More and more energy companies not making payments to Saskatchewan, Alberta landowners. Why would they? Landowners, urgent with greed, signed leases they didn’t read, with few legal protections. Multi-billion dollar profit-taker CNRL asks for 30% property tax cut. Do landowners ripped off by oil companies get tax cuts? Do citizens and communities with their water, land and air poisoned by frac companies get tax cuts?

Sask. tracking energy companies not making payments to landowners by D.C. Fraser, Regina Leader-Post with files from the Calgary Herald, August 18, 2016, Calgary Herald

Nine energy companies operating in Saskatchewan have had complaints made against them for not paying landowners for use of that land.

This is the first year the province is tracking such numbers, although there is still no counting of the total number of complaints, just how many companies are complained about.

“We made the decision to start tracking the number of companies that were in this situation not based on any sort of perceived increase in complaints,” says Brad Wagner, director of liability management for the Ministry of Economy. “It was more based on the fact the industry is in such a bad state that we decided that was information we should probably start collecting.” [To use to enable lease violating companies and to extort money out of Canadian taxpayers to pay the companies’ debts after they sucked billions out from under Alberta and Saskatchwan?]

Which companies have been complained about is unknown, as the province said it would be difficult to go back and find out which ones complaints were lodged against. [If there’s a will, it’s easy to find out!]

Although there is no data to support the claim, Wagner suggests, anecdotally, the total number of complaints has increased, but not significantly. Each year there is about one complaint per month. This year the government expects a few more than that, but not a tremendous increase.

“If these low commodity prices persist, and continue to persist for years into the future, I would expect we would see more companies to become insolvent,” he said. [With the provinces and courts letting the companies run from their clean up responsibilities as well as their lease payment responsibilities? Nice profit taking set up. It’s obvious companies were planning this, before each boom. Easy, economical, simple solution: make all companies pay bonds to all landowners sharing their land for corporate profit-taking, to be held in trust until all wells and facilities are appropriately and completely cleaned up and paid for, and all health harm and contamination harms (water, land and air) paid for as well. And, make all companies pay bonds to all affected counties, municipalities and communities too (refer also below).]

With more insolvent companies come more missed payments.

In neighbouring Alberta, the province is seeing a record number of landowners’ complaints this year over lapsed payments from oil and gas companies.

Already, that province has received more than 1,200 applications from landowners looking for their compensation, which easily tops last year’s record-breaking 760.

Saskatchewan differs from its western neighbours in that the only option for landowners to try and get paid is to go through civil court. [Is justice accessible though to ordinary Canadians in Canada’s legal system? Or is there only access to justice for law violating, polluting and or health harming corporations, and for corrupt, lying, cheating politicians and Senators?]

Legislation to change that has been explored extensively by the province — since 2013 there have been consultations with farm organizations and the energy industry on the matter. [Why consult with the energy industry on such an important matter that is seriously harming ordinary Canadians? Should the energy industry have a say in bringing in legislation that protects citizens from its ruthless “cost of doing business” operations?]

A 2014 summary of potential changes to the law said it would provide for the establishment of a delinquent payment fund to compensate surface rights holders, “for unpaid compensation where the operator fails to comply with a compensation order.”

Wagner said this week such changes remain “on hold.” [If the energy industry can so easily walk away from their financial responsibilities, with Canada’s legal system (inaccessible to most landowners) as the only deterrent, would industry let buddy Brad Wall make any changes?]

The lack of such a law is, at least in part, one reason why the number of complaints in Saskatchewan pales in comparison to those received in Alberta.

“There could very well be, and probably in all likelihood there are, [many] landowners who are not being paid who have not complained,” said Wagner. [Emphasis added]

Perpetual Energy offers its assets to counties to cover property tax bills by Reid Southwick, August 18, 2016, Calgary Herald

Calgary-based Perpetual Energy Inc. has proposed donating its interests in assets and resource rights to an Alberta county as part of a desperate attempt to cope with a property tax bill the company says far outstrips its ability to pay.

The extraordinary proposal comes as oil and gas companies have lobbied municipalities across Alberta for property tax breaks in a bid to cut costs in the oil price rout, with limited success.

