Saturday, March 26, 2011

ENERGY: Where are the Maritimes in the St. Lawrence Boundary contest. Or will 9 Billion $$ go to Quebec?

Quebec strikes offshore oil exploration deal

Gulf of St. Lawrence development; Province stands to gain $9B in royalties from Old Harry formation, minister says


QUEBEC - Offshore oil and gas development in Quebec's area of the Gulf of St. Lawrence could begin in 2014, Christian Paradis, federal minister of natural resources, said Thursday after signing an agreement that gives Quebec 100 per cent of the income from its undersea hydrocarbons.

The Quebec-Canada agreement, signed by Paradis, Quebec's Natural Resources Minister Nathalie Normandeau and its Intergovernmental Affairs Minister Pierre Moreau, relies on the 1964 undersea boundary between Quebec and Newfoundland and Labrador.

Normandeau said Quebec stands to gain $9 billion in royalties under the agreement from the Old Harry formation in the gulf, giving Quebec more energy independence.

Old Harry may contain up to 2 billion barrels of oil, or 5 trillion cubic feet of natural gas.
"Never have the planets been so well aligned," Normandeau said.

But a spokesperson for Newfoundland's Natural Resources Department, who requested anonymity, signalled a hitch in what Quebec Premier Jean Charest called a "historic" agreement.

"There is no undersea border between Newfoundland and Labrador and Quebec," the spokesperson said, adding, "We certainly have an interest in seeing the boundary resolved to remove the uncertainty for developers."

"This is the starting point," Paradis said. "But Newfoundland can contest it if they want."
The Newfoundland spokesperson pointed out that a 2002 maritime boundary tribunal, created under similar offshore agreements between the federal government and Nova Scotia in 1984 and Newfoundland in 1986, concluded that the 1964 line had no basis in law.

The 1964 undersea boundary was agreed to by the four Atlantic provinces and Quebec, but was never made official, as required by Section 3 of the British North America Act of 1871.

Quebec stands by the 1964 line, which runs through the 29-kilometre-long Old Harry formation in the gulf, and won over Paradis, who said two days earlier that the agreement was "very complex."

Paradis denied the imminence of a federal election had anything to do with the sudden resolution of this file.

Earlier, Charest said he was very happy with the agreement, adding it would "play out over a few generations."

"It's more than just a question of day-to-day events. It's not an exaggeration to say that this is a historic agreement."

In the Quebec National Assembly, Charest told Parti Québécois leader Pauline Marois the agreement contains an "arbitration clause" to deal with the boundary issue.

Marois replied if the boundary issue is not settled, the agreement, meant to allow drilling in Quebec's portion of the Old Harry formation, "does not include Old Harry."

In 2004, then-Quebec environment minister Thomas Mulcair imposed a moratorium on seismic testing and drilling in Quebec's portion of the gulf until 2012. Charest indicated the moratorium would run its course.

"The strategic environmental assessment will remain in place," the premier said.
It took 18 years from the signing of the offshore agreement with Nova Scotia to determine by arbitration the undersea border between Newfoundland and Nova Scotia. Paradis said the dispute-settlement process in this agreement calls for negotiation and mediation, with binding arbitration as a last resort.

Similar to two previous offshore agreements with Newfoundland and Nova Scotia, the Quebec accord provides for joint Quebec-Canada management of the resource.

The federal government and Quebec must adopt over the next 18 months "mirror legislation," essentially the same law passed by Parliament and the National Assembly, setting out that Quebec labour and workplace laws apply, while there is joint jurisdiction over the environment.

The Supreme Court of Canada has ruled that offshore resources belong to the federal government but all three accords give the provinces 100 per cent of the benefits.

© Copyright (c) The Montreal Gazette
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Map Credit: David Suzuki Foundation
Reference:  The Maritime Boundaries of Québec -
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