Quebec paves way for oil, gas exploration with new energy plan


Quebec's legislature passed a bill that will pave the way for more oil and gas exploration, providing a boost to drillers such as Junex Inc. while drawing criticism from environmental, aboriginal and citizen groups.

Bill 106 passed Quebec's National Assembly in a 62-38 vote early Saturday after an overnight debate ahead of the holiday break. The legislation is meant to implement Quebec's clean energy plan but also contains provisions allowing for energy exploration, potentially including fracking.

"Quebec's government just voted down an amendment to ban fracking in a triumph of science over 'leave it in the ground' lunacy," Calgary-based Questerre Energy Corp. tweeted early Saturday morning.

Shares of companies that hold exploration rights, including Questerre and Junex, based in Quebec City, surged last week as passage of the legislation looked likely. Questerre holds about 1 million acres and has drilled test wells in the Utica shale formation along the St. Lawrence River, according to its website. Questerre's shares rose the most in more than eight years on Thursday and inched up again on Friday. Junex's stock increased 30 per cent, the most in almost two years.

Bill 106 creates a new agency to promote Quebec's transition to cleaner energy yet also lays out a framework for oil and gas development in the Canadian province. Environmental, aboriginal and citizen groups argued that the bill's mandate is contradictory, that debate was rushed and that it should have included a moratorium on fracking as well as greater protection for landowners.

While the National Energy Board doesn't record Quebec as producing any marketable hydrocarbons of its own, the province holds enough gas to meet its own needs for about 100 years. Most is locked up in the Utica shale formation or in deposits beneath Anticosti Island, according to the Canadian Association of Petroleum Producers.

"This is obviously a way for the government to please the industry," Patrick Bonin, a spokesman for Greenpeace Canada's climate and energy campaign, said by phone. "There is no reason why this bill was passed under the false claim from the government that there is urgency."

Fracking is safe and the industry position is that it should be monitored like any other technology to make sure that's the case, so a moratorium is unnecessary, David Lefebvre, director general of the Quebec Oil & Gas Association, said by phone Saturday. "Wells are fracked every day, all around the world," he said.

Bill 106 strips power from landowners who will be powerless to stop exploration by companies with drilling claims, Carole Dupuis, a spokeswoman for Regroupement vigilance hydrocarbures Quebec, said by phone from Quebec City. That, in turn, will hurt property values, especially if exploration leads to fracking.

"If there was not the fracking issue, the landowner issue would not be a problem. It's an access issue," she said. "What's the value of your land if someone has been drilling one kilometre from you and you don't know if your drinking water is safe?"

The citizens group she represents is also concerned that companies with deposits worth developing will be able to expropriate land from owners who are unwilling to sell.

Expropriation was possible before Bill 106 and a moratorium on fracking would have actually hurt landowners by giving environmentalists the power to decide what they could do with their property, said Michael Binnion, chief executive officer of Questerre Energy.

"In our entire time in Quebec we've never gone on anyone's land that didn't want us there," he said by phone from Calgary. "This act lets farmers who would like to partner with oil and gas companies have that chance."

Bill 106 goes against aboriginal rights to self-determination and to establish the best use of their lands, Mi'gmaq Chief Darcy Gray said in an e-mail Saturday.

"The bill also opens up our lands to exploration that we feel could have long-lasting, detrimental and irreparable damage," he wrote "especially with regards to hydraulic fracturing and or other types of well stimulation."

"Why this would even be considered, or how it could be construed as a favourable initiative, is beyond me," he said.

Stronger Opposition The fact that the debate was rushed through the National Assembly has set the stage for stronger opposition from citizens, Greenpeace's Bonin said.

"Having the Quebec government sign onto the Paris agreement, claiming they are leaders in climate change, but not wanting to have proper debate on fossil-fuel development in the province is a clear demonstration that it's not a climate change leader," he said.

The Quebec energy bill was approved just hours after Canada reached agreement on a national climate deal to establish a minimum carbon price, with Manitoba and Saskatchewan the lone hold-out provinces.

Environmentalists have criticized Prime Minister Justin Trudeau for falling short on his green pledges by allowing continued energy sector development, most notably with his approval of Kinder Morgan Inc.'s Trans Mountain pipeline last month. Trudeau has said his government aims to balance economic growth with tougher environmental standards.

Danielle Bochove and Robert Tuttle, Bloomberg News

Story: Globe & Mail