A small oil company with hopes of drilling for oil in Quebec’s Gaspé Peninsula is set to demand compensation after the province announced a fossil fuel extraction ban in its Speech from the Throne earlier this week.
In a speech that focused largely on pandemic recovery and health care decentralization, Premier François Legault cast the fossil fuel ban as a way to meets the province’s greenhouse gas reduction commitments while boosting its hydropower resources.
Quebec must “capitalize on our strengths by fundamentally transforming our economy,” Legault said. “From now on, it is on electricity, on renewable energies, that we must focus.”
The resulting power exports will “build up significant wealth for future generations, and it also allows us to attract business investment,” he added, since companies looking for emissions-free electricity will find an “incomparable welcome” in Quebec.
Climate groups in the province were quick to heap accolades on Legault’s announcement, which landed less than two weeks before this year’s United Nations climate conference, COP 26, gets under way in Glasgow.
“Quebec will become one of the first North American states to close the door once and for all to fossil energy exploitation,” Nature Québec Director-General Alice-Anne Simard told Le Devoir.
“This is excellent news,” agreed Greenpeace Canada Climate and Energy Campaigner Patrick Bonin. “The government has made a wise decision and should not compensate oil and gas companies, which are largely responsible for the current climate crisis.”
But compensation is exactly what one small Quebec fossil producer, Ressources Utica, was after in the aftermath of the provincial Throne Speech. The government’s decision “represents an historic error that will cost Quebecers dearly,” the company said in a release.
“This decision is all the more ironic in that the Premier is offering Quebecers an economic nationalism that encourages the production and purchase in Quebec of the goods we consume,” said company president Mario Lévesque. “I agree with Premier Legault on this subject: producing in Quebec is a win for Quebec. This is also true for oil and natural gas.”
Lévesque said Utica now expects Legault “to act fairly and to quickly compensate, at fair market value, the expropriated companies that held rights in Quebec. Expropriation without fair compensation would have devastating effects on Quebec’s reputation with international investors whose capital is essential to Quebec’s economic development. It would also be contrary to Quebec legislation, which presupposes a compensation at a minimum of fair market value in the event of expropriation.”
Utica had already filed a lawsuit against the province last month, claiming the province had “acted illegally and with political motives” with a new regulation that set a minimum distance of one kilometre between oil and gas drilling operations and water sources, the Globe and Mail wrote at the time.
‘Fair market value’ may not be the windfall that Utica CEO, Lesvesque, anticipates. As Canada makes the transition away from fossil fuels (as we must), what he views as an asset today may quickly become a stranded asset. If negotiations take a few years as they often do, the fair market value will very likely drastically diminish.
Really good point, Barrie. Say, if the asset is actually deemed to have a *negative* value by the time negotiations conclude, do you suppose Utica will be very interested in doing the math? Asking for a friend… 🙂