US-North Dakota Senate Approves Oil Well Tax Exemption for Non-Core Areas

North Dakota’s Senate has passed House Bill 1483, granting tax incentives for oil drilling outside the Bakken and Three Forks formations. The bill encourages exploration in 10 additional geologic formations, supporting industry expansion beyond the state’s primary production areas.

The bill offers a reduced oil extraction tax rate of 2% (down from 5%) on the first 300,000 barrels of oil produced within 36 months of a well’s completion. Wells within tribal reservations are excluded unless the respective tribe opts in.

Additionally, the bill proposes a study on low-producing wells (stripper wells), which currently become exempt from extraction tax if they produce no more than 35 barrels per day for 12 consecutive months. Lawmakers will assess the long-term fiscal impact of this exemption and consider alternative tax policies.

The bill now returns to the House for approval or further negotiation in a conference committee.

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