CALGARY—When Calgary-based natural-gas company Trident Exploration failed last month, it already owed Mountain View County more than half a million dollars in unpaid taxes.

But when Trident collapsed, it also left behind 4,700 wells with a cleanup bill of about $329 million. By law, the cleanup takes priority, giving Trident’s creditors little chance of recovering their money. So the county north of Calgary, which gets half its revenue from oil and gas, will likely have to make up the gap with a tax increase.

“We really wouldn’t want to cut services,” said Angela Aalbers, the county’s deputy reeve.

“We would be looking at an additional 1 to 1.5 per cent increase ... I don’t think there’s a lot we can do about it.”

The situation was discussed at the Mountain View County Council meeting Wednesday, where council heard that Trident owes the county just under $578,000 in outstanding taxes. That’s a significant loss for a small municipality like Mountain View, which had an operating budget of $63 million in 2018.

Trident announced it would fold on April 30, citing low natural-gas prices, high property taxes, “inflated” lease costs and a recent Supreme Court decision requiring companies to fund well cleanup before paying creditors. The company said it had settled upon a plan with its primary creditors to restructure its assets but failed to get the support of the provincial regulator, which has to approve well transfers.

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“These challenges reached a tipping point,” Trident said in a press release.

The Alberta Energy Regulator (AER) said it had been working with the company and ordered Trident to either decommission its wells, post security or transfer the wells to “responsible” companies before folding. Trident did not comply.

“While we are aware of the difficult market conditions Trident has endured, we also have a responsibility to ensure that safety and environmental requirements are being met,” the AER said in a statement.

In Alberta, the cleanup of orphan wells — sites with no legal owner — is handled by the industry-funded Orphan Well Association (OWA), which is struggling with a swelling inventory. In 2017, the Alberta government loaned the association $235 million to speed up the cleanup process.

With more energy companies going bankrupt and the government holding little security to cover cleanup costs, many worry the bill will eventually fall to the public.

Mountain View County isn’t the only one struggling due to Trident’s downfall. The defunct company owed other municipalities millions of dollars, said Al Kemmere, president of the Rural Municipalities of Alberta (RMA) and a Mountain View County councillor.

Not only that, Trident joins numerous smaller companies that have gone bankrupt amid tanking oil-and-gas prices.

“There are many municipalities that have been struggling not only with Trident but other oil-and-gas companies that hadn’t been paying their taxes,” Kemmere said.

Earlier this year, the RMA surveyed its 69 member municipalities and found energy companies had failed to pay more than $81 million in property taxes. That leaves a “significant hole” in many counties’ balance sheets, the RMA said.

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To make up the difference, municipalities will have to increase the burden on taxpayers. But many of those taxpayers are struggling to recoup lost income from lapsed oil-and-gas leases on their land, said Daryl Bennett, director of Action Surface Rights, a group that helps landowners with wells on their properties.

In Alberta, landowners can’t legally refuse oil-and-gas development on their property. Though farmers can go to a provincial board to get what they’re owed, a backlog of cases means it can take a year or more, said Bennett.

He said that although the OWA takes custody of orphan wells, the association’s large inventory means it’s hard for landowners to get help if the sites start leaking and posing environmental and safety risks.

“Before, you had someone you could call,” Bennett said, referring to the companies that used to own the wells. “Now, who can you call?”

Both Kemmere and Aalbers said they’re already fielding calls from concerned residents with Trident wells on their land.

“This is quite a bit of money for some of these landowners,” Aalbers said. “I know that a lot of landowners within our county are dependent on these surface lease payments.”

Mountain View County staff are now tallying how many Trident wells are within its jurisdiction to find out how many landowners are losing out, Aalbers said.

The AER has suggested that many of Trident’s properties are still viable, and it will try to transfer them to a new operator who might be able to pay the company’s debts.

If that doesn’t work out, Mountain View can apply to a provincial program that reimburses certain taxes owed by failed oil-and-gas companies. That would get the county some of its money back, at least.

But Aalbers said she’s more concerned that the municipality can’t tell whether other companies in the area are at risk of failure. Most are privately owned, so local officials can’t see their corporate finances or plan for even more lost revenue.

“We just have to sit and wait,” she said. “The real issue is just the uncertainty.”

Emma McIntosh is an environment, justice and investigative reporter with Star Calgary. Follow her on Twitter at @EmmaMci

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