The oil and gas companies that held exploration permits in Quebec territory have still not claimed the public funds offered as compensation, noted The duty, even if the government put an end to this sector more than a year ago. They are banking on the 11 lawsuits filed against the state to get their hands on hundreds of millions of dollars.
Since August 2022, promoters who held oil and gas exploration permits before the prohibition of this practice can recover part of the sums invested in the search for possible deposits thanks to a compensation program.
Last year, the former Minister of Energy and Natural Resources Jonatan Julien estimated at “a little less than 100 million dollars” the sums that would be spent by the State, including 33 million dollars for finance the closure of some sixty exploration wells. A “reasonable” amount, compared to the “Homeric” demands of the industry, he said.
However, companies have not said their last word. Despite the availability of the government program, none of the companies holding the 182 exploration licenses revoked last year have filed a claim for compensation, confirmed to the Duty the Ministry of Economy, Innovation and Energy (MEIE). “No compensation has therefore been paid,” wrote public affairs adviser Félicia Nicole.
Should we be surprised? Not at all, says the president and CEO of the Alberta company Questerre Energy, Michael Binnion. “According to my understanding, all the companies affected have challenged the law as to its validity,” he said in an interview.
Legal actions
There are 11 ongoing lawsuits against the Quebec government involving 16 companies, according to court documents seen by The duty. Several of these actions directly challenge the constitutionality of the “Law aimed mainly at putting an end to the exploration and production of hydrocarbons as well as the public financing of these activities” (Law 21), but some also target previously established rules. to oversee oil and gas exploration.
In a case involving eight companies, it is claimed in particular that the government carried out a “disguised expropriation” by putting an end to the activities of this industry, which has raised a lively controversy since 2010. At the same time, the ban on recourse fracking in the St. Lawrence Lowlands. Companies are therefore calling for the suspension of Law 21, failing which they estimate that they will be entitled to claim “several billion dollars” in compensation.
Other unknown companies in Quebec have sued on their own. This is the case of Altai Resources, which held five permits in the lowlands and is claiming at least 72 million dollars. Alberta’s Repsol Oil & Gas says it is entitled to $200 million, due to the impossibility of resorting to fracking. As for Pieridae Energy, it says it has been robbed of “several tens, even hundreds of millions of dollars”, because of a “government strategy” to put an end to oil exploration in Gaspésie.
To my understanding, all affected companies have challenged the law as to its validity.
After the tabling of the bill putting an end to hydrocarbon exploration in Quebec last year, the president of the Quebec Energy Association, Éric Tetrault, had already estimated at “3 to 5 billion” dollars the “lost profits” in the oil and gas adventure. By promising $100 million, Quebec is “unjustly enriched,” adds Michael Binnion today.
“It’s different from Anticosti Island, for example. […] [où] the government paid a sum that far exceeded the cost,” he observes. After launching a state-funded oil exploration project in 2014, the government finally closed the door after carrying out some exploratory drilling. This saga still cost him 92 million dollars, including 62 million in financial compensation paid to five companies.
Given the uncertain energy context in Europe, Michael Binnion is also asking the government of François Legault to “reassess” its options. “Otherwise, we believe the government should pay,” he argues. The bill adopted in April 2022 to revoke all exploration permits in Quebec, however, was intended to limit actions. The law therefore now indicates that “the revocation of licenses and authorizations […] does not give right to any other indemnity, compensation or reparation, in particular by way of damages, than those provided for by the compensation program”.
Choice of company
Lawyer for the Quebec Center for Environmental Law, Marc Bishai believes that the Quebec government has all the necessary legitimacy to put an end to the oil and gas sector without complying with the demands of companies.
The organization has also requested the right to act as an intervenor in cases before the courts. “We want to put forward an environmental citizen perspective to remind that a societal choice has been made and that a law has been adopted by the National Assembly within the framework of its powers. We must maintain the validity of this law to protect the ability of the National Assembly to pass laws in the collective interest and to respect the choice that has been made, in the wake of an enormous mobilization,” he said. to be worth.
In interview with The duty last year, Minister Julien said he did not want to “wait indefinitely” for Quebec to settle the matter definitively. The new law will deliver results within five years, he said. At the moment, however, the ministry is not putting pressure on developers. Asked about this, the head of media relations at the MEIE confirmed that no deadline would be imposed on them for them to appeal to the compensation program. No negotiations are underway either.
In 2012, following the adoption of a law revoking oil and gas exploration licenses in the St. Lawrence River and estuary, the American company Lone Pine brought an action against Canada in under the investor protection provisions of the North American Free Trade Agreement to obtain compensation of nearly $150 million for potential lost operating profits. This request was rejected in November 2022.