(File photo)

By Josh Hall (Twitter: @Vancan19)

first proposal was 'shocking'

Local counties relieved as province backs off oil & gas well assessment plan for now

Oct 19, 2020 | 4:59 PM

Early reaction to the province’s announcement that it will exempt some oil and gas companies from paying property taxes for three years can be summed up as relief.

Under four scenarios proposed earlier this year, rural municipalities said they would stand to lose tens of millions dollars individually, with others claiming they may be forced to fold if the government followed through. Red Deer County Mayor Jim Wood joined fellow rural leaders at the legislature in protest.

Monday, the UCP announced it will exempt companies for three years from paying property taxes if they are drilling new wells and building new pipelines.

Furthermore, the government will lower assessments for less productive oil and gas wells, meantime continuing with the formerly introduced 35 per cent assessment reduction on shallow gas wells for three years.

The province says these measures are to provide much-needed certainty to industry, investors, municipalities and taxpayers in both the short and long term.

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“We’re pleased that none of the four options that were previously proposed were decided on,” says Lacombe County Reeve Paula Law. “This will have an effect on municipalities and it won’t be what the industry was initially looking for, but I think it’ll be workable. This will allow the province, municipalities, and industry to work together.”

Law says the county is very happy that the new minister of municipal affairs, Tracy Allard, is taking a more collaborative approach before revisiting this issue down the road.

However, Law says not all the details have rolled in just yet.

Heather Surkan, director of corporate services at Red Deer County, says they to know what the parameters are for a “less productive” oil and gas well.

“When they first proposed this assessment model review, it was shocking” she says. “They’ve listened to us, and we’ve said we want to be included in discussions.”

“It’s hard to say how we’ll really feel until we can understand what the lower assessment means on less productive wells. Does that translate into millions of dollars?”

“We are acting now to encourage new oil and gas development that will create jobs and boost Alberta’s recovery,” said Minister Allard. “Alberta needs to be as competitive as possible to attract investment into our communities. We know our municipal partners are committed to do their part to create jobs and support Albertans through this challenging economic time. We are working to secure a brighter future for our province by supporting both industry and communities.”

Rural Municipalities of Alberta President Al Kemmere says the announcement strikes a fair balance between enhancing oil and gas industry competitiveness and supporting municipal viability.

“RMA appreciates the efforts of Minister Allard to reach out to municipalities to better understand how important the current assessment model is to supporting municipal infrastructure and operations, and the efforts of the entire Government of Alberta caucus in supporting these short-term initiatives,” Kemmere says. “RMA looks forward to working with the Government of Alberta and industry in the coming years to ensure that rural municipalities can address their viability and continue to do their part to support industry competitiveness in a way that reflects a strong partnership.”

According to government figures, just 1,547 wells were drilled in the first eight months of 2020. There were 3,069 drilled in 2019, and 4,173 drilled in 2018.

The province has not updated the way it assesses oil and gas wells since 2005.

RELATED: Counties warn of “disastrous consequences” if province approves oil & gas tax breaks