In North Dakota, Countdown Looms For $5.3 Billion Oil Tax Break

If the average price of crude is below an inflation-adjusted limit - set at $55.08 per barrel for 2015 - for five consecutive months, then the 6.5 percent oil extraction tax is waived for the first 24 months of a well's life.

After that 24 months is up, and if the average price of oil is still below $55.08 per barrel, the tax rate rises to 4 percent, not the original 6.5 percent.

The full 6.5 percent oil extraction tax only returns if the average price of oil rises above that $55.08 per barrel threshold each month for a five-month period. The break does not apply to wells already in production, however.

The state still imposes a separate 5 percent gross production tax as a type of property tax on each barrel, no matter what.

But a complete repeal of the 6.5 percent extraction tax would mean North Dakota's "overall oil tax rate would be effectively cut in half," Rauschenberger said.

(Reporting by Ernest Scheyder; Editing by Jonathan Leff and Lisa Shumaker)