Nexen Energy ULC is seeking a $19.5-million tax break from the financially strapped Regional Municipality of Wood Buffalo to deal with losses at its Long Lake oilsands facility after a deadly explosion last year.
The blast at the Long Lake upgrader killed two workers and caused production setbacks for the Calgary-based subsidiary of the Chinese state-owned oil company CNOOC Ltd.
Nexen said last summer short-term repairs of the upgrader were unfeasible, which meant the facility would remain idle indefinitely, a decision that triggered 350 layoffs.
The company cited the inoperable upgrader when it requested the $19.5-million property tax break from Wood Buffalo. Municipal staff have recommended that council reject the request at tonight's meeting.
In the same session, the politicians will also debate measures to deal with a $7.2-million deficit that hit the municipality's books in 2016 amid an economic slump that drained revenues.
The municipality has slashed positions and other spending in an attempt to deal with the shortfall. Officials are looking for additional savings and may have to dip into a reserve fund.
An administration report on Nexen's request said the municipality has given property tax breaks to residents who lost their homes to last year's wildfire, but it has not afforded the same compensation for other properties.
The report noted Nexen's idled upgrader will not be assessed in its 2017 tax bill, given that the facility was taken out of service before the Dec. 31 deadline.
"Changes in industrial properties due to damage to the machinery occur relatively frequently," the report says.
Nexen blamed worker error after employees Dave Williams and Drew Foster were killed in the Long Lake blast. They had been changing valves at a hydrocracker Jan. 15 when the explosion hit, with Foster declared dead at the scene while Williams died in hospital.
The company said at a news conference mid-July the blast was caused by employees working outside their approved scope of duties at the hydrocracker, which is part of the facility's bitumen upgrader.
Occupational Health and Safety investigated the explosion, but has not yet published its findings.
The blast is among a long list of setbacks that have bedevilled CNOOC since it bought Nexen in a blockbuster $15-billion deal in 2012.
A pipeline rupture in mid-2015 spilled an estimated five million litres of bitumen, water and sand at the Long Lake facility after the spill went undetected for more than a month. The company's internal investigation uncovered flaws in the pipeline design and failures to discover it.