The Utica Resources company wants to relaunch oil exploration in the Gaspé and confirm its commercial potential, now that the courts have invalidated the refusal to drill by the Minister of Energy and Natural Resources, Jonatan Julien. The documents filed in court show moreover that the minister had rejected the oil company’s request despite the advice of his ministry, in the context where the unveiling of the “Plan for a green economy” was imminent.
A few days after winning the case against the Legault government, the president of Utica Resources, Mario Lévesque, now hopes that the referral of his drilling authorization application to the Ministry of Energy and Natural Resources (MERN) will be concluded. with a green light for the project submitted in February 2020.
“We want to continue the program, as long as the obstacles of a political nature are removed,” he told the To have to. Mr. Lévesque also underlined that this project, named “Galt”, is sufficiently advanced to speak of a “preliminary stage to production start-up”, that is to say the commercial exploitation of the first oil field. of the history of Quebec. He also sent us a “notice of discovery” of a deposit dated October 2019 and whose “compliance” was confirmed by the MERN, according to what can be read on the document.
“The region has already produced a good quantity of oil,” said Mario Lévesque, who is also president of “Gaspé Énergies”, the Utica Resources subsidiary which was set up to develop the “Galt” project, located at 20 kilometers west of Gaspé. According to him, the two boreholes planned by the company should therefore make it possible to “calibrate the production model”, before being converted “into a production well when the production license has been granted”.
There is however a great variability, according to the sources, concerning the true oil potential of this sector, which was the object of drilling as of the XIX.e century. “External assessments show a potential of 540 million barrels alone for the Galt permit. The region should contain several billion barrels in place, ”according to Mario Lévesque.
Documents filed in 2017 by the former Quebec company Junex, which then held the exploration permit for the project, specified however that the Galt project would contain “possible recoverable oil reserves” of eight million barrels of oil. But more specifically, it would contain proven and probable reserves of 161,000 barrels.
The Government of Quebec currently holds, through Investissement Quebec, 17% of the Galt project, after having injected $ 18.4 million into exploration in this sector between 2012 and 2017. It is moreover the most advanced oil exploration project in the province, while the region of the tip of the Gaspé peninsula has been the subject of most of the oil drilling carried out in Quebec since 1860.
Compensation
Whatever the oil potential of the “Galt” sector, the Legault government has however repeated in recent weeks that it will put an end to oil and gas exploration projects in the province. This will involve the abolition of some 182 exploration permits covering approximately 32,000 km2 of the territory.
How does Minister Jonatan Julien intend to proceed to put an end to the projects? “It is by legislative amendment that we will ban oil and gas exploitation in Quebec. A bill is in preparation, “replied his cabinet on Wednesday. Compensation will then be paid, but the details of these are not yet known. “The provisions for compensation will be provided for in the bill. The government has also not decided whether it will appeal the decision of the court, which has just overturned the refusal of drilling for the Galt project.
For Mario Lévesque, however, it is clear that the Quebec government will have to pay substantial sums if it closes the door to Utica Resources projects, which controls 29 permits covering 4,400 km.2. “If the government puts an end to the industry, this will amount to an expropriation. In the event of expropriation, we expect to be compensated at fair market value. An external evaluation is currently underway, ”he stressed.
“However, we would prefer to develop resources and create real jobs,” added Mr. Lévesque. This is what his company intended to do, after having complied with all the necessary procedures to obtain its exploratory drilling permit, during the summer of 2020.
Political intervention
The documents filed in court in the context of the dispute between Gaspé Énergies and Minister Jonatan Julien also show that MERN officials were in favor of authorizing drilling. In the context of discussions and notes reproduced in the judgment rendered on November 12, we can read that “the unanimous recommendation of the various stakeholders at the MERN”, including engineers, the associate deputy minister and the current deputy minister , is “to grant the authorization requested by Gaspé Énergies”.
Everything indicated that this authorization was going to be granted at the end of August 2020, until the office of Minister Julien and that of Prime Minister François Legault intervened in the file.
In exchanges between the two offices, we can read that the chief of staff of Minister Julien mentioned in August “important political considerations to be considered” in this file. “Do we really want to have a debate on drilling for hydrocarbons right now? Galt will never be a big deposit, according to the information available. But not moving forward will have legal (and possibly financial – other companies’ legal) implications claiming that the restrictive regulations in force are a form of expropriation, ”he wrote to the Prime Minister’s office at the time. .
The discussions that followed show that the government was well aware that a refusal to drill could lead to legal action. In case of rejection of the request, the government is “placed in a position of prosecution by the company which is in good standing, pays its rights, proposes a compliant project, which has real potential, which demonstrates a certain social acceptability and which was the subject of an agreement with the native community present, ”reads a presentation made to the Minister on September 2, 2020.
A few days later, the minister’s office sends a “note” which mentions that authorizing the drilling would however present “risks”, including an “appearance of inconsistency with the fight against climate change”, in the context of an “imminent announcement” of the Green Economy Plan. This was announced a month after the official refusal of the drilling permit.
In addition, another note reveals that the idea of closing the door to the entire industry was already part of the government’s thinking in September 2020. For the Center québécois du droit de l’environnement, it is clear that the government can proceed in this way, and without offering financial compensation to companies, “as long as the law is clear in its intention”, specifies lawyer Marc Bishai. This is what the government did in 2011 by canceling all exploration permits for the fluvial section of the St. Lawrence and the islands of the estuary.