Alberta government to relax rule on buying oil, gas wells if municipal taxes unpaid

The Alberta authorities plans to relax a norm that requires energy companies seeking to bargain viable wells from bankruptcy proceedings to first salary each nan grounded producer’s outstanding taxes.

“I person informed nan Alberta Energy Regulator and nan Orphan Well Association that my agency will beryllium amending nan bid successful a measurement that will protect nan worth of productive assets and guarantee that they tin beryllium acquired by responsible operators,” said Energy Minister Brian Jean successful an email.

“We judge that a important number of nan assets sent to nan (association) successful nan caller past will beryllium recovered charismatic by industry.”

In March 2023, Jean’s agency issued an bid to nan power regulator requiring it to see whether an power company’s taxation payments were up-to-date earlier nan company’s licences could beryllium transferred to different owner.

The move was successful consequence to concerns from agrarian municipalities complete increasing taxation arrears from companies that were struggling aliases had entered receivership. That unpaid measure totalled $251 cardinal astatine nan extremity of 2023, which doesn’t see nan magnitude written off.

The bid was intended to plug a leak successful municipal budgets and support wells from being transferred from 1 shaky usability to another.

But an April 11 missive from nan regulator’s unit to CEO Laurie Pushor identified “unintended consequences.”

That letter, released nether Freedom of Information laws and provided to The Canadian Press, says requiring prospective buyers to salary nan full taxation bills of bankrupt companies was stopping those buyers from purchasing perchance profitable wells.

It says nan bid would summation nan number of wells held by nan Orphan Well Association, which cleans up aged wells for which nary proprietor tin beryllium found. That, successful turn, would summation nan yearly levy paid by manufacture to nan association.

“If nan (order) continues to beryllium applied arsenic written … location is simply a precocious consequence that immoderate income processes contemplated will either not beryllium initiated aliases will not beryllium successful successful transferring assets to caller parties,” nan missive says.

“This is expected to consequence successful premature abandonment of resources … that could person different remained successful accumulation by caller parties and lend to nan early municipal taxation base.”

In his email, Jean said he besides intends to move connected Alberta’s immense and increasing problem of wells, pipelines and different power accommodation that request to beryllium cleaned up.

“Our ministry will beryllium starring a wide multi-prong consultation pinch industry, agrarian municipalities and landowners this autumn to activity connected solutions to summation reclamation and beforehand responsible improvement of bequest lipid and state assets successful cardinal and confederate Alberta,” he said.

Orphan Well Association caput Lars DePauw said nan existent bid is closing viable wells and failing to clear taxation arrears. He said requiring producers to clear each taxation indebtedness for each wells of a bankrupt institution conscionable to get nan assets that liking them is driving buyers away.

“Why shouldn’t they beryllium allowed to nutrient those wells?” he said. “There’s nary measurement those taxes are going to beryllium covered.

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“Abandoning those assets prematurely is simply a lose-lose,” DePauw said.

Paul McLauchlin of Rural Municipalities Alberta said he understands concerns astir viable wells being “sterilized” down a wall of unpaid taxes.

But changes to nan bid aren’t going to get those taxes paid, he said. Nor is it going to velocity good cleanup.

“We find it rather concerning that nan astir important point seems to beryllium production, wherever nan astir important point should beryllium companies paying their taxes,” he said.

He said nan Orphan Well Association could tally wells itself and usage nan proceeds to money remediation.

Jean’s email contained fewer details. Much will dangle connected what they are, said Drew Yewchuk of nan University of Calgary’s Public Interest Law Clinic, which follows oilpatch liability issues.

Yewchuk said nan regulator should guarantee immoderate wells sold from bankrupt companies person capable remaining lipid and state to nutrient a profit, salary taxes and money cleanup.

“When nan worth of nan lipid and state is worthy little than nan costs of closing nan well, nan good is simply a nett liability,” he said.

“When a good tin only beryllium operated astatine a loss, it should spell to nan Orphan Well Association, and manufacture tin cleanable it up.”