Alberta: Kneehill County writes off $68k in unpaid oil and gas property taxes

KNEEHILL COUNTRY, AB – Kneehill County council wrote off about $68,000 in unpaid oil and gas industry property taxes as the associated wells entered the orphan wells system. The resolution was passed at the Oct. 8 regular meeting of council.

Councillors heard a presentation from Rajeana Nyman, property tax administrator, about multiple oil and gas companies that had current unpaid property tax bills with the municipality.

“Administration is proposing the cancellation of the 2024 tax levy for municipal tax rolls that have been turned over to the Orphan Well Association,” stated Nyman in her report to council. 

“These assets will continue to be assessed annually until they are fully reclaimed. Once the wells are fully reclaimed, the tax rolls will become inactive.”

Nyman’s report noted the four oil and gas companies and the amount of unpaid property tax they owed: Manitok Energy Inc. ($17,235.24), Trident Exploration Alberta ($38,790.68), Lexin Resources Ltd. ($10,290.09) and Canyon O&G Corporation ($1,936.27). 

In her presentation Nyman described these companies as, “...companies that are no longer operating.”

Staff also provided a list of the specific tax rolls numbering 26 in total, all of which Nyman stated have been turned over to the Orphan Wells Association. 

“Once a well is classified as an orphan, it is no longer a producing asset,” stated Nyman’s report. “This means it no longer generates revenue; consequently, no future tax payments will come from it.”

During her presentation Nyman observed that there is some positive news: county staff have noticed a drop in similar situations since 2023.

Unpaid property taxes by oil and gas companies operating in Alberta have been a bone of contention for a number of years; both Kneehill County and the County of Stettler, for example, have been vocal in their concerns about the issue and have listed their total property tax loss in the millions of dollars; an estimate earlier this year puts total unpaid oil and gas property taxes in Alberta at $250 million.

Some members of the oil and gas industry over the past few years has revealed through statements and lobbying that they feel municipal property taxes are too high.

Mobile home taxes

Nyman also informed council of a mobile home with an unpaid property tax bill in the Hamlet of Torrington. The account was identified as #16 Torrington Mobile Home with an unpaid debt of $191.93 with staff recommending tax cancellation.

During her presentation Nyman informed councillors the owner of the mobile home passed away. The property in question has since been occupied by a new mobile home.

Coun. Carrie Fobes asked if Kneehill County could collect the unpaid debt from the mobile home park where the mobile home in question was located; Nyman answered that some mobile homes rent the lot they’re on and some own the lot they’re on, and in this situation the lot was property of the mobile home owner.

Nyman also stated that Kneehill County could use the tax recovery authority provided by the Municipal Government Act (MGA), but that involves a legal process which could also result in the taxpayers owning the property in question, which would then have to be sold. She compared all of this to the less than $200 owing the taxpayers.

As it turns out, Nyman noted, the mobile home in question was already demolished, suggesting its value wasn’t noteworthy.

Fobes stated she appreciated the explanation because some members of the public didn’t understand the situation.

Councillors unanimously passed a resolution covering both the oil and gas companies and the Torrington mobile home: That Council approves the cancellation of taxes on municipal tax rolls that have been turned over to the Orphan Well Association and are affiliated with Manitok Energy Inc., Trident Exploration (Alberta), Lexin Resources Ltd., and Canyon Oil and Gas Corporation plus (the mobile home) for a total cancelation of $68,444.21. 

Stu Salkeld is a Local Journalism Initiative reporter with the East Central Alberta Review. Title image: Zbynek Burival, UnSplash.