Quebec runs a chronic trade deficit (2013: C$30 billion).
Lower oil prices coupled with higher exports to a resurgent US
should narrow the deficit but it will remain high until certain
structural issues are addressed. Oil is Quebec's number one
import. Quebec's oil consumption is rising and it is expected
to do so for some time to come.
Quebec's two refineries meet nearly all of Quebec's
needs for refined products. They even export some products.
Quebec's refineries represent approximately 20% of Canada's
Junex Inc. and Petrolia Inc., two
Quebec-based juniors listed on the Toronto Venture Exchange (TSV),
recently issued separate press releases indicating that their test
wells located on the Gaspé peninsula had daily oil flows of
316 and 340 barrels, respectively.
Other juniors, including privately-held MundiRegina Ressources,
have acreage with identical geology and expect similar results.
The oil companies report that, unlike Anticosti, the oil in
Gaspésie is conventional and does not require fracking,
merely horizontal drilling.
Oil flows at these volumes mean that commercial development is
feasible. Petrolia Inc. would like to commence
commercial production in 2016 with Junex Inc. to follow later that
Behind closed doors the Quebec government is supportive of
conventional oil in large part because Quebec's finances are
poor and something must be done about Quebec's trade
deficit. The two main opposition parties are likewise
The Quebec government is mindful, however, to avoid the mistakes
made a few years ago in connection with shale gas. In 2010
industry assumed that Quebec was ready for shale gas and attempted,
without thinking to secure the public's support, to develop
Quebec's condiderable shale gas reserves. The result is
that after five years there is no shale gas industry, poll after
poll show strong opposition to fracking and even today's modest
request by the shale gas industry for the right to drill ONE
demonstration well is falling, at least for now, on deaf ears .
The current government has stated that hydrocarbon development
can proceed in Quebec if (i) it can be done in an environmentally
sound manner, and (ii) there is "social
In order to maximize the likelihood of hydrocarbon projects
reaching social acceptability, the government is methodically and
deliberately rolling out the following framework:
Water: On August 14, 2014 Quebec adopted regulations
confirming its jurisdiction over drilling within municipalities and
providing for clear rules regarding drilling close to houses and
wells. These regulations satisfied the town of Gaspé
which subsequently ended its lawsuit against Petrolia
Strategic Environmental Study: In 2014
Government tasked an interministerial committee with carrying out a
study on the whole of
Quebec's oil and gas sector. The study will examine,
among other things, how Quebec's hydrocarbon resources can be
exploited economically and safely. The process will include public
consultations. The final report is due at the end of
New Hydrocarbon Law: Hydrocarbons are
currently covered as an afterthought in the Mining Act. This
was fine when hydrocarbons in Quebec were viewed as a pipe dream.
Now that they are a reality the Minister of Natural Resources,
Pierre Arcand, has promised a special purpose statute for early
2016. The Strategic Environmental Study will help with the drafting
and adoption of the new hydrocarbon law.
Social Acceptability: In November 2014, the
Minister of Natural Ressources announced that its Ministry would
study what conditions foster the social
acceptability of projects. The idea is for the
Ministry to come up during the Fall of 2015 with a set of
guidelines and best practices that can be followed by all
stakeholders. Two things at this time are already clear: social
acceptability does not imply unanimity, and local communities and
First Nations must directly benefit from projects. Quebec intends
to provide for a framework for direct payments by projects to local
communities and First Nations.
All this means that while the outlook for conventional oil in
Quebec looks positive, industry is going to have to continue being
patient for a little while longer.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).