The provincial government’s plan announced earlier this month to provide short-term relief to the province’s shallow gas industry by reducing some of the expenses companies face is being welcomed by the Sundre Petroleum Operator’s Group (SPOG).
Tracey McCrimmon is the executive director of SPOG, which represents oil and gas companies with operations in the region.
“I like the thought of trying to ease some of the burden on the companies without the municipalities eating 100 per cent of that,” she said. “I don’t know how much it will really affect our group because we’ve had so few companies that have gone bankrupt.
“There is going to be some government subsidies coming to the municipalities to help make up for the shortfalls.”
Under the plan the province will be providing forgiveness of a portion of municipal property taxes on specific wells and pipelines identified by the government.
Municipalities collect education property taxes on all taxable properties on behalf of the province. Those taxes are transferred directly to the Alberta School Foundations Fund to support operational expenses for schools.
The one-year plan announced earlier this month will permit municipalities to reduce overall property taxes for companies, allowing companies to temporarily reduce operating expenses, while also ensuring that municipalities will still receive a portion of property taxes from impacted companies in order to adequately provide municipal services.
The program is being undertaken to protect jobs at the local level, the province said in a press release.
“We are asking you to reduce taxes on shallow gas wells and pipeline by 35 per cent,” the province said. “We will cover the resulting revenue loss by reducing the amount of education tax required to be sent to the province by an equivalent amount.”
The program will see more than $23 million in education property taxes returned to municipalities.
“Many shallow gas producers are in a precarious financial situation as a result of prevailing market conditions, and the impact of high operating expenses, including property taxes.”
The Rural Municipalities of Alberta (RMA), which represents 69 rural municipalities including Mountain View County, has already come out in support of the government plan.
“Shallow gas companies are in a tough situation, and it’s been essential to work with the government of Alberta and industry representatives to come up with short-term solutions to support the industry,” said RMA president and Mountain View County councillor Al Kemmere.
“We recognize that municipal and education property taxes are not the core cause of the industry’s struggles, but are likely the only area in which short-term relief can be found, so we are pleased with the government’s announcement as it helps the industry without unfairly penalizing rural municipalities.”
SPOG’s McCrimmon says she hopes the province, industry and associations such as the RMA will continue to work together to seek out ways to keep companies and communities viable.
Mountain View County reeve Bruce Beattie says he is concerned that other industries may also seek relief from the province in the same way shallow gas companies have now done.
