The proposed amendments to Senate Bill No. aim to update the North Dakota Century Code regarding oil and gas production and taxation. A new subsection is introduced to section 57-51.1-03, which offers a limited exemption from gross production tax for the first 250,000 barrels of oil produced from development incentive wells drilled and completed before July 1, 2028. The bill clarifies definitions and criteria for development incentive wells, requiring operators to demonstrate the use of innovative drilling techniques that could enhance oil production. It also revises the definition of "non-oil-producing county" to ensure consistency in classification based on average annual oil production and includes amendments related to temporary exemptions for wells that avoid flaring.

Additionally, the bill establishes a certification process for development incentive wells by the industrial commission from July 1, 2023, to June 30, 2025, with caps on the number of wells that can be certified based on operator classification. Tax exemptions for these wells will not apply to those within reservation boundaries or on trust properties unless a tribe opts in by notifying the tax commissioner. If a tribe opts in, the exemption takes effect in the month of production following the notice. The provisions will be effective for taxable events after June 30, 2025, with certain sections remaining in effect until June 30, 2031.

Statutes affected:
INTRODUCED: 24-02-37.3, 54-27-19.4, 57-51.1-07.7, 57-51.1-07.8
Prepared by the Legislative Council staff for Representative Dockter: 57-51-02.6, 57-51-05, 57-51.1-01
Adopted by the Conference Committee: 57-51-02.6, 57-51-05, 57-51.1-01