Bankrupt oil company leaves Alberta county with $9.3M unpaid tax bill

A northwestern Alberta municipality says it's been left with $9.3 million of unpaid property taxes owed by a company that has since gone bankrupt.

Big Lakes County, about 368 kilometres northwest of Edmonton, said it was owed about $11.3 million from Razor Energy Corp.

The county was able to collect $2 million before the company concluded bankruptcy proceedings earlier this year.

With every legal avenue exhausted, county officials say there’s no way to recover the outstanding money.

“[The industry] helped build Alberta as a whole to what we are today,” said Reeve Tyler Airth.

“But it’s really hard to be proud to support oil and gas when every time you turn around you feel like you're getting kicked by this very industry you fought so hard for.”

The county has been informed that no additional money will be recovered, but if circumstances change, the municipality still has the right to collect the funds in the future.

Airth said Razor Energy was sold to another company, called Tex Cal, which has also filed for bankruptcy, further complicating the issue.

CBC News reached out via multiple channels to Razor Energy and its representatives, but did not receive a response.

Missing millions

Rural municipalities in Alberta have been dealing with the issue of unpaid taxes from energy companies for years.

According to the Unpaid Oil and Gas Property Tax Survey conducted by the province in 2022, a cumulative $220 million in unpaid taxes has been reported by municipalities, with $130 million in tax arrears and the remaining $90 million in cancellations.  About $76 million is owed by companies that are still operating, and that money is potentially recoverable, possibly through repayment agreements.

The Rural Municipalities of Alberta told CBC News there is now about $253 million in unpaid taxes reported provincewide.

President Kara Westerlund said the association has formed a working group with the Ministry of Municipal Affairs and Ministry of Energy, and hopes to table recommendations in the new year.

“There is a solution to this issue. We can legislate and regulate our way out of this problem,” said Westerlund.

“That in itself lies with the provincial government and with the Alberta Energy Regulator. So we will continue to sit at the table and have those really difficult conversations.”

In a statement, Minister of Municipal Affairs Dan Williams said the vast majority of oil and gas operators in Alberta meet their property tax obligations.

“I have been working closely with RMA to find a solution for municipalities affected and we have established a Property Tax Accountability Strategy Working Group to examine additional options and develop further recommendations,” he said.

Williams noted that legislation was passed to give municipalities priority over other creditors through a special lien where property taxes are owed, and the Alberta Energy Regulator has been given clearer authority to enforce compliance.

“This includes requiring proof of municipal tax payment as a condition for approving new licences or licence transfers,” he said.

Small towns, big burden

For Big Lakes County, $9.3 million is a significant amount of money, Airth said, and $2.6 million more in debt is expected to be written off by the county next year.

“We have actually been, unfortunately, planning for a loss in these tax revenues every year. We just expect we are not going to get a certain portion of that. That isn’t right,” he said.

“Why is it that the rest of our ratepayers are hung with the burden for these oil and gas companies that can’t pay theirs?”

Airth said the county is continuing to advocate to the province for a long-term solution.

“I don't think there is a quick and easy answer, but we are at least getting them to listen,” he said.

“I think they are acknowledging the fact that there is an issue, but it shouldn't have taken this long.”