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SB 2397

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.

69th Legislative Assembly (2025-26) Introduced by Mark Enget and 3 co-sponsors

North Dakota modifies oil and gas tax exemptions for development wells, flare-reduction systems, and enhanced recovery projects to incentivize production while limiting long-term revenue impact through expiration dates.

Filed with Secretary Of State 05/06
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Bill Summary · SB 2397

Legislative bill overview

SB 2397 modifies North Dakota's oil and gas tax code by creating a limited exemption for "development incentive wells" and adjusting existing exemptions for wells using flare-avoidance systems and enhanced oil recovery projects. The bill redefines what qualifies as a development incentive well and provides these exemptions with specific expiration dates.

Why is this important

North Dakota is a major oil-producing state, and gross production tax exemptions directly affect state revenue while influencing industry investment decisions. These tax incentives are designed to encourage drilling in less economically attractive areas or using newer technologies, but they reduce funding available for state services unless offset by increased production volume or other revenue sources.

Potential points of contention

  • Revenue impact uncertainty: The fiscal effect of these exemptions depends on production levels and market prices, making it difficult to predict actual state revenue losses or gains
  • Definition changes: Redefining "development incentive well" may expand or restrict which projects qualify, potentially benefiting some operators over others or creating disputes about eligibility
  • Expiration dates: Time-limited exemptions create planning uncertainty for industry while raising questions about whether exemptions will be renewed, potentially causing boom-bust cycles in development

Compiled from official sources — confirm details with the bill’s official record.

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