Perpetual, a junior company controlled by oilpatch tycoon Clayton Riddell, said its $41,500 tax bill from Athabasca County would swallow up all of its cash flow generated by oil and gas reserves in the municipality.

[Invoice Clayton Riddell the tax bill, his

Net worth as of Oct. 30, 2015: $1.3 billion
Net worth as of Dec. 7, 2015: $909 million ]

Sue Riddell Rose, the company’s president and chief executive, said the producer has faced a similar problem in other municipalities, and not just this year. She said the assessed values of Perpetual’s oil and gas properties far exceed what the company believes they are actually worth, which leads to high tax bills.

Riddell Rose has proposed to Athabasca County and other municipalities that Perpetual would give them its interests in oil and gas assets and resource rights, with offers to potentially operate the assets on their behalf.

“If we’re willing to donate them or give them away, that means they (government assessors) have a different value in mind for them than we do,” said Riddell Rose, whose company is seeking relief in about 17 counties.

Athabasca County has so far rejected Perpetual’s pleas for relief, which also included a request to cut its tax bill to $1, though Reeve Doris Splane said she is willing to have further discussions with the company.

In a letter denying tax cuts, Splane said the province is responsible for setting property assessments while she defended the county’s mill rate, which she said ranked 27th among 64 rural municipalities last year.

“If we were to lower taxes in this particular case, that’s precedent-setting for other industries and pretty soon the county isn’t functional,” Splane said in an interview Thursday.

Al Kemmere, president of the Alberta Association of Municipal Districts and Counties, said many of his members have received requests for tax relief from the oil and gas sector during this prolonged period of low commodity prices.

Canadian Natural Resources Ltd., the country’s largest heavy oil and natural gas producer, is asking municipal governments across Alberta for a 30 per cent tax cut, warning rising tax bills could force the company to abandon wells early.

Riddell Rose made a similar argument Thursday, citing a field of wells Perpetual shut-in last summer in the Municipal District of Opportunity north of Edmonton, a decision she blamed on high taxes.

Kemmere said he is aware of only one of his members, the Municipal District of Greenview, that has cut its taxes as a result of pleas from the oil and gas sector.

Kemmere said Alberta’s recession has hurt industries across the economy, which means it would be unfair to offer tax breaks to one of them.

Municipal governments are faced with continued demand for services while dealing with declines in revenue from failed resource companies no longer paying their taxes, Kemmere said. In some municipalities, he said total assessed values of resource properties have dropped. [What about the extreme damages the oil and gas companies, notably servicing fracing operations and hauling water and waste, and dumping waste, cause to roads and bridges? Companies ought to be paying for the damages they cause as well as their taxes, but, ordinary Albertans pay for the damages]

“We understand the challenges that they’re having,” Kemmere said. “It’s just that this (downturn) is felt on such a broad scale that to only deal with one diminishes the value of the others.”

According to the Canadian Association of Petroleum Producers, property taxes are the industry’s second-highest government cost, next to royalties, and are far higher than taxes levied against agricultural producers.

Riddell Rose said she has lobbied the province for what she considers a better means to assess the value of resource assets. But in a brief statement Thursday, the government said it largely hasn’t changed its approach.

Three companies have so far appealed their assessments, but many more are unhappy with their bills.

Jayhawk Resources Ltd., a junior natural gas producer with 60 wells northwest of Calgary, said Clearwater County is making more money from the company in property taxes than it does after all of its expenses are paid off.

“We’re trying to get a return on investment, but these guys are taking it all,” said Dave Meleshko, the company’s president. “Out of what’s left, we’ve got to pay ourselves and we all took big pay cuts just to keep the thing afloat.” [Emphasis added]

[Money Reality Check:

Will the banks and Alberta Courts allow it?

“Where does the buck stop?” AER to appeal ruling on oil, gas cleanup obligations. Chief Justice Wittmann found Alberta’s oil and gas licencing regime to be unconstitutional relating to money, but not in Ernst’s “valid” constitutional claim against AER relating to drinking water contamination by oil and gas

Alberta Court of Queen’s Bench Chief Justice Wittmann rules for creditors instead of clean-up when energy companies go bankrupt, Rules against Albertans, water, land and air ]

CNRL asks for 30% property tax cut, says levies could lead them to abandon wells early Reid Southwick, August 17, 2016, Calgary Herald

Canada’s largest heavy oil and natural gas producer is seeking a 30 per cent property tax break from municipal governments across Alberta, arguing the levies have “risen to an unsustainable level” at a time of low commodity prices.

