The oil industry is "the goose laying the golden egg and I think all of us agree that we want that to continue," he said. "The oil industry will react to tax policy."
The oil boom in western North Dakota that began in earnest about 2007 has spurred record population, a more than $1.6 billion budget surplus and the lowest unemployment rate in the nation. But record production that has propelled the state to the nation's No. 2 oil producer behind Texas also has brought challenges.
Stuart Savelkoul, director of the North Dakota Public Employees Association, questioned whether it's prudent to cut taxes for oil companies at a time when the state has billions of dollars of infrastructure and other needs spurred by record oil development. Officials also are struggling to find state employees to work in the oil patch, due to lack of housing and uncompetitive salaries compared to oil industry wages.
"Good luck finding someone to drive a snowplow," Savelkoul told lawmakers. "If you can drive a snowplow, you can drive an oil truck."
Savelkoul said additional revenue from oil taxes could help "recruit and retain employees."
Ron Ness, president of the North Dakota Petroleum Council, said the group, which represents more than 400 companies working in the oil patch, supports the proposed measure "but not unanimously."
Ness said North Dakota's oil tax policy has been "cobbled together" over the past three decades and is typically amended every two years when the Legislature is in session.
"I'm not aware of any other state that has done that," Ness said. "Predictability — that's what we're after."
Ness said several companies in North Dakota also are drilling in other oil and gas fields across the U.S., and especially in Texas' oil- and gas-rich Eagle Ford Shale region. He said an uncertain tax policy could move North Dakota's rigs out of state, "or pretty much where the best return is."
Blu Hulsey, a spokesman for Continental Resources Inc., said his company was opposed to the measure because it doesn't go far enough in offering incentives to drillers. Hulsey said the Oklahoma City-based company, which is one of the oldest and largest operators in North Dakota's oil patch, wants all wells to be taxed at the lower rate beginning in 2017, not just those that are drilled beginning that year.
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