Finance News Follow us to find the latest Finance news
CALGARY / MONTREAL C If the Quebec government backs out of its contract to understand more about for gas and oil on Anticosti Island, its joint-venture partners say they will sue.
Even although the provincial government owns a 35-per-cent interest in the partnership and has a contractual obligation to help fund the drilling of three wells this summer around the island in the St. Lawrence River, Quebec Premier Philippe Couillard this week continued to distance himself from the shale project.
“Clearly our faith in Quebec like a spot to invest in oil and gas, or other possible development for instance, is shaken,” Corridor Resources Inc. chief executive Steve Moran said within an email.
Clearly our faith in Quebec like a place to invest in oil and gas, or any other possible development for instance, is shaken
He confirmed the organization would seek compensation if the government breaks its contract with Corridor and its partners.
Corridor is one of three companies by having an ownership stake, alongside the Quebec government through Resources Quebec, in Anticosti Hydrocarbons LP.
“We have not yet determined the quantity of any damages, and we and our partners have been concentrating on moving the project forward,” Moran said.
The Couillard government – which at some point commissioned studies regarding how to get gas and oil from the island of Anticosti – now says it wants nothing to do with the partnership.
“My name will never be linked to the dilapidation of Anticosti Island,” Couillard said within the province’s National Assembly now, based on the Montreal Gazette. “My name will never be linked to the aggressive savaging of the environment like Anticosti.”
However, a number of executives with assets in Quebec contacted by the Financial Post said the federal government of Quebec, and the Liberal party in particular, already are closely tied to the work.
On visiting power in 2014, Couillard’s Liberals launched a “Strategic Environmental Assessment” around the entire hydrocarbon sector within the province, and the other one specifically on Anticosti.
Montreal-based engineering firm WSP Global Inc. was contracted by the province to do a study Anticosti. Its report, released in October 2015, explored different scenarios to get gas and oil off the island, such as the construction of a US$4-billion pipeline stretching 900 kilometres from Anticosti, under the St. Lawrence, all the way to Quebec City’s south shore.
But it had been the Parti Quebecois government of Pauline Marois, just before the 2014 election, that signed a $57-million exploration contract having a consortium to explore the island’s energy potential.
Related
- Tiny Junex Inc dares to dream of oil production in QuebecQuebec is Canada’s worst region for oil investment, Alberta, the best, Fraser Institute study findsQuebec oil juniors hopeful new Liberal government will honour Anticosti deals
That contract gives the Quebec government a 35-per-cent equity stake in the Anticosti development, while Corridor, Petrolia Inc. and Saint-Aubin E&P (Quebec) Inc. each own 21.67 per cent.
As part of the deal, Corridor and Petrolia contributed their land holdings around the island and the Quebec government agreed to help finance the venture, that was set to drill and frack three wells on Anticosti – which is twice the size of Prince Edward Island – this summer.
In June 2014, shortly after the Liberals replaced the PQ, Petrolia issued a statement having said that the organization was “satisfied with the government’s confirmation that it will respect the agreement signed on March 31.”
However, executives think Quebec’s premier is different his position previously 3 months, putting the work at risk and potentially leaving taxpayers responsible for breaching anything.
Couillard now says the PQ made an “unforgivable error” in signing the contract and it has indicated he’s willing to break it.
“If which were to occur, we’d certainly reconsider entering into another agreement with the Government of Quebec as our financial partner,” Moran said.
When the agreement was initially signed, the PQ said the project was estimated to provide $45 billion in royalties, tax revenues and profits directly to the province within the next 30 years, and create hundreds of jobs.
A report in the Journal de Montreal Wednesday suggested the idea of exploring for oil was kicked around when Jean Charest was still being premier. Minister of Natural Resources Pierre Arcand said there have been “discussions” about them under Charest, however the political drive came from the PQ.
“There will always be places within Quebec where there might be the potential of oil,” he told reporters in Quebec City February 5.
Irrespective which political party signed the agreement, the joint-venture partners in the Anticosti project say there is a contract.
In addition to a potential breach of contract in this instance, executives at other oil and gas companies with assets in Quebec told the Financial Post that they have consulted lawyers about making claims based on what they believe are bad-faith negotiations through the Quebec government.
These companies have invested money in exploration activities in various areas of the province, but have been waiting for years for the release of the Quebec Energy Technique to discover whether or not they will be allowed to begin producing gas and oil – including from conventional wells that do not require hydraulic fracturing.
The claimants would seek to recover the capital they’ve sunk in to the province based on assurances in the government that a minimum of conventional development would be allowed.
“Couillard flies all over the world in a Bombardier plane, also it doesn’t have extra time cord,” one executive said, referring to what he known as the premier’s preference for electricity over hydrocarbons.
Neither Couillard nor Arcand taken care of immediately requests for comment.
Quebec Oil and Gas Association president Michael Binnion, who’s even the chief executive of Calgary-based Questerre Energy Corp., said Couillard’s attitude toward energy – from the Energy East pipeline project towards the Anticosti venture – seems to have shifted following the Paris conference on global warming in December.
Binnion, who isn’t one of the executives planning to take legal action against Quebec, believes the province had at one point considered oil and gas development in an effort to boost its local economy; now it is actively opposing such development.
“Quebec thinks it’s greener than green because they use hydrocarbons, but don’t produce them,” he said.
Financial Post
gmorgan@nationalpost.com
Twitter.com/geoffreymorgan
