the House and
then voted down 88-3.
SB2342 - would have required a vote by the NDIC to accept a settlement on penalties imposed on the oil industry. The bill was heard in committee but
failed to pass.
SB2373 would have provided for payment of 50% share of property taxes on land if a producing oil or gas well is generating royalty payments to those owners. The
bill was unanimously voted down.
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Again, if this is important to you, go to the source. I am traveling and did not get a chance to proofread as much as I should have. I'm not concerned about the content sent by the reader; it's my additional comments that might have errors.
Feel free to leave comments if you have questions. I will get to the comments before midnight tonight if I find a cooperative McDonald's or Starbucks farther souther.
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Last legislator getting "out of Dodge."
Photograph taken west of Williston on April 28, 2015.
