A leaked draft of a government strategy for cleaning up abandoned oil and gas wells doesn’t contain any plans to help Alberta municipalities collect unpaid property taxes from bankrupt and delinquent energy companies, according to the Rural Municipalities of Alberta (RMA). To date, energy companies collectively owe close to $260 million in taxes to towns and counties across Alberta.
“We don’t see anything concrete in there,” said Kara Westerlund, RMA president and a councillor for Brazeau County southwest of Edmonton. “Our big concern is that there are still major legislative gaps.”
Legislative Gaps Hurt Small Towns
In an interview with TheRockies.Life, Westerlund said oil and gas companies are being allowed to keep their assets despite not paying their municipal taxes.
She pointed out that the rules are different for homeowners, who eventually lose their homes if property taxes go unpaid.
Weak oil and gas sector regulation also allows some companies to peel off non-producing wells and park them in other companies.
“It’s a shell game, and it has to stop,” Westerlund said.
The Globe and Mail reported last week on the leaked “mature asset strategy,” which makes a number of recommendations, including the idea of setting up companies to take control of mature wells to produce the remaining fossil fuels and using revenues to fund clean-up.
It also calls for establishing an insurance fund financed by industry but guaranteed by Alberta taxpayers. The proposed scheme appears to once again use public dollars to prop up the provincial government’s failure to demand private companies that profit from Alberta’s fossil fuel resources to have enough financial security to clean up their messes.
Government Needs to Intervene
Paul McLauchlin, reeve of Ponoka County in central Alberta and former RMA president, has been battling this ballooning municipal tax collection conundrum for years. He isn’t impressed by the government’s latest proposals.
“I think this is just another continuance, another scheme, on behalf of the industry, that’s going to basically create the same scenario again. I think it’s shady. I think, literally, the industry needs to pay their bills, and I think the government, quite honestly, needs to regulate,” he told the Globe and Mail.
The problem gets bigger and more expensive every year
It’s a staggering problem, and it gets bigger every year companies are allowed to continue passing off clean-up bills and unpaid taxes to regular Albertans.
Historically, abandoned wells are transferred to the Orphan Well Association for remediation. But that system is broken. The industry-funded association has had to repeatedly tap provincial and federal government funds to keep going, and is still unable to keep up with demand.
According to the provincial government, there are now 274,215 orphaned oil and gas wells abandoned or left behind by bankrupt companies. That’s more than half of all the wells in Alberta, up from 170,000 in 2022 as reported by the Alberta Energy Regulator. The Globe and Mail reported that the leaked document pegs the bill for cleaning up this toxic mess liability at anywhere from $33 billion to the hundreds of billions of dollars.
Fix it “Once and For All”
The RMA’s Kara Westerlund considers her municipality, Brazeau County, lucky. It has what she called a “small,” roughly $400,000 in uncollected taxes from fossil fuel firms. Other rural communities are not so lucky.
Last Monday, Municipal Affairs Minister Ric McIver created the Property Tax Accountability Strategy working group. Westerlund said she’s hopeful that it marks a turning point in holding delinquent energy companies accountable.“We know that there are notorious companies out there and it’s incredibly unfortunate that they’re being allowed to get away with not paying their taxes. And these taxes are not for building new hockey rinks, they’re for roads and other infrastructure that are critical for rural economies,” she told TheRockies.Life. “We need to find a solution to this problem once and for all.”
