Oil and Gas Companies Arrears of Taxes

Res #: 4-21M
Number: 4
Year: 2021
Midterm: Yes
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Energy and Resources

WHEREAS oil & gas companies are defaulting on their tax payments to rural municipalities, and they are not contributing to the infrastructure, repairs, and upgrades that are necessary as they continue to produce their revenue; and
WHEREAS under section 317 of the Municipalities Act, it allows the administrator to serve Notice of Payment to the purchaser of the resource for the outstanding taxes but does not have recourse for when the purchaser fails to make payments.
BE IT RESOLVED that the Government of Saskatchewan shall ensure compensation to the municipalities for the outstanding taxes of oil and gas companies from the royalties they collect on the sale of these resources.

Responses From: Saskatchewan Ministry of Energy and Resources

March 1, 2022

Our government is aware of the challenges that certain municipalities are facing when it comes to collecting royalty and taxation revenue from some companies operating on their land. At the same time, we remain mindful of the importance of the oil and gas sector to our province’s economy and the extent to which national and international pressures have hampered resource sectors in recent years.

The Oil and Gas Conservation Regulations, 2018 (s. 1 33{5}), allow the Ministry of Energy and Resources (Ministry) to share a purchaser’s information with an RM when taxes owing have been in arrears for a period of 12 consecutive months. It is important to note in these circumstances, specifically:

  • Oil purchaser information is collected by the Ministry and provided to an RM upon request.
  • Gas purchaser information is not collected by the Ministry, as it is not required for the purposes of royalty and/or tax calculations. Unfortunately, therefore, requests from RMs for such information cannot be accommodated.

There is no authority for the Ministry under The Oil and Gas Conservation Act (OGCA), or regulations, to enforce payment of these types of debts (i.e., RM taxes). The Act and regulations provide enforcement tools, such as suspension of operations, only where there is non-compliance with respect to specific obligations under the OGCA. The obligation of oil and gas companies to pay debts tied to a private contract, or under the auspice of other legislation such as The Municipalities Act, is not contemplated under the OGCA.

That said, we continue to enhance our oversight of the oil and gas sector and recently announced The Financial Security and Site Closure Regulations (FSSCR), expected to come into force in 2022, which provide the basis for additional financial scrutiny of oil and gas licensees.

As additional changes to the FSSCR and other oil and gas legislation are considered, we will continue to examine opportunities to further strengthen obligations and eligibility requirements for holding an oil and gas license.

Hon. Bronwyn Eyre – Minister of Energy and Resources