This looks like a good deal for the taxpayers and the oil companies.
WILLISTON, N.D. (Reuters) – North Dakota, the second-largest U.S. oil producer, has approved a sweeping reorganization of its oil tax code, cutting the overall rate and ending a tax break of more than $5 billion poised to hit in June.
Governor Jack Dalrymple signed the measure on Wednesday afternoon, his staff told Reuters, lowering the combined rate crude producers will pay by 1.5 percentage points.
The bill also eliminates, starting this December, a so-called “large trigger” tax break worth as much as $5.3 billion to oil producers over a two-year period if it ever took effect.
The large-trigger tax curtails oil extraction taxes during the first 24 month’s of a well’s life. It was meant to encourage production during periods of low oil prices.
“This will provide a more steady, predictable tax system over time,” Dalrymple said in a statement to Reuters. “It’s a trade-off between an unpredictable oil tax regime and one that’s more consistent.”