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Associated Press, Published January 21 2013

Exemption for oil wells costing ND $50M a year

BISMARCK — The oil industry is protesting a bill that cuts a tax exemption for low-producing oil wells to keep them pumping.

But North Dakota's tax department says the exemption also is being applied to some high-producing wells, and it's costing the state an estimated $50 million a year.

North Dakota Petroleum Council President Ron Ness says the exemption gives companies an incentive to drill in marginal areas.

Republican Rep. David Drovdal of Arnegard introduced the bill to cut the exemption. He says it's a matter of fairness.

The 1980s-era law excuses higher-producing wells from paying extraction taxes because they are near the weaker wells but drilling in the same oil pool.

Attempts to cut the exemption have failed in the past three legislative sessions.

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