The new oil sheik of Quebec

MONTREAL — The Globe and Mail

Natural Resources Minister Martine Ouellet is excited about the province’s crude reserves. (Jacques Boissinot/CP)

To say that I am a football fan is an overstatement as big as New Orleans’ Superdome, though I’ve always had a soft spot for the San Francisco 49ers. But I gave up on “my team” and on the Super Bowl when the Baltimore Ravens’ lead reached 22 points, and switched to Tout le monde en parle, the talk show that normally rules Quebec airwaves on Sundays.

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So I missed the power outage and the 49ers’ spectacular comeback. But I did see Quebec’s Natural Resource Minister, Martine Ouellet, throw a couple of Hail Marys.

This may come as a surprise to those who have heard of Quebeckers’ widespread disdain for the oil sands, but the province of cheap, abundant hydroelectricity has some big oil ambitions of its own.

On the Radio-Canada talk show, Ms. Ouellet talked about the revenues that could be extracted from Quebec’s oil reserves. The Gaspé region could generate $35-billion, she said. The Anticosti Island? Between $200-billion and $300-billion. The Old Harry offshore deposit in the Gulf of St.-Lawrence? A whopping $500-billion! (A press officer corrected her Tuesday and said she had meant to say $50-billion, but still.)

The show’s court jester, Dany Turcotte, was flabbergasted at those huge figures, which conjured up images of oil gushing from a swamp like in the opening of the old Beverly Hillbillies TV series. Until now, the reality has been very different. Quebec’s oil is hard to extract. In the past 10 years, junior resource companies poking the land have only succeeded in pumping a couple of hundred of very pricey barrels from exploration wells.

“You have got to be careful before asserting that we are going to be as rich as Alberta,” says Jean-Yves Lavoie, chief executive officer of Junex, a Quebec exploration company. There is still a lot of work to be done.

There is only one deposit close to being commercially viable, according to its promoter, Pétrolia Inc., and that is the Haldimand project near the town of Gaspé, where exploratory work is now halted.

But Premier Pauline Marois is determined to see Quebec reduce its reliance on imported oil. And for a cash-strapped province that is cutting expenses in all departments to balance its books, extra oil royalties would ease some fiscal pain.

Even Ms. Ouellet, a former water conservationist who denounced “fracking” as unsafe in her first days in a limousine, is officially riding along, although she advocates moving with extreme caution. Fracking is a technique that injects a chemically-laced solutions underground to fracture rock formations and release oil and gas.

But Quebec’s three known oil regions are facing daunting obstacles. The Old Harry offshore deposit has become another battleground between Quebec and Newfoundland, with both provinces claiming jurisdiction over its riches. While there have been some seismic surveys on the Newfoundland side, there has been no exploratory work on the Quebec side of the disputed border, as the government awaits an environmental assessment of the fragile ecosystem.

Since no drilling has been done, no one knows what Old Harry truly holds. “Chances are it’s natural gas, but when politicians take a hold of Old Harry, it turns into oil,” says Mr. Lavoie, a mining engineer.

The Anticosti island, also in the Gulf, holds the best promise, according to Mr. Lavoie, whose exploration licences border the south of the island.

Pétrolia concurs. Its licences and those of its partner Corridor Resources from Halifax cover the rest of the island; they hold 30.9 billion barrels of oil, according to an assessment by Sproule Associates Ltd. But most of this oil would only be accessible by fracking, not by conventional extraction methods, according to Pétrolia president and chairman André Proulx. And there is a de facto moratorium on fracking until Quebec completes its environmental review on the controversial technique.

In the meantime, the former shale gas opponents are revving up the campaign to protect the sparsely populated wildlife sanctuary against oil production. This places the Marois government in an untenable position, as it opposed fracking for gas while apparently favouring it for the oil industry.

Which leaves Gaspésie. There, Pétrolia temporarily halted its exploratory work on the Haldimand project because of the Gaspé mayor’s opposition on environmental grounds. Mr. Proulx believes the fear of ground water contamination is rubbish. “What they are truly trying to do is to get more municipal powers and a share of the mining royalties,” says Mr. Proulx, who hopes the province will settle the issue.

Despite this setback, Pétrolia’s president remains a believer. “In theory, in five or six years time, we could supply half of all the oil Quebec consumes,” Mr. Proulx asserts. Only a vocal minority opposes oil production, this promoter says.

Yet the Marois government will have to do a hell of a selling job. Because if recent history proves anything, that minority is what freezes energy development in Quebec – be it winter or summer.

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