A Calgary-based company buying up assets from Trident Energy wants Red Deer County to writeoff more than $150,000 in back taxes owed by the bankrupt firm.
JfEnergy successfully bid on some of Trident’s gas wells during the receivership process for the former energy company that shut down its operations last April and walked away from 4,700 wells.
The company’s abandonment and reclamation obligations were estimated at $329 million.
Trident owed the county $74,313 in 2018 taxes and $68,831 in 2019 taxes. This year, the bill for the full year would be $72,831.
In its request to the county, jfEnergy says if the county requires the company to pay the back taxes, it will have to drop its deal to buy Trident’s wells from the receiver and the wells will be turned over to the province’s Orphan Well Association.
“Once the OWA takes custody of these wells, it will prevent any future possibility of tax reenue for the county, surface and mineral lease payments for county constituents and the Alberta government,” says the company in its request.
It will also prevent jfEnergy’s plan to work with Horseshoe Power to use natural gas to create electricity that could be used to provide intensive agricultural operations with discounted power and heating costs.
“This cost reduction for local agricultural operations is facilitating growth, providing more jobs for central Albertans and supplying our markets and grocery store with more local produce.”
A court hearing was set for March 30 to award the assets to jfEnergy.
In a report to council, county corporate servies director Heather Surkan said in a similar situation involving another company, the court ordered the county to writeoff the back taxes owing on assets being purchased.
JfEnergy could ask the court to make the same order, which would likely be granted. The energy company would rather not go that route because it would cost more in legal fees, says Surkan.
“JfEnergy has assured administration that they have a solid business model that makes sense and can survive in this economy. Further, they assure us on a go-forward basis, they will be responsible for municipal taxes.”
County council will review the request on Tuesday.
Outstanding municipal tax bills from oil and gas companies have become a major financial issue for many of Alberta’s rural municipalities.
Rural Municipalities of Alberta estimated the amount of taxes owed by oilpatch companies ballooned to $173 million last year from $81 million a year earlier, based on a survey of its 69 county and municipal district members.
In Red Deer County, $2.5 million in taxes could not be collected last year. Counting previous years, about $5 million in taxes are outstanding, 75 per cent of them owed by oil and gas companies.