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    Quebec faces C$18bn suit over oil, gas ban

Summary

Quebec oil and gas company says legislation violates Charter of Rights and Freedoms.

by: Dale Lunan

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Quebec faces C$18bn suit over oil, gas ban

Utica Resources said June 22 it had filed a lawsuit in Quebec’s Superior Court seeking nullification of Bill 21, the provincial law banning oil and gas production in the province, or failing that, compensation in the amount of C$18bn (US$14bn).

Citing Quebec’s Charter of Rights and Freedoms, Utica is arguing that Bill 21 constitutes an attack on Utica’s right to “the peaceful enjoyment and free disposition of its property.” 

Further, Utica says the expropriation under Bill 21 violates that section of the Civil Code of Quebec which says that “no owner may be compelled to transfer his ownership except by expropriation according to law for public utility and in return for a just and prior indemnity.”

“We will defend our rights so that this disguised expropriation, the public utility of which does not exist, is compensated at the fair value of our properties,” Utica CEO Mario Levesque said. “A leading independent expert has concluded that Utica’s properties would generate $67bn in future profits (net value of recoverable resources in place), the equivalent of $18bn in net present value using the discount rate of the court.”

Levesque said previous Quebec administrations had invited the exploration and production of the province’s oil and gas resources, which include significant reserves of shale gas in the Utica formation, the northern edge in Canada of the Marcellus shale, the largest shale gas resource in the US.

“We acted in good faith, found local and foreign investors and respected all of Quebec’s regulatory requirements,” he said. “Then from one day to the next, the government changed its mind for political reasons and effectively expropriated our properties without proper prior compensation.”

Bill 21, Levesque added, “is completely irresponsible and without logic” and goes against the wishes of a “significant majority” of Quebec residents. “It is bad for Quebec, our European allies who desperately need our gas and even for the environment.”

Utica’s action is the second legal challenge against Bill 21, which Quebec premier Francois Legault introduced in February and which the National Assembly passed in April. In May, Questerre Energy, which holds a Utica shale gas resource in Quebec’s St Lawrence Lowlands estimated at 6 trillion ft3, filed a statement of claim against the legislation, which has not yet been enacted, pending finalisation of associated regulations.