Enhance Energy had sought tax breaks from Lacombe County for its carbon capture project near Clive. “It is difficult to look at granting an exemption or deferral of any form to just one company,” a report to council says in part. Photo from Enhance Energy

Lacombe County turns down tax relief request from carbon capture company

Enhance Energy hopes for tax concessions to improve long-term viability of project

A Calgary-based carbon capture company will not get the tax breaks it was looking for from Lacombe County.

Enhance Energy representatives went before county council last month to ask for a number of concessions to help improve the profitability of its project, which will see millions of tonnes of CO2 pumped into a heritage oilfield near Clive.

Enhance Energy hoped for a five-year waiver on the county’s well drilling tax levy, a three-year property tax holiday on new assessments related to CO2, and the removal of some paving requirements connected with facilities.

Council voted last week to turn down the requests.

Based on Enhance’s projected drilling program, the well-drilling waiver would cost the county $100,000 to $132,000 in 2020.

Enhance Energy paid about $230,000 in property taxes in 2019, but that is expected to drop to about $170,000 this year, because of depreciation and lower property taxes.

The company said it would continue to pay the taxes on its existing facilities, but hoped for relief on new infrastructure.

Each new 3,000-metre-deep well would generate about $3,700 in county taxes.

“Like the well drilling tax, it is difficult to look at granting an exemption or deferral of any form to just one company, when many oil and gas companies are suffering due to low commodity prices,” says a report to council.

Paving costs range from $5,000 to $7,500 per approach.

Some companies have already paid the taxes that Enhance Energy was hoping to have waived, said the county.

As well, oil prices have rebounded past the $25-per-barrel price assumption Enhance Energy used in its pitch.

“Given the volatility of these prices, council would be remiss if it were to grant any type of long-term exemption or deferral to Enhance Energy or any other energy company.”

Company spokesperson Cindy Gray said the meeting with Lacombe County was “evidence of Enhance’s long-standing, collaborative relationship with this key stakeholder in the project.

“The tax deferral request — which was brought forward in the context of broad industry and commodity price challenges — was done so to strengthen the long-term viability of this project, which ultimately will benefit Lacombe County, its residents, as well as all Albertans and Canadians.”

The Alberta Carbon Trunk Line system will capture CO2 at the North West Redwater Partnership Sturgeon Refinery, near Edmonton, and transport it through a 240-kilometre pipeline owned by Wolf Midstream — which was not part of the tax waiver request — to a mature oilfield at Clive.

The CO2 will be injected underground. It acts like a solvent, reducing the viscosity of the oil, allowing it to be pumped to the surface. The CO2 is then permanently stored underground.

Oil produced from the process, known as enhanced oil recovery, is 60 per cent less carbon intensive than conventionally produced oil.

The federal and provincial governments provided funding for the $1.2-billion project, which was announced more than a decade ago.

The trunk line system is the world’s largest capacity pipeline for CO2 created by human activity. It is capable of transporting 14.6 million tonnes of CO2 per year — the equivalent of 20 per cent of all current oilsands emissions, or equal to the impact of taking more than 2.6 million cars off Alberta roads.


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