North Dakota Administrative Code
Title 81 - Tax Commissioner
Article 81-09 - Oil and Gas Gross Production and Oil Extraction Taxes
Chapter 81-09-02 - Oil and Gas Gross Production Tax
Section 81-09-02-14 - Taxation of volume gains

1. An oil purchaser that has realized a volume gain resulting from differing measurements of the oil must report and pay tax on the volume gain. An oil purchaser that has incurred a volume loss resulting from differing measurements of the oil may utilize the volume loss on a first-in first-out basis to offset a volume gain in subsequent periods as follows. An oil purchaser may utilize the loss to offset a gain at another trunkline measuring point. A volume loss may be carried forward for three years after the due date of the return for the production month in which the loss was incurred.

2. The amount of volume gain and volume loss must be calculated for each month and reported. The amount of volume gain must be reported on the oil return in the month succeeding production.

3. A volume gain or volume loss is calculated by subtracting the total amount of oil received by the purchaser as measured at the well from the total amount of oil delivered by the purchaser as measured at the trunkline. If this calculation results in a positive number, there is a volume gain. If this calculation results in a negative number, there is a volume loss. A volume gain or loss may be adjusted for a volume gain or loss attributable to production outside North Dakota.

4. A volume gain cannot be decreased and a volume loss cannot be increased by oil lost due to spillage, leakage, fire, theft, or any other event resulting in a physical loss of oil.