Record numbers of farmers seeking lapsed payments
Lana Bulger’s barley and hay farm in southern Alberta is a sprawling expanse of green fields scarred by a dirt road that leads to a swath of cleared land where a natural gas well is surrounded by a steel fence.
Like any other private landowner sitting on top of oil and gas fields in the province, Bulger had no choice but to allow drillers onto her property northwest of Nanton in 2006. The trade-off was the $3,300 payment compensating her for land access that arrived in her mailbox every March.
This year, the cheque never came. Now, Bulger has joined 400 other landowners and counting who are demanding cash from Lexin Resources Ltd., a Calgary company that decided last fall to stop making lease payments.
“This has taken a lot of money out of our community,” Bulger said, noting she is surrounded by farms that also have not received payments.
While Lexin is at the centre of a rising number of complaints, the company is not alone. As sagging oil prices continue to leave Alberta in a recession, record numbers of landowners claim they have not been paid by resource operators.
The province’s Surface Rights Board, responsible for recovering lapsed payments from oil and gas companies, has already received more than 1,200 applications from landowners seeking compensation this year. That’s well above the record-breaking tally of 760 requests the board handled in all of 2015.
The board estimates it will get 1,600 applications by the end of the year totalling more than $3 million in overdue payments. It admits that forecast could be blown out of the water if landowners with Lexin wells on their properties continue seeking payments in droves.
According to the Alberta Energy Regulator, Lexin has more than 1,500 well licences along with another 300 licences for facilities and pipelines. The regulator notes the tally includes wells that are inactive or have been plugged and cleaned up. As of May, 530 of Lexin’s wells were still listed as operating.
So far, about 410 landowners have filed applications seeking payment.
Farmers and ranchers from across southern Alberta will meet Wednesday at a community hall in the hamlet of Cayley south of High River, where they hope to draw public and government attention to what appears to be a worsening problem.
In an email to one farmer, a Lexin representative said the company’s owners decided to stop paying landowners in October, 2015.
“They have an office in Hong Kong that they want me to direct you to, but I am not going to do that because that will not get you anywhere,” the company official wrote, recommending the farmer contact the Surface Rights Board.
“You will get the money much quicker this way than going through the ownership group and their runaround that they suggest,” he wrote.
The worker was laid off along with other Lexin employees at the end of June.
The company did not respond to requests for comment this week.
In the end, taxpayers may be stuck with the bill. After the Surface Rights Board confirms landowner claims are legitimate, and the company fails to provide payment, the board bans the operator from the property and recommends the province pay the outstand- ing amount. Last year, it ordered $1.7 million in payments, a bigger tab than the $1.2 million it had recommended during the entire 2008/09 recession.
The Alberta government did not respond to requests this week seeking the amount of cash it recouped from companies during these periods and how much taxpayers were forced to pay.
Still, this is not the only way taxpayers are being squeezed during this economic slump. Rural governments are also reporting resource companies have lapsed on their tax payments. Vulcan County said oil and gas operators still owe more than $1 million in taxes from 2015, the highest amount in recent years which represents a sizable chunk of the $19.5 million it issued in levies.
Similarly, the Municipal District of Foothills is owed $1.2 million in 2015 back taxes from the resource sector. The same companies — including Lexin Resources — have not yet paid their 2016 tax bills, which come due in September, said Harry Riva-Cambrin, the municipal manager. As the district seeks payment, it has the authority to seize company assets, but Riva-Cambrin said it’s a far more expensive process than seeking foreclosure against residential properties.
“We understand the pressure that the resource companies are under,” he said, adding most of them pay their taxes.
Landowners who have not been paid by resource companies often have to wait six to eight months before their applications are approved by the Surface Rights Board, which must ensure the claims are accurate and that the company has been given time to respond.
The board has directed payment on three applications involving Lexin so far, with the province covering $11,600. Lexin has not responded to any of the board’s requests for payment, said Gerald Hawranik, the board’s chairman.
Farmers involved in the Lexin dispute worry that the industry is walking away from rising numbers of oil and gas wells.
Wells left behind by failed resource companies end up in the lap of the Orphan Well Association, an industry-funded group that cleans up old wells. In June, the industry group had a list of more than 1,100 wells to be plugged and sealed, a 45 per cent spike over the tally from just three months before.
“Paying us is just the smaller issue,” said Shirley Pocock, an Alberta farmer who said she’s owed $5,000 from Lexin. “The larger issue is going to come if all those wells end up being abandoned.”