Calgary-based Canadian Natural Resources Ltd. argues in letters to municipal governments that its property taxes ballooned five times more than its revenues per barrel of oil equivalent from 2004 to 2014.

The company says the downturn will likely diminish demand for municipalities’ services and infrastructure, while cutting their materials and contractor costs.

“Despite our success in reducing overall costs, there remain too many properties where property taxes are a concern,” Scott Stauth, a senior vice-president, said in a letter to the Municipal District of Willow Creek.

“Increasing property taxes are likely to result in early abandonment of wells and facilities, which will reduce the assessment base, local employment and royalties.”

Willow Creek’s council rejected Canadian Natural’s request, arguing other taxpayers have suffered through dramatic declines in their industries and continued to pay their taxes in full.

“We’ve had lots of farmers and ranchers who have gone through BSE (mad cow disease), drought, hail, and not even ask for that,” Reeve Earl Hemmaway said in an interview.

Still, Canadian Natural is not alone in its request for property tax relief. Perpetual Energy Inc., a Calgary-based junior oil and gas company controlled by Clayton Riddell, asked that Athabasca County reduce its tax bill to $1, due to the diminished value of its assets.

The county rejected Perpetual’s request and said it should direct its concerns over the assessed value of its assets to the provincial government.

Similarly, Athabasca County turned down Canadian Natural’s bid for a 30 per cent tax cut.

Canadian Natural said it operates in more than 90 Alberta municipalities and began requesting the tax breaks in areas where the company is paying the most, and where taxes account for a “significant” share of its expenses.

The producer said it has enjoyed some success, citing the Municipal District of Greenview, which cut its industrial mill rate by more than seven per cent in part to “assist industry during these tough economic times.” The district said the cut was made possible by an unexpected increase in assessed property values. [Meaning that ordinary Albertans are forced to pay for CNRL’s greed?]

Canadian Natural warned in its letter it has shut in an estimated 1,700 wells and 50 natural gas compressors during the oil rout, with plans to shut in another 600 wells and 20 natural gas compressors by the end of the year. [The CEO of CNRL moved to England in 2015 to escape Canada’s taxes. He ought to relinquish CNRL properties entirely, hand them over to the Alberta government to manage, if he’s so unhappy with his billions.  Problem of taxes solved.]

“In evaluating properties to determine whether to shut in further production, the primary consideration will be high costs, including the property tax burden,” Stauth wrote.

Canadian Natural hasn’t laid off any workers to cope with the oil price rout, though it has reduced salaries for senior management and staff. The company said it cut operating expenses by more than $1 billion, and is looking for further cuts this year.

Steve Upham, reeve of the County of St. Paul northeast of Edmonton, said his council rejected Canadian Natural’s request about six months ago on the grounds the company had not cut its dividend to shareholders.

Upham said the firm has made the same request a second time, though he doesn’t believe the result will be different.

“Until we see a significant change in (the dividend to shareholders), we have no reason to believe that things are that bad,” he said.

Upham said his county’s property taxes did not increase exorbitantly as Canadian Natural suggests. He said the company’s taxes have likely risen because it built new facilities.

The reeve worries that tax breaks will not guarantee the company will continue operating its wells in the county and it may later decide to shut in those wells based on other factors.

“How do I address the people that have been laid off?” Upham said. “Do I give them a 30 per cent reduction in their taxes because they don’t have a job anymore? I can’t do that.” [Emphasis added]

One of the comments:

Reynold Reimer · Calgary, Alberta
Give us a break! Big Oil has made billions in Alberta, paid among the lowest royalties in the world, and has left hundreds of abandoned wells for the public to clean up. Recently the NDP government announced an incentive program to help them keep drilling in the tar sands (never mind that a glut doesn’t get better by continued production), and now they want to beg off their property taxes???

