Alberta Energy Firm Wins Court Challenge Of Quebec Bill Blocking Petro Exploration, Production

The Quebec Superior Court is seen Wednesday, March 27, 2019 in Montreal.THE CANADIAN PRESS/Ryan Remiorz

A Calgary-based energy company has secured a court victory with a ruling by the Quebec Superior Court to halt parts of Quebec’s Bill 21, an act passed in 2022 that aimed to end petroleum exploration and production in the province.

In a Jan. 26 press release, Questerre Energy Corporation described as “exceptional” the court decision on the company’s application to stay certain provisions of the bill, an “Act Ending Exploration for Petroleum and Underground Reservoirs and Production of Petroleum and Brine,” while judicial proceedings are continuing.

“This exceptional ruling in our favour preserves our legal rights as we continue to work for a political and business solution to the situation in Quebec,” Michael Binnion, Questerre’s president and chief executive officer, said in the press release.

“We remain hopeful for a solution that will materially reduce Canadian greenhouse gas emissions while improving energy security.”

Questerre launched a legal claim against Quebec in 2022, following Bill 21’s enactment, “for unjust enrichment and breach of contract,” said a September 2023 company presentation.

The company had submitted a proposal for a carbon storage test to the Quebec government in 2021, in response to a request for proposals. In its September 2022 company presentation, it said, “Despite social acceptability and zero-emissions footprint, Government enacts Bill 21 to expropriate licenses without just compensation.” Questerre said it was working with Quebec stakeholders including First Nations to protect their legal rights and to seek “full value for a giant discovery.”

The case involves a significant natural gas discovery in Quebec’s St. Lawrence Lowlands, a region south of the St. Lawrence River between Montreal and Quebec City, that “could result in the second lowest supply gas cost in North America,” according to the company’s website.

‘Serious Legal Matter’

In the recent ruling, the Quebec Superior Court justice dismissed an earlier argument by the Quebec attorney general, saying its circular nature “gave rise to a serious legal matter,” says Questerre’s press release.

The attorney general had argued that although the Civil Code of Quebec and the Quebec Charter of Human Rights and Freedoms protect citizens’ and companies’ right to property against unreasonable use of government powers, these protections don’t apply if the government decides to use those powers to override those rights.

“The argument of the Attorney General is, in effect, that the powers of the legislature are supreme even over laws intended to limit the powers of the legislature. This would, in effect, nullify the provisions of the Civil Code and Charter protecting citizens from abuse of Government powers,” Mr. Binnion said.

“It is a hallmark of constitutional democracies that the Government has limits on its power and the disguised expropriation of our assets in Québec should be compensated for.”

Exporting Canadian Resources

Bill 21 aims at advancing energy transition to address “the climate emergency.” The legislation imposes restrictions on exploration and production activities related to petroleum and underground reservoirs in Quebec. The measures are in line with the province’s commitment to adhere to the Paris Agreement, aiming to achieve carbon neutrality by 2050.

At the time of the bill’s passage, Mr. Binnion said he was “incredibly disappointed,” noting that the law “does nothing to actually reduce greenhouse gas emissions in Quebec or globally.”

“By blocking the development of its natural gas resources with zero-emissions technology for export, Quebec is missing an important opportunity to work with other nations to provide secure, reliable energy for our European allies,” he said in an April 13, 2022, press release.

“It also leaves the province highly dependent on imports of natural gas and petroleum that meet more than half their energy needs.” he added.

Key players in the oil and gas sector have supported the potential export of Canadian natural gas to Europe, urging both the federal and provincial governments to “remove the politics.” Among them is Quebec-based Utica Resources Inc., which has been actively engaged in the exploration and extraction of oil and gas resources in the province.

In the wake of Russia’s invasion of Ukraine in February 2022, Utica’s president, Mario Levesque, highlighted that Quebec’s substantial reserve of about 60 trillion cubic feet of natural gas could effectively replace all Russian exports to Germany for 30 years.

‘Strong Business Case’

At a joint press conference with German Chancellor Olaf Scholz in August 2022, Prime Minister Justin Trudeau said the government is open to easing regulatory requirements for projects that would facilitate the export of Canadian natural gas to Europe. However, he questioned whether a business case exists for the industry to invest in the infrastructure needed.

A response to an Inquiry of Ministry tabled in the House of Commons in January 2023 effectively said the lack of a “strong business case” is affected by the federal government’s own regulations.

“Ultimately, project investment decisions are made by proponents based on their ability to comply with federal and provincial regulatory standards while competing within the global market,” stated the document signed by Liberal MP Greg Fergus, who at the time was the parliamentary secretary to the prime minister.

The document came in response to an Inquiry of Ministry submitted by Conservative MP Clifford Small.

“With regard to the prime minister’s claim that there has never been a strong business case to export liquefied natural gas from Canada to Europe: on what specific evidence or analysis, if any, did the prime minister base such claim?” Mr. Small asked.

In response, the government said, “The federal Government is focused on growing Canada’s economy and creating good jobs for Canadians, while protecting our environment for future generations.”

Isaac Teo and Noé Chartier contributed to this report