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Legislative interim committee to study oil taxes

The Legislature’s interim Taxation Committee will be looking at the way North Dakota taxes the oil industry.

The current tax structure came out of 1980’s Measure Six – which added an oil extraction tax, bringing the rate to 11-and-a-half percent. Since that time, the Legislature has put in place certain tax breaks for so-called “stripper” wells – that is, low producing wells – as well as a price trigger, so when a barrel of oil falls below a certain price threshold, the tax is cut.

"It's been cobbled together over many years," said Sen. Dwight Cook (R-Mandan), who will chair the committee. "All of the policies we have in place were the right thing at the time. We're going to study and make sure our taxes really fit the needs of the oil industry today, to see if they fit in this competitive world we're living in."

Cook had sponsored a bill in the 2013 Legislature – that would have reduced taxes on wells drilled after 2016, in exchange for ending some of the other special tax breaks. That bill failed.

"For an industry that's going to pay $5.2 billion in in the next two years, I'm hoping it gets a better look next time," said North Dakota Petroleum Council executive director Ron Ness. He says Cook's bill had some positives -- and some negatives for the industry.

Lawmakers did make some changes in definitions of so-called "stripper wells" in the Bakken. Stripper wells are low producing wells that get tax breaks to keep them producing.

"At the end of the day, we cobbled together a tax piece that has some good in it, and some things we (the industry) don't necessarily like," said Ness. "We kicked the can down the road again."

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