It’s official, the first oil-tax reduction price trigger has been reached. Full news release follows below.
— Official News Release, ND Tax Commissioner —
Tax Commissioner Ryan Rauschenberger announced an oil extraction tax rate reduction for new wells today at a news conference. This incentive, also known as the “small trigger,” took effect on February 1, 2015. It lowers the oil extraction tax rate from 6.5% to 2% on the first 75,000 barrels produced or the first $4.5 million of gross value during the first 18 months after completion of a well.
“This tax reduction was passed by the 2009 North Dakota Legislature to incentivize drilling and to encourage continued production through low oil prices,” stated Rauschenberger. “It only applies to wells completed after the incentive is triggered on and is effective through June 30, 2015 or until it is triggered off.”
Rauschenberger continued, “Through this incentive, the state is acknowledging the importance of the oil and gas industry to the state’s economy by easing a portion of the tax burden during times of low oil prices.”
This is the first time in North Dakota history that the Office of the Tax Commissioner has triggered on a tax incentive. In the past the Legislature usually enacts them in the on position. Once the incentive is in effect, it will only be triggered off when the average price of a barrel of oil is $72.50 (as reported for West Texas Intermediate crude) or more for a single month.