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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., on Feb. 14, 2012. Fracking blasts pressurized water and chemicals into underlying rocks to release trapped natural gas and oil. (JEFF McINTOSH FOR THE GLOBE AND MAIL)
A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., on Feb. 14, 2012. Fracking blasts pressurized water and chemicals into underlying rocks to release trapped natural gas and oil. (JEFF McINTOSH FOR THE GLOBE AND MAIL)

Energy

Quebec signals shift in support for oil and gas development Add to ...

The Parti Quebecois government is embracing an oil economy, hoping to usher in an era of petro-riches for the province by drilling in the environmentally sensitive Gulf of St. Lawrence region.

With an election call expected in coming weeks, Premier Pauline Marois announced Thursday the government would launch joint ventures and provide up to $115-million to help finance $190-million in exploratory work on Anticosti Island, which is believed to sit on top of promising quantities of oil and gas.

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“For my government, promoting the energy independence of Quebec is a priority,” Ms. Marois said, as executives from the small exploration companies that will undertake the exploration work looked on.

The PQ says the province could reap $45-billion in royalties, profits and taxes over the next 30 years if exploration is successful – a number that is highly speculative given the lack of information on whether oil and gas can be commercially developed. And energy independence would require the discovery of a massive reservoir of oil.

Successful development of fossil fuels could change the nature of the energy and environment debate in a province that runs on hydroelectricity and has been in the forefront of the country’s effort to reduce greenhouse-gas emissions.

Quebec has been wary about exploiting its unproven oil and natural gas resources, due to concerns about offshore drilling in the St. Lawrence, and to public fears about hydraulic fracturing in onshore areas where shale gas is thought to exist in commercial quantities.

The PQ government is in the final stages of a strategic environmental review of its offshore to determine whether to allow drilling in the Gulf of St. Lawrence, where a Nova Scotia company, Corridor Resources Inc., is looking to develop a prospect called Old Harry, which straddles the Quebec and Newfoundland boundary.

Quebec has also imposed a moratorium on hydraulic fracturing – which blasts chemically laced water to break rock containing oil or gas – in the St. Lawrence lowlands, where companies are eager to exploit known shale gas deposits.

A spokeswoman for Calgary-based Canadian Association of Petroleum Producers welcomed Quebec’s foray into the oil business.

“Eastern Canada currently imports about 800,000 barrels a day, and Quebec oil production would help offset those current oil imports, create Quebec jobs and generate government revenue,” said Janet Annesley, CAPP’s vice-president of communications. “Hydraulic fracturing technology has opened up vast new potential resources and has added significant oil supplies in Saskatchewan and Alberta, and could do likewise in Quebec. Moving ahead to evaluate Quebec's oil resource is an important first step.”

But the province is a long way from declaring an oil bonanza.

On Anticosti Island, the state-owner, Ressources Quebec, will partner with two separate groups that currently hold leases to determine whether they have commercial quantities of oil or gas.

It will join with Corridor Resources, Petrolia Inc. and French group Maurel & Prom, and provide up to $57-million in funds for the $100-million program, the balance coming from Morel & Prom. Ressources Québec will work with Junex Inc. and another company whose identity is still unknown in a $90-million exploration program.

Some believe that Anticosti’s potential has been largely overblown. Marc Durand, a retired University du Québec à Montréal geology professor who analyzed deposits similar to Anticosti, says the island’s promoters have exaggerated the oil production potential by a wide margin.

Corridor Resources chief executive Phillip Knoll said the entire island lays on top of a large deposit known as the Utica Shale, which is known to contain large quantities of liquid hydrocarbons – as opposed to dry natural gas.

“You never know what is there until you spend a fair modicum of money to determine what’s there,” Mr. Knoll said in a phone interview. “This signals to me that Quebec recognizes that it would be important for them and good for Quebeckers to develop hydrocarbon resources that could help economic activity.”

While Quebec business leaders applauded the move, environmental groups denounced it. They accused the PQ government of distancing itself from its promise to reduce the province’s dependency on fossil fuels. They were also concerned that fracking methods used to explore on Anticosti Island may prove disastrous for the environment.

“We are opposed to hydraulic fracking of gas and oil especially in the extremely fragile region of the Gulf of Saint-Lawrence,” said André Bélisle, president of the Association québécoise de lutte contre la pollution atmosphérique.

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