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Senate approves limited tax exemption for development‑incentive oil wells
Summary
Senate Bill 2397 creates a temporary gross production tax exemption on the first 250,000 barrels from qualifying development‑incentive wells for up to 36 months and allocates incentive wells to operators based on recent drilling activity; the bill passed the Senate.
The North Dakota Senate approved Senate Bill 2397, which establishes a limited exemption from the 5% gross production tax for development‑incentive wells that meet specified technical and production criteria.
Senator Patton, the conference committee chair, said the measure targets wells that use newer drilling or completion techniques and that demonstrate the capability to develop reserves that otherwise would remain underdeveloped. The exemption applies to the first 250,000 barrels produced from an eligible well during the first 36 months after production begins.
Patton described a tiered allocation of incentive wells to operators based on drilling activity in the two years prior to June 30, 2025: operators that drilled more than 40 but fewer than 99 wells would receive four incentive wells; those with 100–149 wells would receive eight; and operators with 150 or more would receive 12. Patton said a realistic estimate was 75–100 wells might qualify under the program assumptions and that larger laterals (2–4 mile) carry substantial drilling costs.
Patton said the bill includes sunset language and a time‑limited incentive window. On final passage the secretary recorded 42 ayes, 4 nays and 1 absent; the bill passed.
