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Alberta rural municipalities say unpaid oilpatch taxes rising despite high oil prices

The amount of unpaid taxes energy companies owe to small-town Alberta is growing despite high oil prices, the province's rural municipalities said Tuesday.
Pumpjacks draw oil out of the ground near Olds, Alta., on July 16, 2020. Rural areas in Alberta say the amount of unpaid taxes from energy companies is growing despite high oil prices. THE CANADIAN PRESS/Jeff McIntosh

The amount of unpaid taxes energy companies owe to small-town Alberta is growing despite high oil prices, the province's rural municipalities said Tuesday. 

Rural Municipalities of Alberta says its members were owed more than $250 million at the end of last year — up three per cent over the previous year. Meanwhile, the price of West Texas Intermediate oil averaged nearly US$70 a barrel over 2021 and has spiked in recent weeks to more than $120.

"This is just not fair or right," said the group's president, Paul McLauchlin. "We all bear the cost of this."

McLauchlin said unpaid taxes have more than doubled since 2018 and almost half of the companies that haven't paid taxes are still operating. 

As well, he said another $50 million owed to communities is under some kind of payment plan. And there are 7,000 cases before Alberta's Surface Rights Board of bills unpaid to landowners. 

It's time to get tough with companies that aren't fulfilling their obligations, McLauchlin said. 

"By late 2021, the commodity prices were such that there really was no excuse," he said.

"At $60 a barreloil, if you can't pay your taxes, you really have to ask if you should be operating an oil and gas facility in the province of Alberta."

Last year, the province's United Conservative Party government told the Alberta Energy Regulator that it "may" use factors such as tax arrears in ruling on whether or not to allow transfers of energy assets. It also gave municipalities powers to attach liens if taxes go unpaid. 

McLauchlin said liens are cumbersome and slow. As well, he points out the regulator is not obliged to consider tax status when it's asked to transfer a licence from one operator to another.  

"That light touch they provided didn't have the effect that we wanted. We saw no movement."

Alberta Energy Regulator spokesman Adrian Mrdeza said the agency is working with municipalities and the government to find solutions. 

"Ultimately, the Government of Alberta sets policy direction for responsible energy development, and the AER implements, enforces, and works within those policies," he said in an email.

He said municipalities can submit statements of concern on applications for licence transfers if the companies involved have unpaid taxes. 

McLauchlin said his group has met with Alberta Energy and been told the province has no power to fix the problem. He has his doubts. 

"I believe it's 100 per cent within their ability," he said.

"If we're going to discuss ethical oil as it relates to a commodity in the province of Alberta, we're going to have to deal with two things — unpaid taxes and unpaid surface rights."

Neither Alberta Energy nor the Canadian Association of Petroleum Producers returned requests for comment. 

This report by The Canadian Press was first published March 8, 2022.

— Follow Bob Weber on Twitter at @row1960

Bob Weber, The Canadian Press

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