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Quebec opens the door to oil exploration

Quebec opens the door to oil exploration

The Quebec Liberals passed Bill 106 last week, a new energy policy bill that aims to reduce greenhouse gas emissions to 37.5% by 2030. The bill creates a new provincial agency, Energy Transition Quebec, which would oversee the government's clean energy plan.

Buried deep in the text (Chapter III, Division III on page 31 to be more exact) is the creation of a new Petroleum Resources Act, which outlines a plan for licensing, production, storage and distribution of oil resources in the province. Royalties collected from oil production will be put into an Energy Transition Fund.

The purpose of that Act is to govern the development of petroleum resources while ensuring the safety of persons and property, environmental protection, and optimal recovery of the resource, in compliance with the greenhouse gas emission reduction targets set by the Government. To that end, it establishes a licence and authorization system applicable to exploration for and the production and storage of petroleum. Under the Act, the holder of a drilling authorization must produce a permanent well closure and site restoration plan and furnish a guarantee covering the anticipated cost of completing the work required under the plan. The Act also requires petroleum production or storage projects and junction pipeline projects to receive a favourable decision from the Régie de l’Énergie before being authorized by the Minister. The Energy Transition Fund is created, into which petroleum royalties, among other sums, are to be paid.

Opposition parties debated Bill 106 for several hours with Minister of Energy and Natural Resources Pierre Arcand. The bill passed by 62-to-38 votes at 4:40 am after Premier Phillippe Couillard invoked the "closure" rule to cut-off debate and force the bill to a vote.

Although the Quebec government has been a vocal opponent of fossil fuels and pipelines, it has at times sent out mixed messages.

At last month's UN Climate Change Conference, Arcand suggested the province may be open to fracking someday if the technology improves. However, Premier Couillard said fracking would be at odds with plans to combat climate change and "socially unacceptable" in densely populated area of the province.

The Quebec government is partnered with several oil juniors such as Pétrolia and Junex to explore for oil from Anticosti Island in the Gulf of St. Lawrence, estimated to hold about 46 million barrels of crude within the Macasty Formation. The exploration program was signed by the Parti Quebecois (PQ) government in 2014, under former leader Pauline Marois in a bid to wean the province off "foreign" oil (it's unclear if that includes Alberta). The Liberals criticized the plan after they took office in 2014, although Couillard long maintained he had no choice but to abide by the former government's contracts. The current PQ opposition party now says they're opposed to oil & gas development, calling Bill 106 "a bill that sets Quebec back."

Last week, the Fraser Institute rated Quebec the second-least investor-friendly jurisdiction in the world for oil and gas development, only slightly ahead of Venezuela.

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