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    Quebec moves to expropriate oil and gas assets


The legislation, Utica Resources says, is "unfair and inequitable".

by: Dale Lunan

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Quebec moves to expropriate oil and gas assets

The government of the Canadian province of Quebec tabled legislation on February 2 that will effectively end the oil and gas industry in the province, following through on promises made last year by premier Francois Legault.

Bill 21, An Act mainly to end petroleum exploration and production and the public financing of those activities, was tabled in Quebec’s National Assembly by Jonatan Julien, the province’s minister of energy and natural resources.


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It prohibits petroleum exploration anywhere in the province and revokes all exploration and production licences that have been issued under the Petroleum Resources Act, which is itself amended.

Holders of those licences must permanently close all wells and restore their sites, and will be compensated for about 75% of the expenses associated with that work.

But other compensation will only be calculated based on work performed on the licences between October 2015 and October 2021, which Mario Levesque, CEO of Utica Resources, which holds exploration rights in Quebec, says falls short of the province’s legislation covering expropriations.

“Quebec's expropriation laws are clear that fair value must be paid in the event of expropriation,” he said in a statement released February 3. “The bill, as tabled, is unfair and inequitable for companies that have invested in good faith and in compliance with all Quebec laws in order to discover the immense hydrocarbon resources in our subsoil.”

The government’s “bad faith” is made more evident, Levesque said, by the strict time frame for compensation, especially since the government is aware that the vast majority of oil and gas exploration work in the province was carried out between 2006 and 2014.

“This is a serious lack of respect that will scare away investors who, before deploying capital in Quebec, will rightly wonder what will be the next industry to be expropriated in such a brutal manner.”

Michael Binnion, CEO of Questerre Resources, which has a discovered contingent shale gas resource in Quebec of nearly 6 trillion ft3, says Bill 21 is, in effect, a confiscation of a proven discovery.

“While the last government paid value for cancelling permits on Anticosti Island, this bill contemplates far less than even a refund of costs to discover one of North America’s largest gas fields,” he told NGW. “Our view is the bill will not withstand legal challenge.”

And passing the legislation – intended as the province’s key response to climate change concerns – will actually lock in higher emissions in Quebec, which will still depend on imported oil and gas since Bill 21 doesn’t prohibit the consumption of oil and gas.

“There are no practical replacements for imported oil and gas in Quebec, though the Government speaks aspirationally about some ideas around electrification that have not been succeeding in Europe,” he said.

Recent polling results in Quebec, Questerre said February 2, show that more than 66% of decided Quebecers support local natural gas development, with that number increasing to 74% if companies can produce natural gas with technologies that eliminate emissions.