Unpaid Oil and Gas Property Taxes—Alberta’s $250 Million Question

Unpaid Oil and Gas Property Taxes – Alberta’s $250 Million Question

For more than a decade, unpaid property taxes from oil and gas companies have quietly challenged the financial sustainability of Alberta’s rural municipalities. While the issue began during a period of economic strain, it has since become a standing concern—one that affects local services and infrastructure, provincial governance, and Alberta’s energy sector. Now, with more than $250 million in arrears,1 Alberta is entering a new phase in addressing the problem. The focus is shifting from short-term measures to a coordinated, cross-sector strategy grounded in accountability, enforceability, and long-term stability. 

Background 

The unpaid tax issue traces back to the 2014–2015 oil price crash. At the time, many operators—particularly small and mid-sized ones—began deferring municipal tax payments because of financial pressure. As the industry slowly recovered in the years that followed, the arrears persisted, and the interest accrued. 

By the end of 2024, total outstanding taxes owed to Alberta’s rural municipalities reached $253.9 million. Of that, $110 million was considered unrecoverable,2 often tied to bankrupt companies or defunct operations. Despite several provincial measures aimed at improving enforcement, municipalities have continued to report increasing arrears year after year. 

Even with oil price recovery and ongoing production, some operators have continued to extract resources while leaving tax bills unpaid. In the absence of strong enforcement mechanisms, municipalities have had little recourse. The issue is no longer confined to economic cycles—it has become a structural challenge requiring a structural solution. 

Industry Perspectives: Complexity Beneath the Surface 

The oil and gas sector is a diverse ecosystem. Larger, financially secure operators generally remain compliant with their municipal tax obligations. However, smaller or junior operators—particularly those managing older, marginal wells—must often balance multiple financial pressures, including regulatory and environmental costs, declining production, and tighter margins.  

In some cases, property tax payments are delayed to preserve cash flow. Some industry voices have also questioned the fairness of existing assessment models, arguing that assessment valuations do not always reflect declining asset productivity.3 

There are also concerns about unintended consequences. Aggressive enforcement could lead to further abandonment of wells, shifting long-term liabilities to Alberta’s Orphan Well Association.4 There is increasing acknowledgment within the sector that a clear and consistent approach to tax compliance could provide greater predictability for operators and support constructive relationships with municipalities and the public.  

Municipal Perspectives: More with Less 

For Alberta’s rural municipalities, unpaid property taxes impact more than just balance sheets—they affect essential services. In some municipalities, oil and gas infrastructure comprises 40 to 60% of the property tax base.5 When a portion of that revenue disappears, municipalities face tough choices, as the impact falls directly on the ability to provide services such as road maintenance, water systems, and local programming.   

Municipal leaders have consistently expressed frustration with the tools available to them. While the Municipal Government Act allows municipalities to place liens on property, these are often ineffective when applied to abandoned or low-value infrastructure. Even when companies remain operational, municipalities frequently lack the legal authority to compel timely payment. 

Another source of concern is equity. Most residents and businesses face strict enforcement for unpaid taxes, but a subset of oil and gas operators has continued operations despite years of arrears. This perceived imbalance has contributed to declining trust and increased calls for reform. 

Exploring Opportunities 

Building on previous discussions, the following situations highlight potential opportunities for resolution: 

  • Tax Installment Payment Plans (TIPPs): Some Alberta municipalities have introduced TIPPs, allowing operators to pay property taxes in monthly installments rather than as a lump sum. While adoption has been inconsistent, TIPPs offer greater predictability for both municipalities and companies. Expanding or standardizing these plans could enhance financial stability and simplify cash flow management. 
  • Redirecting Oil and Gas Royalties: Saskatchewan has considered a mechanism to redirect oil and gas royalties toward outstanding municipal taxes. Although not yet implemented, this concept demonstrates a growing appetite for innovative fiscal solutions that link provincial resource revenues to local obligations.6 

These examples indicate that Alberta could benefit from building on Canadian precedents through updated legislation, stronger enforcement frameworks, and voluntary compliance tools tailored to the province’s specific needs. 

2025: A New Beginning 

In response to growing consensus across the sector, the Government of Alberta announced the formation of a Property Tax Working Group in March 2025.7 Co-chaired by Alberta Municipal Affairs and the Rural Municipalities of Alberta, the working group includes representatives from municipalities, industry associations, and the Alberta Energy Regulator.

The working group’s mandate is to develop a property tax accountability strategy7 to address unpaid taxes and ensure future compliance. The group will consider legislative changes, voluntary tools, regulatory enforcement, and other mechanisms to align accountability with long-term sustainability.

Conclusion 

The issue of unpaid oil and gas property taxes in Alberta has evolved over the last decade from a downturn-related challenge to a persistent governance and financial concern. The province, municipalities, and industry all recognize that new solutions are required. These approaches must acknowledge economic pressures while upholding the responsibilities shared by resource developers and host communities. 

The creation of a multistakeholder working group signals a new phase in this conversation: one grounded in collaboration, guided by accountability, and focused on ensuring Alberta’s energy development continues to support the communities that make it . 

Scott Powell
Director, Team Lead, Property Tax
scott.powell@ryan.com

Kaleigh Hogg
Senior Manager, Property Tax
kaleigh.hogg@ryan.com

Taylor Bourne
Senior Consultant, Property Tax
taylor.bourne@ryan.com

Citations and Sources

  1. Rural Municipalities of Alberta (RMA). 2024 Unpaid Oil and Gas Tax Survey Results. March 2025. https://rmalberta.com/news/unpaid-oil-and-gas-tax-survey
  2. Ibid.
  3. Government of Alberta. Liability Management Framework: Overview. Accessed March 2025. https://www.alberta.ca/liability-management-in-oil-and-gas.aspx
  4. Rural Municipalities of Alberta (RMA). Municipal Finance and Assessment Position Statement. Accessed March 2025. https://rmalberta.com/advocacy/position-statements
  5. Municipal Government Act, Revised Statutes of Alberta 2000, Chapter M-26. Office of the Queen’s Printer. https://www.qp.alberta.ca/documents/Acts/m26.pdf
  6. Saskatchewan Association of Rural Municipalities (SARM). 2022–2023 Resolutions and Advocacy Updates. Accessed March 2025. https://sarm.ca
  7. CBC News. “New Alberta working group to tackle problem of $253M in unpaid oil and gas property taxes.” March 12, 2025. https://www.cbc.ca/news/canada/calgary/new-alberta-working-group-to-tackle-problem-of-253m-in-unpaid-oil-and-gas-property-taxes-1.7493010