CALGARY / MONTREAL C If the Quebec government backs from its contract to understand more about for oil and gas on Anticosti Island, its joint-venture partners say they will sue.
Even though the provincial government owns a 35-per-cent interest in the joint venture and has a contractual obligation to assist fund the drilling of three wells this summer on the island in the St. Lawrence River, Quebec Premier Philippe Couillard this week continued to distance himself in the shale project.
“Clearly our faith in Quebec like a spot to purchase oil and gas, or any other possible development for that matter, is shaken,” Corridor Resources Inc. chief executive Steve Moran said within an email.
Clearly our faith in Quebec like a place to invest in gas and oil, or any other possible development for that matter, 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 amount of any damages, and that we and our partners have been focusing on moving the project forward,” Moran said.
The Couillard government – which at one point commissioned studies regarding how to get oil and gas off the island of Anticosti – now says it wants absolutely nothing to use the joint venture.
“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 associated with the aggressive savaging of a environment like Anticosti.”
However, numerous executives with assets in Quebec contacted through the Financial Post said the federal government of Quebec, and the Liberal party in particular, already are closely associated with the work.
On visiting power in 2014, Couillard’s Liberals launched a “Strategic Environmental Assessment” around the entire hydrocarbon sector within the province, and another one specifically on Anticosti.
Montreal-based engineering firm WSP Global Inc. was contracted through the province to do a study Anticosti. Its report, released in October 2015, explored different scenarios to get gas and oil from the island, including the construction of a US$4-billion pipeline stretching 900 kilometres from Anticosti, under the St. Lawrence, up to Quebec City’s south shore.
But it was the Parti Quebecois government of Pauline Marois, right before the 2014 election, that signed a $57-million exploration contract with a consortium look around the island’s energy potential.
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That contract provides 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 percent.
As part of the deal, Corridor and Petrolia contributed their land holdings around the island and the Quebec government decided to help finance the venture, which was set to drill and frack three wells on Anticosti – that is twice how big Prince Edward Island – come july 1st.
In June 2014, shortly after the Liberals replaced the PQ, Petrolia issued an argument having said that the company was “satisfied with the government’s confirmation that it’ll respect the agreement signed on March 31.”
However, executives think Quebec’s premier is different his position in the past three months, putting the work in jeopardy and potentially leaving taxpayers on the hook for breaching anything.
Couillard now says the PQ made an “unforgivable error” in signing the contract and it has indicated he’s prepared to break it.
“If which were to happen, we’d certainly think twice about entering into another agreement with the Government of Quebec as our financial partner,” Moran said.
When the agreement was first signed, the PQ said the work was estimated to supply $45 billion in royalties, tax revenues and profits straight to the province within the next 3 decades, and create countless 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, but the political drive came from the PQ.
“There will always be places within Quebec high 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 within the Anticosti project say they have a contract.
In accessory for a potential breach of contract in this case, executives at other gas and oil companies with assets in Quebec told the Financial Post that they have consulted lawyers about creating claims according to the things they feel are bad-faith negotiations through the Quebec government.
These companies have invested money in exploration activities in various parts of the province, but happen to be awaiting years for the discharge of the Quebec Energy Technique to find out whether or not they will be permitted to begin producing oil and gas – including from conventional wells that don’t require hydraulic fracturing.
The claimants would aim to recover the capital they’ve sunk into the province based on assurances from the government that at least conventional development could be allowed.
“Couillard flies around the globe in a Bombardier plane, also it doesn’t have an extension cord,” one executive said, talking about what he known as the premier’s preference for electricity over hydrocarbons.
Neither Couillard nor Arcand taken care of immediately requests for comment.
Quebec Gas and oil Association president Michael Binnion, who’s even the chief executive of Calgary-based Questerre Energy Corp., said Couillard’s attitude toward energy – in the Energy East pipeline project towards the Anticosti venture – has shifted following a Paris conference on climate change in December.
Binnion, who isn’t among the executives likely to take legal action against Quebec, believes the province had at some point considered oil and gas development as a way 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
