On July 17, in the Woodlands County Council meeting, Coun. John Burrows said that Alberta's energy minister, Brian Jean, reported a relaxation on the abandoned oil well tax collection guidelines.
The provincial guidelines referenced state that there cannot be a transfer oil and gas well assets with more than $20,000 in outstanding taxes, said Burrows.
Outstanding taxes to municipalities were to be paid by energy companies looking to purchase abandoned oil and gas wells, but buyers are walking away from deals rather than pay the owed taxes.
Woodlands County Council voted to write a letter to Athabasca-Barrhead-Westlock MLA Glenn van Dijken, West Yellowhead MLA Martin Long and to the Alberta Government about the impacts to the municipality with this new revision to relax the guideline.
By relaxing the guidelines to encourage more sales of these oil and gas wells, the municipalities seem to be overlooked in addressing the unpaid taxes.
Reeve Dave Kusch seconded the recommendation.
“This will only put us back in the same boat we were in before with tax non-payments," Kusch said.
“In reality, this is how we pay our bills for infrastructure and inter-municipal collaboration frameworks, and it is another strife on our revenues,” said Burrows.
The energy minister’s office submitted an order to the energy regulator in March 2023 that tax payment statuses were to be checked.
The taxes have to be up-to-date before a new owner can receive the licenses for a transfer of ownership.
This impacts the Orphan Well Association (OWA), trying to deal with bankruptcies with tax liabilities attached to some of the cases.
The OWA works with the Alberta government, the Alberta regulator, and the oil and gas industry to address abandoned oil wells where there is no legally or financially responsible party who is accountable.
The Alberta government did a survey with municipalities in July 2022 with 55 of 71 municipalities responding.
There were 51 of the 55 respondents that had unpaid taxes.
The survey examined the companies, industries, and amounts associated with these unpaid tax amounts.
The key findings of the survey revealed that oil and gas properties tax arrears have been a concern for municipalities in recent years.
The survey also identified that it was unlikely these outstanding tax amounts would be paid because these businesses are no longer in operation.
Municipal unpaid property taxes continues to be a growing concern for rural municipalities.
The Rural Municipalities of Alberta (RMA) organization completes a survey with members each year.
Their 2023 survey shows about 30 per cent of respondents have collected tax arrears due to the requirement guideline on license transfers and new owner sales of abandoned oil and gas wells.
“While these have led to modest improvements in the situation, they are far from a solution, said Paul McLauchlin, Rural Municipalities of Alberta President, on the RMA website.
