Quebec has a well-deserved reputation for excellence in
hydro-electricity. Less well known is its potential as an oil
producer. The province is home to at least three likely production
zones: Gaspe Peninsula, Gulf of Saint Lawrence and Anticosti
Island. Aside from the basic question of whether there is
sufficient recoverable oil, there are five other conditions that
must be satisfied before Quebec can become an oil producer.
Below is a look at each condition, and its current status.
1. Oil. It has long been known that there is
some oil on the Gaspe Peninsula; but it is in the Gulf of Saint
Lawrence and on Anticosti Island that very large quantities are
thought to be recoverable thanks to newer techniques. Further
exploration work is required in all three zones to confirm
reserves. Status: More work required.
2. Political Will. There is considerable
popular opposition in Quebec to shale gas. The attitude is
different with oil, in large part because nearly everyone is a
consumer. Electricity and oil currently vie for first place in
Quebec's energy mix, but natural gas is a distant third. Quebec
already has oil refineries in Montreal and near Quebec City. Energy
independence is a vote magnet: it creates jobs and helps
Quebec's balance of payment. Status: Ready.
3. Adequate Laws. Oil is currently a
legislative afterthought. The sudden interest in 2008-2009 in
Quebec's shale gas brought into sharp relief the need for an
adequate legal, tax and institutional framework for hydrocarbons.
The Quebec government has promised legislation for the end of 2013.
Status: In progress.
4. Environmental Approvals. Gaspe Peninsula:
drilling on Quebec's only oil well was stopped in January 2013
by the town of Gaspe due to water quality concerns. The matter is
currently before the courts, even though the Quebec government has
promised to enact appropriate standards and define more precisely
what falls within municipal jurisdiction. Status: In
Gulf of Saint-Lawrence: There is a moratorium on offshore
drilling in Quebec waters. Quebec has tasked an outside consultant
to make a preliminary environmental study. It is expected to be
completed mid-year. The government will then most probably task
Quebec's independent environmental review agency to examine the
matter in greater detail. Status: More work required.
Anticosti Island: Quebec currently views Anticosti as the most
promising opportunity. Over the objections of NGOs, Quebec is
allowing exploration work to continue this summer. The
government's position is that an environmental impact
assessment need only be carried out once there is clarity on oil
reserves. Status: More work required.
5. Oil Prices; Alberta Oil: Anticosti and Gulf
of Saint Lawrence oil will be expensive. Oil prices will have to be
sufficiently high to warrant the necessary investments. Also, it is
not clear what impact, if any, Alberta oil would have on Quebec
production. TransCanada and Enbridge each have plans to pipe oil to
Quebec and early indications are that the Quebec government is
sympathetic. Connecting Alberta oil to Quebec would materially
reduce costs for Quebec's refineries and create oil export
activities. The fact that tankers already ply the Saint-Lawrence
importing oil should also lessen environmental resistance, since
this will not be a new activity. Status: More work
6. Third Party Agreements: Agreements may be
required with (i) Newfoundland regarding the Old Harry oil field
between Anticosti and Newfoundland, and (ii) municipalities and
First Nations regarding the Gaspe Peninsula and Anticosti Island.
As detailed in a
previous post about the failure of the Great Whale project, a
conscious effort on the part of government to consult and involve
First Nations is the preferred development route. Status: More
All of the above conditions can be met, but overall there is a
fair bit of work to be done before Quebec may become an oil
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The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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