Alberta oil and gas companies owe rural municipalities at least $250M in property taxes


Alberta oil and gas companies owe rural municipalities more than $250 million in unpaid property taxes, prompting a call for changes to how that growing tax bill is collected.

Rural Municipalities of Alberta (RMA) say energy companies are taking advantage of what it calls the Alberta Energy Regulator’s (AER) “hands-off approach to regulation,” which it says allows certain companies with no plans to grow to avoid paying property taxes.

The AER meanwhile says it’s made recent regulatory changes to address the issue, and that municipalities are responsible for collecting the taxes.

Oil and gas companies’ tax bill grew by $43 million in 2023, according to a recent survey of RMA members. That’s in addition to the $50 million in unpaid taxes reported the previous year, amounting to $251.8 million in unpaid property taxes to rural communities.

“Companies continue to profit from Alberta’s resources while ignoring their community obligations and funnelling profits to executives and shareholders,” Paul McLauchlin, president of the RMA, said in a statement.

In a statement, the AER said it introduced new rules last May that say applicants for a new well licence or well licence transfer cannot owe more than $20,000 in municipal taxes — if they owe more than that limit, companies must show they have paid their debt or have an acceptable payment plan before the AER considers a new licence or transfer.

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Municipalities are responsible for the collection and enforcement of their municipal taxes, the AER said, noting it’s working with municipalities to identify energy companies that owe property taxes.

“We encourage the Rural Municipalities of Alberta to continue discussions with the government regarding unpaid municipal taxes,” the regulator wrote.

RMA accuses energy regulator of being a ‘cheerleader’

RMA said the $20,000 threshold — along with legislative changes that give municipalities special status during bankruptcy or insolvency hearings — are positive, but neither target companies that are operational and profitable but aren’t expanding their footprint. (It added 10 per cent of members were able to use that special status, and 30 per cent felt the new $20,000 requirement positively affects their ability to collect unpaid taxes.)

“While both help on the margins, neither target the companies at the root of the problem: the ‘zombies’ that continue to operate but have no interest in growing,” McLauchlin said.

The RMA said the AER has taken a “hands-off approach to regulation” and that requiring these companies to meet their property tax obligations would likely result in thousands of wells being orphaned. McLauchlin accused the AER of being a “cheerleader” instead of a regulator.

Paul McLauchlin
Paul McLauchlin, president Rural Municipalities of Alberta. Jim Wells/Postmedia

The association is proposing a phased approach to enforcing property tax bills, which would result in repayment timelines being linked to a company’s level of risk — meaning those able to pay quickly should do so on a shorter timeline than those needing time to divert revenue to cover the bill.

RMA is requesting the province’s energy ministry direct the AER to make the changes.

In a statement to Postmedia, Energy Minister Brian Jean’s office said it will consider the RMA’s suggestions, and in the coming months, when the program provides a year’s worth of data, it will assess the effectiveness of the AER’s $20,000 limit for municipal tax arrears when applying for a new well or licence transfers.

“Alberta’s government will consider the RMA’s suggestions and continue working with them on ways to resolve this ongoing issue. Most companies pay their taxes, but we understand why municipalities are frustrated by overdue property taxes owed by some oil and gas companies,” Jean’s office wrote.

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