Quebec will ask the federal government for 100 per cent of the resource royalties from oil and natural gas developments in the Gulf of St. Lawrence, which could initially bring the province as much as $8.7 billion.
“We won’t settle for less,” Natural Resources Minister Nathalie Normandeau said Wednesday, emerging from a meeting of the Liberal cabinet with a mandate to negotiate a royalty agreement with Ottawa.
Several potential drilling sites have been identified in Quebec’s portion of the gulf, but Normandeau acknowledged the province was pushed to act by plans to start drilling on the Newfoundland and Labrador side of the disputed underwater boundary between the two provinces, at a place called Old Harry.
The province also wants Ottawa to recognize the 1964 boundary line in the gulf, she said. The line was agreed to at the time by Quebec Premier Jean Lesage and all four Atlantic premiers, including Newfoundland’s Joey Smallwood. But the boundary accord was never submitted to the federal government for approval, as required by the constitution, and Newfoundland no longer considers the agreement valid.
Normandeau also wants Ottawa to recognize 10 drilling permits Quebec has already issued in the gulf.
Corridor Resources Inc. of Halifax wanted to drill on Quebec’s side of the line, but cannot do so in the absence of a royalty agreement between Quebec and Ottawa. So Corridor will drill instead on the Newfoundland side, where it has drilling permits that expire in 2013.
While Newfoundland says it does not recognize the 1964 line, it does not issue drilling permits on the side claimed by Quebec.
Geologists estimate there may be about 2 billion barrels of oil in Quebec’s part of Old Harry. But the deposit could also be natural gas, or perhaps a salt dome. If it is natural gas, the royalties would total a more modest $1.5 billion, Normandeau said.
The federal government, backed by a Supreme Court of Canada ruling, claims full ownership of Canada’s offshore resources. Quebec also claims full ownership of undersea gas and oil deposits.
Normandeau said reopening the constitution to resolve the dispute would be a dead end.
So, like Newfoundland and Nova Scotia, Quebec will seek an administrative agreement with Ottawa, leaving the ownership issue unresolved.
The agreements reached with the two Atlantic provinces call for joint federal-provincial boards to manage the offshore hydrocarbons.
Quebec wants to collect all the royalties itself, without federal participation, Normandeau said.
Read more: http://www.montrealgazette.com/Province+eyes+royalties+from+gulf/3986025/story.html#ixzz18LZ7py1X
