The Legault government has ruled: Quebec will put an end to all oil and gas exploration projects on its territory, after a decade of debate. However, taxpayers risk to have to pay substantial sums to compensate companies that have never launched a single operating project, despite decades of research. This announcement will not change the fact that Quebeckers consume shale oil and gas.
If Quebec had taken the path desired by the shale gas industry, at the turn of 2010, there would now be thousands of fractured wells in the St. Lawrence Lowlands, between Montreal and Quebec. According to forecasts, it was a question of drilling no less than 20,000 wells, with all that this implies in terms of trucking, water use, various pollution, methane leaks and social controversies.
At the time, while there was no law designed to regulate the exploration and exploitation of petroleum and natural gas in Quebec, there were more than 450 exploration permits covering approximately 80,000 km.2 of territory. All these permits had been acquired without taking into account land use, environmental issues or possible social acceptability. Thus the entire island of Montreal was covered by permits, as were Laval, Quebec, Longueuil, Trois-Rivières, Île d’Orléans, the entire fluvial part of the Saint-Laurent, the Bas-Saint -Laurent and the Gaspé.
It must be said that the Liberal government of Jean Charest was in favor of the exploitation of fossil fuels. The then Minister of Natural Resources, Nathalie Normandeau, even promised the industry to adopt legislation to this effect. “We want to make your life easier, because we are well aware that by making your life easier, we will help create more wealth in Quebec. We will allow you to spread your wings, ”she said at the first congress of the Quebec Oil and Gas Association in October 2009.
This was counting without the media coverage of the file and, above all, the outcry from citizens and environmental groups, who put a stop to gas projects. These still left 31 wells behind, some of which experienced significant leaks. All are now classified as “temporarily closed”, according to the vocabulary of the government, while the companies that drilled the wells have since left Quebec.
What follows essentially takes the form of two reports from the Office of Public Hearings on the Environment, but also of a series of four strategic environmental assessments, one of which aimed to assess the possibility of exploiting of oil in the Gulf of St. Lawrence. But never, until this week, has a government closed the door to industry.
In February 2014, the Parti Québécois, under Pauline Marois, even decided to finance the search for shale oil on Anticosti Island, as part of a partnership with companies. The Prime Minister then spoke of the possibility of “creating sustainable wealth and quality jobs”. The “Hydrocarbons Anticosti” project, canceled in 2017, cost taxpayers $ 92 million, mainly to compensate the companies involved.
Compensations?
Despite opposition to shale gas, the rejection of exploration on Anticosti and opposition to the most advanced oil projects in the Gaspé, some companies have chosen to keep their exploration permits in Quebec. According to data available from the Ministry of Energy and Natural Resources, there are still 182 active permits held by a dozen companies, for a total of approximately 32,000 km.2.
Even if they have, for the most part, never carried out exploration or drilling work with their permits, Prime Minister François Legault said this week that his government was ready to compensate them. “We are ready to put financial and legal resources,” he said Wednesday, the day after the announcement of his decision to “waive definitely ”to development of this industry. Mr. Legault however refused to advance on the continuation, evoking simply the sums disbursed by the companies and “the market value” of their assets. “It’s complex. It’s on a case-by-case basis, ”he dropped.
One thing is certain, companies are already on the verge of claiming millions of dollars, if not billions. This is the case of Utica Resources, a company controlled by Austrian shareholders. It got its hands on several permits abandoned by other companies, so much so that it now controls 29 permits, totaling around 4,400 km.2 in the St. Lawrence Lowlands and in the Gaspé.
According to what its president, Mario Lévesque, specifies, in a written response, the value of the assets would amount to “several billion dollars”. An opinion shared by the president of the Association de l’énergie du Québec, Éric Tétrault, who believes that on its own, shale gas from the St.Lawrence Valley could represent “lost profits” of “3 to $ 5 billion ”.
Mr. Lévesque adds that the end of the projects decreed by the Legault government is equivalent to an “expropriation”, which must provide for “the payment of compensation fixed according to the value of the property expropriated and the damage caused” by this decision. “To do otherwise and to violate the law would be very damaging to Quebec’s reputation with all investors, both Quebecers and foreigners,” he says.
A subsidiary of Utica Resources, Gaspé Énergies, has already launched an action in justice against the Legault government, which refused him an oil drilling permit in Gaspésie, for a project called “Galt”. A judgment is expected this fall. Ironically, the government is also a shareholder in this project, which was blocked because of the risks it could represent for the protection of waterways.
Unnecessary decision
This week, the Quebec Environmental Law Center and several environmental groups called on the Legault government to close the door to the payment of compensation to companies. “The fossil fuel companies will artificially inflate their profit projections to extract millions, even billions of dollars in public funds. As of today, the Prime Minister must close the door to any form of compensation, ”declared Nature Québec’s Executive Director, Alice-Anne Simard. Environmentalists base their arguments on legislation adopted in 2011 to cancel exploration permits in the St. Lawrence River and Estuary. This specified that there would be “no compensation” paid to companies.
Holder of the Chair in Energy Sector Management at HEC Montreal, Pierre-Olivier Pineau believes that François Legault made the wrong decision by announcing the end of an industry that was already dying in Quebec. “Everyone knows full well from the Rabaska LNG port project, from shale gas projects, from Anticosti and from GNL Quebec, that hydrocarbon projects have no social acceptability in Quebec and are practically impossible to materialize, ”he emphasizes.
“This is an announcement made only to give a veneer of ecology, without that changing anything on the ground, adds Mr. Pineau. In fact, the danger of this announcement and this decision is to give legal ammunition to the companies which carry out exploration: we will now be obliged to compensate them for projects which probably would not have seen the light of day. anyway, given the social context already mentioned, but also the economic uncertainty surrounding these projects. “
He also specifies that this announcement will not change the consumption of fossil fuels in Quebec. Quebecers import 100% of the oil and natural gas they use and “it is highly probable that there is oil and shale gas, as well as oil from the tar sands”, in our daily consumption. And this dependence on hydrocarbons, which contributes to worsening the climate crisis, will not diminish without profound changes in our modes of transport and our consumption habits for goods.