Tax relief for the shallow gas industry

The Alberta government has acted to assist the struggling shallow gas industry with short-term tax relief. Minister Madu stated, “Our government vowed to take swift action to help shallow gas producers and municipalities. We’re proud to have made good on that promise. Not only will this action reduce further company failures and job losses, but it will update the assessment model for linear property, creating a more viable system overall for industry and government. It was my pleasure to announce this plan with Associate Minister of Natural Gas Dale Nally, the Rural Municipalities of Alberta and the Explorers and Producers Association of Canada, who all believe this is the right path forward for our province.”

We appreciate the province’s decision not to place the burden on municipalities and instead have the reduction come from the education property tax.  While municipal taxes are not the core reason the industry is facing challenges and we recognize that this is likely the only way to provide short-term relief to the struggling industry.

The province will be developing a list of qualifying shallow gas wells and associated pipelines. This list will be provided to affected municipalities and companies. Municipalities will then cancel 35% of property taxes for qualifying properties and report the total cancellation to Municipal Affairs. Of Alberta’s 65,000 gas wells most are in 15 counties. A little over 200 are in urban municipalities.

The shallow gas industry has suffered in recent years with prices as low as 21 cents US per thousand cubic feet, which is a massive drop from its high of $10 in 2008. Even last year prices averaged $1.60. The largest impact has come from the shale gas revolution in the US which has seen US production soar. The industry has also faced infrastructure constraints, investor apathy, and growing liability concerns from aging wells.

AUMA is proud of our oil and gas industry and the jobs it creates in our communities. We have advocated strongly on the Trans Mountain Pipeline, worked to create the Resource Communities of Canada Coalition, and are proud of our work with the various industry groups on a wide range of issues.