oil taxes

House kills oil tax bill

Apr 7, 2017
ND Legislature

The House has defeated a measure that makes the tax on oil permanent at 10 percent.

The bill follows up the actions of the 2015 Legislature, which got rid of most of the low price "triggers" to reduce the oil tax -- but lowered the top rate from 11 1/2 percent to 10 percent. But there still was a top-end trigger, so if the price of a barrel of oil hit $90, the tax would go up to 11 percent. As introduced, the bill would have ended that top-end trigger.

Dave Thompson / Prairie Public

A bill to remove the remaining “trigger” in North Dakota’s oil taxes is now before a senate committee.

The bill – authored by House Majority Leader Al Carlson (R-Fargo) – would remove language adopted two years ago, when most of the tax triggers were removed. That bill lowered the oil tax from 11 ½ percent to 10 percent – and got rid of tax reductions tied to lower prices. It did have a provision that if oil went back up to $90 a barrel, the tax would go to 11 percent.

Oil tax allocation bill 'premature,' says House

Feb 15, 2017

The House has rejected a bill dealing with oil tax distribution to local governments in the oil patch, saying it’s premature to approve it.

Opponents say the issue will come back in the second half of the session – after the new March revenue forecast. That forecast is to be released March 9th. Rep. Jason Dockter (R-Bismarck) said that forecast will allow big decisions like this to go forward.

Experts say the slowdown in the oil patch is directly tied to the oil price.

So – what will it take to get the industry drilling and completing already drilled wells?

Gov. Jack Dalrymple told the recent state demographics conference in Bismarck – the industry calls $40 per barrel the break-even price. But he says it will take more than that.

"Somewhere around $45 a barrel, we should begin to see some wells being completed," Dalrymple said. "Certainly around $50 a barrel, there should be a lot more activity."

A Legislative interim committee has been studying the oil impact formula – with an eye to making changes.

But that panel’s chairman says it may not happen now.

Until the 2015 Legislative session, North Dakota state coffers received 75 percent of the 5 percent oil production tax – and local governments received 25 percent. The Legislature changed it to a 70-30 split. And an interim committee was assigned the study of whether those percentages needed to change, sending more money to local governments.

The chairman of the Legislature's interim Energy Development and Transmission Committee says he expects a new proposal on how to divvy up oil taxes will be introduced in the 2017 session.

Up until the 2015 session, the state took 75 percent of oil tax revenues, and local governments got 25 percent. Wardner and a group of western North Dakota lawmakers proposed a 60-40 split – with local governments getting the lion’s share. But the Legislature decided to make it 30-70, with local governments getting the 30 percent.

An interim legislative committee will be taking a hard look at the oil tax distribution formula.

Under state law, 80 percent of the annual oil production tax revenue above $5 million is split between state and local governments. It used to be a 75-25 split, with the state getting the 75 percent. Some western North Dakota lawmakers pushed for a 60-40 split, with the counties getting 60 percent. Governor Dalrymple included that in his budget. But in the face of declining oil revenues, the 2015 Legislature decided on a 70-30 allocation, with the state getting the lion’s share.

'Big Trigger' oil tax cut most likely won't happen

May 14, 2015

In April, lawmakers passed a bill to limit a huge tax break for oil and gas companies to just six months. The so-called “Big Trigger” would disappear entirely next January and be replaced by a different tax system. At the time, lawmakers believed the “Big Trigger” would go into effect in June. But as Emily Guerin reports from the monthly oil and gas production meeting, that’s looking unlikely.


Inside Energy: North Dakota oil taxes

May 4, 2015

The oil and gas industry pays a ton of money in severance taxes to energy producing states like Colorado, Wyoming and especially North Dakota.

When oil prices were high, North Dakota took in about $10 and a half million dollars -- a day. But as prices have fallen, so has revenue. In the midst of this, North Dakota lawmakers have passed a bill to stabilize and lower the state’s oil and gas tax rate. Inside Energy’s Emily Guerin reports.

A change in North Dakota’s oil tax rate is heading to Governor Dalrymple for his signature.

The original bill would have lowered the tax from 11-and-a-half percent to nine-and-a-half percent. It would also remove the triggered tax breaks tied to oil prices. The House passed it that way. The Senate changed it, so the rate would be 10 percent. The Senate also added a “reverse trigger” – so that the tax would go to 11 percent if the oil price climbed above $90 a barrel. Now the House has gone along with the Senate’s changes.