Expropriation of Oil and Gas Companies: Open Letter to Premier Legault

QUÉBEC, Oct. 14, 2021 /CNW/ -

Mr. Premier,

I take the liberty of writing this letter to you from one businessman to another.

Utica Resources, the company I founded, is today one of the largest holders of hydrocarbon rights in Quebec.

As you know, the Hydrocarbons Act adopted in 2016 had the clear objective of creating a legal framework that would lead to the production of oil and natural gas discovered in large quantities on our territory, paving the way for the development of this strategic industry for Quebecers. Over time, this law would allow us to produce at home the hydrocarbon resources that we import each year at the cost of several billion dollars.

My team and I enthusiastically welcomed your election as Premier of Quebec in October 2018. We were confident that you would support our projects which aim at creating collective wealth, securing energy supplies, and reducing of GHGs emissions, since local consumption remains a better environmental option than import. Your public statements spread over several years aligned perfectly with our views on this strategic issue for Quebec.

We followed rigorously the Quebec regulations and filed a drilling permit application for the Galt project, in the Gaspé area, in which the government of Quebec (through Resources Quebec) is a partner. However, although the MERN specialists who carried out an in-depth analysis of the file unanimously recommended issuing the drilling authorization, including the associate deputy minister who said our file could not be better presented and had no doubts about its quality, the drilling authorization was rejected by Minister Julien, which unfortunately forced us to seek redress from the Courts.

The refusal of the Minister of Natural Resources of Quebec to issue the drilling authorization does not comply with the Hydrocarbons Act and was not supported by an in-depth analysis or a detailed understanding of the file, which he admits not to have read. This is hardly the behaviour any serious businessperson would expect from a senior government official, particularly one whose responsibility is to manage the sensible development of the natural resources of Quebec for the benefit of us all – not to stop the development of Quebec's resources to appease a small but vocal minority.  The government's behavior is even more difficult to understand since Resources Quebec and the MERN had previously demanded Utica to proceed with the Galt Project and a member of your own cabinet then confirmed to us that your government supported this type of project.

In recent weeks, the media reported that your government is about to expropriate companies that hold rights for the exploration and production of hydrocarbons in Quebec. Meanwhile, an unprecedented energy crisis is unfolding in Europe and is also affecting Quebec where we are experiencing a dramatic rise in natural gas prices.  This crisis could well continue, which will result in significantly higher costs for a multitude of Quebec industries that consume large amounts of natural gas, as well as hundreds of thousands of residential and commercial consumers. We do not understand how renouncing the production of our own natural gas reserves, an essential resource for the energy transition, could be a good decision for Quebec without running the risk of replicating the European crisis here. As you know, Quebec has even fewer alternatives than Europe to resolve such a crisis as we are entirely dependent on the United States and Western Canada for our gas supply.

In good faith and encouraged by the Government of Quebec, the industry has invested hundreds of millions of dollars to find sufficient resources to guarantee energy independence for the province, resources which are now worth hundreds of billions of dollars. 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. How could it be otherwise? How could any citizen whose business or house has been expropriated not be offered at least fair market value compensation by the government?

Either way, now is the time to act. After so many years of sending contradictory signals, the Government of Quebec must take its responsibilities and decide once and for all. Either it works in good faith with the industry to manage the energy transition by developing on its territory the important resources of oil and natural gas in an environmentally responsible way, reaping the benefits from both stable energy prices and more jobs, or it expropriates the oil and gas industry by offering fair and equitable compensation.

This letter is all the more difficult for me to write as I have been a proud supporter of your party whose main vision, the collective enrichment of Quebec, corresponded perfectly to my view as well as that of the majority of your supporters.

In closing, I believe that it is urgent for a meeting to be organized to discuss this very important question for the future of Quebec.

Best regards,
Mario Lévesque, President and CEO

SOURCE Ressources Utica

Utica Resources, Mr. Mario Lévesque, President and Chief Executive Officer, [email protected]