North Dakota Administrative Code
Title 81 - Tax Commissioner
Article 81-09 - Oil and Gas Gross Production and Oil Extraction Taxes
Chapter 81-09-03 - Oil Extraction Tax
Section 81-09-03-05.3 - Reporting requirements for secondary and tertiary recovery projects

Universal Citation: ND Admin Code ยง 81-09-03-05.3

Current through Supplement No. 394, October, 2024

1. Categorization and taxation of production. The unit operator must report on a form prescribed by the commissioner all of the oil produced from the project. The aforementioned production is categorized and taxed in the following manner:

a. If the five-year or ten-year exemption is in effect, any incremental production is exempt from the oil extraction tax.

b. If the applicable exemption period has expired, any incremental production is subject to extraction tax at a rate of four percent.

c. Any nonincremental production attributable to stripper wells, new wells, and worked-over wells is exempt from the oil extraction tax. The volume of this exempt nonincremental production must be calculated by multiplying the actual production from any stripper wells, new wells, and worked-over wells by a fraction the numerator of which is the lesser of the volume of oil projected pursuant to the production decline curve or the total volume of oil produced from the project and the denominator of which is the total volume of oil produced from the project.

d. If a project has been certified as qualifying for a reduced extraction tax rate, any nonincremental production which is not otherwise exempt is subject to extraction tax at a rate of four percent.

e. If a project has not been certified as qualifying for a reduced extraction tax rate, any nonincremental production which is not otherwise exempt is subject to extraction tax at a rate of six and one-half percent.

f. If a project has not been certified as qualifying for a reduced extraction tax rate, any nonincremental production attributable to new wells that are no longer exempt is subject to extraction tax at a rate of four percent. The volume of nonincremental production subject to this reduced rate must be calculated by multiplying the actual production from any new wells that are no longer exempt by a fraction the numerator of which is the lesser of the volume of oil projected pursuant to the production decline curve or the total volume of oil produced from the project and the denominator of which is the total volume of oil produced from the project.

2. Payment of tax. Tax must be paid on all nonexempt oil produced from the project during each month of production. For reporting purposes, oil produced but not sold in the month of production should be valued based on the taxpayer's average sales price for any oil that was sold during the month.

3. Remittance of tax. Tax may be remitted by the unit operator or the unit's working interest owners. However, if tax will be remitted by any working interest owner, the unit operator must provide on a form prescribed by the commissioner the name and address of each working interest owner that will be remitting tax along with the percentage of ownership interest on which the tax will be remitted. In addition, the tax remitted by any working interest owner must be calculated based on the production reported by the unit operator.

General Authority: NDCC 57-51-21, 57-51.1-05

Law Implemented: NDCC 57-51.1-01 (5)(6)

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