For a new Premier who wants to make Quebec “the best place to invest,” François Legault is off to a shaky start.
Mr. Legault’s Coalition Avenir Québec last month broke a nearly 50-year-old Liberal-Parti Québécois duopoly in provincial politics by winning a majority government, in large part by promising to focus on improving Quebec’s economic competitiveness. But except for vowing to match Ontario’s proposed cut to its corporate-tax rate, Mr. Legault has so far said a lot more to discourage potential investors than he’s done to make his province a magnet for new business.
Last week, Mr. Legault all but invited Quebeckers to boycott Sico paint after the formerly Quebec-owned brand announced plans to shut its remaining operations in the province. That he did so while on a visit to Boston, where he was drumming up support for Hydro-Québec’s bid to sell more electricity to Massachusetts, only served to buttress the argument of U.S. renewable-power producers that are urging the state to buy American energy instead.
Back in Quebec, Mr. Legault poured cold water on the hopes of Calgary-based Questerre Energy that a CAQ government would keep a more open mind than its predecessors regarding shale-gas development. “We are open to looking at [oil and gas] projects in taking into account their environmental impact, but we aren’t open to shale-gas projects in Quebec,” Mr. Legault told Le Devoir, appearing to slam a door that the CAQ had previously kept open.
Indeed, unlike the Liberals and PQ, the CAQ’s election platform promised to favour the “responsible development” of the province’s natural resources, including oil and gas. It vowed to ban hydraulic fracturing, the process used to unleash shale gas, only in areas that are “densely-populated” or where fracking lacks “social licence.” That at least left the door ajar to shale gas projects in rural areas of Quebec that would welcome the much-needed development.
Mr. Legault’s sudden about-face followed the mobilization of Quebec environmentalists in the wake of the CAQ’s election. An estimated 50,000 people turned out for a Nov. 10 demonstration in Montreal in support of the so-called Pact for the Transition that, among other measures, calls on the new government to “cease any fossil fuel exploration and exploitation in Quebec.” More than 212,000 Quebeckers have signed the “pact” since it was released on Nov. 7.
Questerre, however, is nothing if not determined. The company is seeking a court injunction to invalidate regulations adopted in August by the previous Liberal government that prohibit fracking in the St. Lawrence River Valley. The election-eve move by the Liberals turned what had been a temporary moratorium on fracking, pending more studies, into a permanent ban.
In a motion filed this month in Quebec Superior Court, Questerre argues that the Liberal regulations banning fracking constitute a “disguised expropriation” of companies such as itself that hold exploration permits covering the St. Lawrence Valley. These companies have invested about $160-million in natural gas exploration and development projects in Quebec in recent years. But they are not the first oil and gas producers to get burned by the Quebec government.
In 2017, former Liberal premier Philippe Couillard ended an initiative launched by a short-lived PQ government in 2014 to pursue oil and gas exploration on Anticosti Island, through a state-controlled energy company in partnership with private companies. Ending the joint venture forced the government to dole out $62-million to its private-sector partners in the initiative. Halifax-based Corridor Resources alone got $19.5-million.
Questerre chief executive officer Michael Binnion denies his company is suing merely to seek compensation from the government, as some Quebec environmentalists have charged. He says Quebec’s gas reserves present an economic opportunity the province can’t afford to ignore. Besides, he adds, "there would be nothing more disappointing to our shareholders than having to take compensation rather than being able to develop a world-class gas discovery.”
Mr. Binnion insists Quebec could reduce its reliance on imported natural gas – much of it produced through fracking in Western Canada – by developing its own resources. A 2018 KPMG study for Questerre estimated tax and royalty revenues of $400-million during the first six years of natural-gas development and $800-million annually during the following decade. The study pegged recoverable natural gas in the St. Lawrence Valley, which is part of the Utica Shale, at between 13 trillion cubic feet and 36 trillion cubic feet worth between $68-billion and $186-billion – most of which could be exported.
“It is a pragmatic solution using world leading technologies to solve the Quebec hydrocarbon import problem,” Mr. Binnion insisted. “Unfortunately, it is not supported by environmentalists who are ideologically 100-per-cent against hydrocarbons.”
So far Mr. Legault, who has said he aims to wean Quebec off federal equalization payments, seems to be siding with the ideologues. So much for making his province the best place to invest.