I think you are suffering from a bad, and possibly terminal case of wealth worship. But still, if these guys have done so much good for the province, let them continue to wear those white hats and pay their share. No one lets joe citizen off the hook because he’s fallen on ‘hard times’. He’s lectured that he should have put something by for such a calamity…and I think the Oil Companies should have done the same.

A good chance they have….and are just squeezing municipalities because they are so big they think they can.

[Refer also to:

2016 08 07: Prosperity Alberta style: Record numbers of farmers ripped off by the oil and gas industry, seeking lapsed payments

2016 03 24: Billionaire Murray Edwards changes residency from Calgary to United Kingdom

Murray Edwards, one of Canada’s wealthiest people, appears to be changing his residency from Calgary to London, according to a regulatory filing.

On Wednesday, Magellan Aerospace Corp., a Mississauga, Ont., aircraft manufacturer in which Edwards holds 74 per cent of the shares and acts as chairman, listed his residence as “London, United Kingdom,” in its annual information form filed with regulators.

Two sources familiar with the situation who asked not to be identified said it’s their understanding Edwards is switching his residency to the U.K. for tax reasons.

Income taxes for high earners in Alberta increased dramatically over the past year with the top federal/provincial combined marginal rate rising from 40.25 per cent in 2015 to 48 per cent in 2016.

To be considered a non-resident by Canada for tax purposes, a person must routinely live in another country or show they don’t have significant residential ties to Canada. Stays in the country may be limited to fewer than 183 days a year.

The Magellan information contradicts the annual information form filed by Calgary-based Ensign last week, in which Edwards’ residence is described as Calgary/Banff, as it has been for several years. He holds about 16 per cent of that company’s shares.

The finance and oil and gas magnate, who is also a part-owner of the Calgary Flames and owns ski resorts through Resorts of the Canadian Rockies, did not return a phone call or email asking for comment Thursday.

Paige MacPherson, Alberta director for the Canadian Taxpayers Federation, said she doesn’t know of any specific examples but is not surprised people are considering leaving Alberta given the “double whammy” of provincial and federal tax increases.

“This is the problem with levying taxes on high-income, high-skilled individuals,” she said.

“They are an extremely mobile tax base … studies show you often don’t get the return you’re expecting to get from levying higher taxes. In addition, it makes it more difficult for the province to attract those high-skilled workers, including people like CEOs and engineers.”

Catherine Brown, a law professor at the University of Calgary who specializes in taxes, said the U.K.’s top income tax rate is only a few percentage points lower than Canada’s (45 versus 48 per cent) but there are big benefits there in terms of lower taxes on capital gains — profits earned from the appreciation of value on property such as a house or a company’s stock.

“The same people that came here shopping for attractive tax rates are going to be shopping somewhere else,” she said. “I think we’ve shot ourselves in the foot by taking away the Alberta advantage.”

Brown also pointed out an immigrant to the U.K. may qualify to be taxed on a remittance basis, which means he pays U.K. tax on foreign income and gains only if they are brought to or used or enjoyed there, thus opening options for offshore tax planning.

In the Calgary Herald’s executive compensation survey last spring, Edwards’ 2014 earnings of $12.7 million as chairman of Calgary-based Canadian Natural Resources Ltd. were rated fourth highest of the city’s 100 largest publicly traded companies. He also earned almost $2 million as chairman of Ensign Energy Services Inc. Much of his compensation from both companies was in the form of stock options.

Canadian Natural, Canada’s largest producer of heavy oil, hasn’t filed its 2015 regulatory forms yet, but those filed in March 2015 show his address as Calgary/Banff. The company has substantial energy interests in the U.K., reporting production of 23,000 barrels of oil per day in the fourth quarter of 2015 from offshore wells in the North Sea.

Edwards, a lawyer who was originally from Regina, Sask., was listed as the second-richest Calgarian on the Forbes list of billionaires released this month with a fortune pegged at US$1.33 billion, a fall from last year’s valuation of $1.8 billion due mostly to the decline in the price of oil and the value of the shares he owns.

Last October, the Alberta government introduced a sliding tax scale including an 11.25 per cent rate for people with the highest annual taxable income above $300,000 and a 15 per cent rate starting in 2016. The Canadian government raised its income tax rate for top earners to 33 per cent in 2016, from 29 per cent previously.


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