Oil and Gas Well Exemptions and Enhanced Oil Recovery Tax Incentives
Summary
North Dakota Legislature passed SB 2397, amending multiple sections of the North Dakota Century Code to modify tax exemptions for oil and gas wells. The bill extends temporary exemptions for wells using flare avoidance systems, creates a limited exemption for development incentive wells, and provides gross production tax exemptions for gas from enhanced oil recovery projects. The legislation was signed by the Governor on May 17, 2025.
What changed
North Dakota Senate Bill 2397 modifies three key areas of oil and gas taxation under state law. The bill amends Section 57-51.1-01 to revise the definition of "development incentive well," amends Section 57-51-02.6 to extend the temporary exemption for wells employing flare avoidance systems, and amends Section 57-51-05 to expand gross production tax exemptions for gas produced from enhanced oil recovery projects. A new subsection to Section 57-51.1-03 creates a limited exemption specifically for development incentive wells. The bill takes effect upon signing and includes an expiration date.
Energy companies operating in North Dakota should review their current well classifications to determine eligibility for the revised exemptions. Operators of wells using flare avoidance technology should confirm their exemption status under the extended temporary exemption. Companies engaged in enhanced oil recovery projects should verify whether their gas production qualifies for the newly expanded tax exemption. Tax planning and compliance systems may need updating to reflect these statutory changes.
What to do next
- Review well classifications against revised definition of development incentive well
- Verify flare avoidance system exemption status and renewal requirements
- Assess enhanced oil recovery project eligibility for gross production tax exemption
Source document (simplified)
SB 2397 - Overview
View All Bills 69th Legislative Assembly (2025-27)
SB 2397 Passed
| A | Amendment | | S | SPA |
| E | Engrossment | | $ | Fiscal Note |
| HJ | House Journal | | SJ | Senate Journal |
Overview Versions Actions Video Hearings Testimony
Sponsors
Introduced by Sen. Enget, Rep. Kempenich, Sen. Sickler, Sen. Sorvaag
Title
AN ACT to create and enact a new subsection to section 57-51.1-03 of the North Dakota Century Code, relating to a limited exemption for development incentive wells; to amend and reenact sections 57-51-02.6, 57-51-05, and 57-51.1-01 of the North Dakota Century Code, relating to the temporary exemption for oil and gas wells employing a system to avoid flaring, an exemption from gross production tax for gas produced from certain enhanced oil recovery projects, and the definition of development incentive well; to provide an effective date; and to provide an expiration date.
Measure Status
First Reading
Senate 01/27
Referred to Committee
Finance and Taxation
Second Reading
Senate 02/04
First Reading
House 02/18
Referred to Committee
Finance and Taxation
Second Reading
House 04/21
Return to Senate
Refused to Concur
Conference Committee
Concurred
Governor
Signed on 05/17
Last Official Action
Filed with Secretary Of State 05/06
Legislative History
Named provisions
Related changes
Source
Classification
Who this affects
Taxonomy
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