WHEREAS the oil and gas industry travels throughout Alberta and utilizes many local roads; AND WHEREAS the increase in oil and gas activity has created an impact on the local infrastructure that has produced a financial burden to local municipalities; AND WHEREAS local governments recognize that a large percentage of municipal taxes are collected from the oil and gas industry and are not seeking to increase municipal tax revenues from this industry;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request the provincial government to re-assess the distribution of royalties collected from oil and gas production and allocate a portion of these royalties to local rural governments to maintain infrastructure utilized by the oil and gas industry.
The intent of this resolution is to allocate a portion of the provincially collected royalties directly to rural municipalities to help address the impact the oil and gas industry has on local municipal roads and infrastructure. It is not the intent of this resolution to add additional property taxes or royalties to the oil and gas industry. While there are road grants available to address municipal roads, many municipalities do not qualify for these grants and do not derive any revenues from the oil and gas industry that use local roads as commuter routes to destinations in other municipalities. In Wheatland County, the number of wells drilled or estimated to be drilled by a particular oil company has increased significantly as follows: Year New wells drilled Gas production per million cubic feet per year 2002 612 75,803 2003 1,078 74,302 2004 (estimated) 1,145 83,549 2005 (estimated) 1,150 83,879 While the gas production has not significantly increased, the number of new wells being drilled has increased. This is a general trend in western Canada to offset the production declines in the gas reservoirs that indicate the average decline of gas well productivity has tripled since 1990. Given these figures, twice as many gas wells have to be drilled just to maintain the natural gas production at its current levels. Wheatland County is concerned that the drilling of new wells necessitates large heavy equipment traveling on local roads. This causes a huge impact on local infrastructure that, in many cases, was not designed to accommodate the movement of this equipment. Our municipality is also used as a commuter route to locations in other municipalities. A provincially regulated property assessment procedure for oil and gas activity has established a reasonable basis for the allocation and collection of local municipal taxes. In our municipality, the property assessment associated with oil and gas activity provides for a significant portion of our property tax base. Therefore, it is not the intent of this resolution to add additional property taxes or royalties to the oil and gas industry. Again, the intent of this resolution is to urge the provincial government to distribute a portion of the provincially collected royalties directly to rural municipalities to help address the impact the oil and gas industry has on local municipal roads.
The AAMDC has no resolutions currently in effect with respect to distribution of oil and gas royalties for infrastructure.
In addition to the $3 billion in provincial funding for infrastructure needs that was announced in 2005, the provincial government has indicated it does plan to also dedicate a portion of oil and gas royalties to rural municipalities to maintain infrastructure. Premier Stelmach, in December 2006, announced that a review of oil and gas royalties is one of his new governments top priorities. This review will be undertaken by an executive committee appointed by the government. As the review process progresses, AAMDC will update its members.