BISMARCK – An amendment to a bill that includes parameters for a new oil tax agreement with the Three Affiliated Tribes moved forward Friday, but legislators indicated it may get more scrutiny at a future hearing.
Members of the state Senate adopted several amendments Friday to House Bill 1234, an oil bill that includes an amendment that would equally divide oil taxes generated on the Fort Berthold Reservation between the tribes and the state.
Sen. John Andrist, R-Crosby, requested to consider the tribal tax agreement separately from other amendments in the bill.
“I hear a lot of talk about there’s no accounting for the money they’re getting right now,” Andrist said. “I think this should have more daylight.”
Andrist withdrew his request after other legislators suggested it could be dealt with at a future hearing. The bill will be discussed by the Senate Appropriations Committee on Monday.
Other amendments adopted Friday include an elimination of a tax loophole for some wells in the same area as low-producing wells, known as stripper wells.
The elimination of that tax exemption is estimated to bring an additional $104 million in revenue during the next biennium. Currently, a productive oil well in the same spacing unit as a low-producing well can qualify for the same tax exemption as the weaker wells.
While the loophole will close for some wells, others may now fall under the definition of a low-producing well and be exempt from taxes.
Another amendment would change the criteria for Bakken and Three Forks stripper wells from those that produce fewer than 30 barrels to fewer than 40 barrels. That would mean a projected loss of $13.5 million in state revenue.
Sen. Jim Dotzenrod, D-Wyndmere, said he’s concerned that changing the definition of a stripper well could cost the state significant future revenue.
Sen. Dwight Cook, R-Mandan, said the cost of drilling an oil well in the Bakken has risen 20 percent since 2008, so he feels the change is good way of encouraging continued oil exploration.
“I think it’s justifiable when you look at the cost of drilling out there,” Cook said.
Another amendment includes a tax incentive to encourage companies to drill in formations other than the Bakken and Three Forks.
In addition, the bill would withhold taxes on royalty payments to non-North Dakota residents, generating an estimated $4.2 million for the state.