(Quebec) The Legault government will set up a compensation program of 100 million for the gas and oil industry with its bill putting an end to the research and production of hydrocarbons, which also includes the reimbursement of 75% of costs to close existing wells.
Posted at 11:14 a.m.
Updated at 11:27 a.m.
The piece of legislation, tabled Wednesday by the Minister of Energy Jonatan Julien, specifies that the State will pay “a maximum of 75% of the costs relating to the definitive closure of wells and site restoration”. However, the companies have an obligation to plug these holes for good before ceasing their operations.
It also provides for a “compensation program” for holders of oil and gas exploration and exploitation permits, which is less generous than what the industry would like, however. Minister Julien foresees a total cost of nearly 100 million: two-thirds in compensation, and one-third in rehabilitation work.
Quebec will reimburse the “exploration and development costs” of companies that were made between October 19, 2015 and October 19, 2021, “for activities carried out on the territory that was the subject of the revoked license, in the extent to which these costs have been paid”. Claims for compensation will be analyzed by an external auditor to be chosen by Quebec, who may himself “make recommendations on the amount of compensation to be paid”.
Quebec also specifies that no new pilot project in the future may “have the effect of allowing the search for hydrocarbons or underground reservoirs, the production of hydrocarbons or the exploitation of brine”.
500 million
The bill is likely to displease the industry, which claims at least 500 million in compensation. This amount is an estimate of the expenses incurred by companies over the past 15 years to explore Quebec’s gas and oil potential, and is circulating in the industry, reported The Press.
“It’s an approximation,” said Mario Lévesque, president of Utica Resources. It is considered a bare minimum by Mr. Lévesque, who makes a comparison with the owners of taxi licenses, who received compensation when the Legault government made them disappear.
In fact, companies in the sector want to receive a larger amount than a simple reimbursement of expenses. The spokesperson for the Association de l’énergie du Québec, Éric Tétrault, said: “If you win the lottery and you are only reimbursed for your ticket, that’s not compensation, it’s confiscation”. He estimated that the amount of compensation could “probably” be in the billions of dollars.
On the other side of the spectrum, Québec solidaire demands that Québec not reimburse a single dollar to the “wolves” of the hydrocarbon industry. The Liberal Party hopes that this compensation “tends to zero”. “The message that needs to be sent is to sit down with them and then reduce that amount as much as possible, but we cannot ignore the seriousness of the situation from a climate change point of view. “, said chef Dominique Anglade.
PQ leader Paul St-Pierre Plamondon also hopes that this amount will be as small as possible, but stresses that Quebec must respect its international commitments.