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This is generally an upfront cost associated with drilling a well. Oil companies prefer and traditionally have made one lump-sum payment to surface owners instead of prorating the payments over an unknown period of years since nobody really knows how long the well will be active. The lump-sum payment has traditionally worked out well for the surface owner.
The State Treasurer has recently made some improvements in the payment distribution system and the revenues are now paid monthly instead of quarterly which has been a significant benefit to those entities.
The Oil Impact Fund is a special fund that is managed by the State Land Department. The Fund receives up to six million dollars per biennium to address impact in oil and gas producing areas.
When Measure #6 was passed by the citizens of North Dakota in November 1980, the price of oil was $36 per barrel, down from a high of $39.50 and the drilling rig count was 100. By the time the new tax took effect on July 1, 1981, the oil price had declined to $35 per barrel and the drilling rig count had climbed to 135. Eighteen months later the oil price was $33 per barrel and the drilling rig count had plummeted to 48 after peaking at 147.
In fiscal year 2008, the oil and gas industry in North Dakota paid $398 million in oil production taxes. This was the second highest revenue source to the state behind sales tax and surpassed all individual income tax and corporate income collections.