City to receive tax break on shallow gas wells from province

“As a collector of taxes, the Government of Alberta has indicated they want tax forgiveness to affected oil and gas companies within our geographic municipality of upwards of 35 percent,” said councillor Darren Hirsch.

Between the three local producers in the City of Medicine Hat, New North Resources Ltd. and Canlin Energy Corporation, the province will be refunding roughly $45,500.

New North Resources Ltd. and Canlin Energy Corportation will be seeing a refund of 35 percent in their property taxes from the City of Medicine Hat totalling $6,609.93.

As for the City itself, they will see a reduction in their education property taxes from Alberta Education as they own their own natural gas utility and collect municipal property taxes themselves.

Of course, this comes a month after the City announced they would be abandoning roughly 2,000 gas wells over the next three years.

“I think the wells that have been recently announced in terms of abandonment are still counting towards it,” said Hirsch. “Ultimately, I think the message we’re trying to receive is as collectors of taxes on behalf of the province, we’re basically saluting the province indicating that we’ll follow through on the direction that they’ve given us.”

Last month, the City said the decision was made to stop the bleeding of low commodity prices that have afflicted natural gas over the last number of years.

However, Hirsch said the assistance from the province is just a drop in the bucket compared to the $90 million abandonment initiative.

“We’re talking in the scope of seven figures for our moving forward plans,” he said. “So, it really is a material effect in terms of this tax forgiveness. Having said that, to companies and smaller companies that are in the oil and gas industry that are just trying to get by, it certainly might be a welcome amount of money.”

Hirsch also addressed questions about the timing of this tax relief as it follows the City’s abandonment decision, saying they were only recently contacted by the province.

“This was completely brought on just recently to us,” he said. “There was a ministerial letter sent to us requesting that and we’re just following through on that. So, the abandonment timing has no bearing on this whatsoever.”

Even with the provincial assistance set to come down, pending council approval, the plan remains to shut down most of Medicine Hat’s wells by 2022.

The City has not received any further offers of funding or provincial assistance for these wells, saying the assistance is nice but isn’t enough for them to change course.

“Ultimately, our plan of approach for the next couple years has been thoughtfully and respectfully submitted to council, and council has agreed with the approach that we’re taking,” said Hirsch. “This tax relief forgiveness portion really didn’t have any bearing on it.”

The City will be credited with their take break from Education Alberta sometime in December.

by Scott Roblin

City to receive tax break on shallow gas wells from province

Our Community