A Calgary oil company ordered by regulators to abandon 36 sites owed municipalities $278,000, including more than $51,000 to Red Deer County.
The Alberta Energy Regulator (AER) has ordered Cycle Oil & Gas to abandon 36 sites within two weeks of the Aug. 21 order because of its failure to meet a previous order that required it to abandon wells where mineral leases had expired.
Cycle has failed to maintain its sites and the order was issued to "mitigate the risks of Cycle's assessed lack of capability to meet its regulatory and liability obligations鈥�" says the order.
Cycle corporate director and 100 per cent shareholder Perry Miller told the AER in an Aug. 6 email that "Cycle was shut in and there was no money to maintain the properties," and asking what steps were required to have the Orphan Well Association to take over the sites. The industry-funded association closes oil and gas sites for companies that have gone under or shown no sign they intend to meet their obligations.
AER said Cycle's liabilities include $278,000 in unpaid municipal property taxes. That includes $51,327 owed Red Deer County. Cycle is the third company to own the well since 2014, and none of them have paid a dime in taxes to the county, council heard on Tuesday.
Cycle also owes an estimated $2.2 million in abandonment and reclamation liabilities. The company was given 14 days from the order date to abandon the sites, including removing all surface equipment, cement pads, debris and produced liquids. It must also submit a reclamation plan outlining how it intends to restore the sites.
Red Deer County assistant chief administrative officer Dave Dittrick knows the Cycle story well.
"I literally outed this company in front of the Alberta Energy Regulator and (Alberta) Municipal Affairs," said Dittrick on Thursday.
He pointed the finger at the company as part of the problem rural municipalities face by industry tax dodgers at a meeting of the Rural Municipalities Association (RMA) Property Tax Accountability Strategy Working Group last week. The RMA's most recent survey found $253 million is owed rural municipalities by the energy industry.
The story is a familiar one, featuring multiple owners, none of which have paid their county tax bill, which only amounted to about $3,700 a year.
Redwater Energy first drilled a well in 2012. It was then sold to Energy Express Canada and finally Cycle. In all those years, it has been a producing well and continues to pull oil out of the ground.
A fourth company has now come forward with an offer to buy the well on the condition that the county cancel the taxes owed by others. On Tuesday, county council agreed and praised Blue Star Energy Inc. 鈥� which has offered to pay half of the 2025 and all of the 2026 tax bill up front as a show of good faith 鈥� for being a responsible operator.
In Red Deer County, 33 companies owe $5.2 million in unpaid taxes. The county has tried to meet them halfway by offering payment plans to spread payments over a longer period and freezes penalties. Only one company is currently on a payment plan to pay its $1.4 million in back taxes.
Between 2015 and 2024, the county has written off $9.8 million in oil and gas taxes and $1 million is budgeted every year to write off bad debts.
"It's an ongoing source of frustration," said Dittrick.
"Cycle only owns one well in Red Deer County," he said, adding there are 35 other Cycle-owned wells, pipelines and facilities listed in the order.
"There's obviously a lot of other municipalities that have been affected by Cycle. We're just one of them."
Energy industry bad actors' actions have an impact on other ratepayers, who must pick up the slack. In each of the last two years, the county has boosted farmland tax rates by 20 per cent, which has raised about $500,000 more to offset write-offs.
The county is also taking a hard look at the services it delivers and whether bridge replacements need to be delayed, reduced to one lane or dropped altogether.
In his presentation to the working group, Dittrick said the provincial government is partly to blame. It is too pro-oil, too influenced by the powerful oil and gas lobby, and confident it has rural voting support locked up.
In his presentation, he called it a "challenging combination that has proven very difficult to overcome."
