Provincial Press Release October 19, 2020 @ 11:54 published at 12:53
Alberta’s government is supporting the energy industry and municipalities to attract investment and create good jobs while delivering certainty for investors and taxpayers as Alberta recovers from the COVID-19 pandemic.
Supports to energy companies will include an exemption from property taxes for three years when drilling new wells and building new pipelines. The government will also eliminate the Well Drilling Equipment Tax province wide for new drills.
Additionally, the government will lower assessments for less productive oil and gas wells while continuing the recently introduced 35 per cent assessment reduction on shallow gas wells for three years. These measures are to provide much-needed certainty to industry, investors, municipalities and other taxpayers now and into the future.
Arriving at a solution that benefits both rural municipalities and the energy industry is the result of a commitment to consult with and listen to our partners in both sectors. In the coming months, government will be developing a plan for longer-term reviews of the regulated assessment system and remains committed to continued consultations and open dialogue.
“We are acting now to encourage new oil and gas development that will create jobs and boost Alberta’s recovery. 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.” Tracy Allard, Minister of Municipal Affairs
“This announcement reflects an effort to achieve 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. 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.” Al Kemmere, president, Rural Municipalities of Alberta
“Municipal taxes and assessments for oil and natural gas are one of the biggest competitive issues facing this province today. The Alberta government's action to incent new drilling and provide relief to mature wells is a crucial step to help restore investor confidence and preserve and create jobs for Albertans. Rural Alberta is key to the success of the oil and gas industry and we are committed to continuing to work with the municipalities and the province on this issue going forward to rebuild our energy industry and bring prosperity back to Alberta.” Tim McMillan, president and CEO, Canadian Association of Petroleum Producers
“The decision today by the Alberta government on municipal taxation is a positive step forward to not only support Alberta workers and the economy, but also to support all Alberta municipalities and rural communities.” Tristan Goodman, president, Explorers and Producers Association of Canada
“AUMA is encouraged Alberta’s government listened to feedback from municipalities and understands the importance of striking a balance between local government costs and industry competitiveness. We were pleased to be engaged in the consultation process and on working to strengthen the partnership between the province and municipalities.” Barry Morishita, president, Alberta Urban Municipalities Association
“CEPA appreciates the steps the government has taken today to determine the best path forward for adequate and reasonable assessment of pipeline assets. We look forward to continuing to work with the government and other stakeholders in the future.” Chris Bloomer, president and CEO, Canadian Energy Pipeline Association
Through extensive consultations with municipalities across the province, Alberta’s government heard loud and clear that now is not the time to make comprehensive changes to the way it assesses oil and gas wells, the machinery and equipment at these wells, and the pipelines associated with them. Today’s announcement reflects our continued commitment to working with and listening to our municipal and industry partners.
Alberta’s Recovery Plan is a bold, ambitious long-term strategy to build, diversify, and create tens of thousands of jobs now. By building schools, roads and other core infrastructure we are benefiting our communities. By diversifying our economy and attracting investment with Canada’s most competitive tax environment, we are putting Alberta on a path for a generation of growth. Alberta came together to save lives by flattening the curve and now we must do the same to save livelihoods, grow and thrive.
Companies paid a one-time well drilling equipment tax based on the depth of the well.
There were 1,547 wells drilled between January and August of 2020. In 2019, there were 3,069 wells drilled. In 2018, there were 4,173 wells drilled.
Alberta has not updated the way it assesses oil and gas wells, the machinery and equipment found at the well sites and pipelines since 2005.
The government, municipalities and industry will continue to work together to determine how best to update the assessment model for the longer term, after these three-year measures have concluded.