Overview

Industrial property tax on shallow gas wells and pipelines will be reduced by 35% for the 2019 tax year.

This short-term relief will help shallow gas producers cut costs, protect jobs and remain competitive while dealing with economic pressures facing the natural gas industry.

To ensure municipalities don’t suffer from lost revenue, the province will reduce the amount of education property tax they pay to the government.

Qualifying properties – about 65,000 wells and their associated pipelines – will receive more than $23 million in total support.

Why it’s needed

Many shallow gas producers are in a precarious financial situation as a result of low market prices and high operating costs. Urgent property tax relief is required to avoid:

  • further company failures
  • job losses
  • impacts on communities
  • abandonment of reclamation liabilities

How it works

The government worked with the Explorers and Producers Association of Canada to determine which companies would benefit the most from this tax relief.

A list of qualifying shallow gas wells and associated pipelines will be provided to affected municipalities and companies.

Municipalities will then have to:

  • cancel 35% of property taxes for qualifying properties
  • report the total amount of tax cancellation to Municipal Affairs
  • continue to collect property taxes from shallow gas producers that go directly into their local budgets

The wells are predominantly found across 15 municipalities:

  • Cypress County
  • County of Newell
  • Special Areas Board
  • Wheatland County
  • Kneehill County
  • Red Deer County
  • Lacombe County
  • Rocky View County
  • Vulcan County
  • County of Stettler No. 6
  • Starland County
  • County of Forty Mile No. 8
  • Ponoka County
  • Mountain View County
  • Camrose County

Next steps

While property taxes go to municipalities, the assessment model for linear property such as pipelines is determined by the province. The model has not been updated since 2005, despite tremendous changes in the natural gas sector.

This decision addresses fixed costs as referenced in the Natural Gas Advisory Panel’s Roadmap to Recovery report.