By JONATHAN MONTPETIT, Halifax Chronicle Herald, July 30, 2010
MONTREAL — Negotiations have been launched between the federal government and Quebec in an attempt to strike an offshore drilling deal similar to those that have enriched Atlantic provinces.
Federal Natural Resources Minister Christian Paradis expressed confidence this week that the sides are moving toward an arrangement that could unlock the potential windfall in the Gulf of St. Lawrence.
"I feel there is momentum — as much on the provincial side as for the federal government," Paradis told reporters during a news scrum in Montreal this week.
"I’ll do everything in my power to get a breakthrough."
Paradis and his federal colleagues will be walking a fine line as talks go forward. The deposits straddle a much-disputed maritime border between Quebec and Newfoundland.
At stake are the potential riches of Old Harry, a 29-kilometre hydrocarbon field thought to contain either as much as two billion barrels of oil, or five trillion cubic feet of natural gas.
Such oil deposits would be twice as much as the Hibernia project off the coast of Newfoundland or, in terms of natural gas, three times Nova Scotia’s Sable Island field, according to oil industry representatives.
But unlike Newfoundland or Nova Scotia, Quebec does not have an agreement with Ottawa for underwater extraction.
Quebec, however, feels a breakthrough could be coming soon.
"The differences between Quebec and Ottawa have been simmering for 12 years," Quebec’s natural resources minister, Nathalie Normandeau, said this week.
"This is the first time I’ve sensed such openness from the federal government, and the (federal) natural resources minister in particular."
Details about what the deal would entail, and when it would be implemented, remain vague. But Paradis described the broad outlines while standing next to Normandeau at an event earlier this week.
"We’re talking about an administrative deal," he said.
"The goal is to create an office of hydrocarbons, as is the case in Nova Scotia and Newfoundland."
Both those provinces have offshore petroleum boards, joint independent agencies with Ottawa that oversee various elements of oil and gas exploitation.
They were created following accords with the federal government that allow revenues from underwater resources to flow to the provinces.
Paradis said he prefers an administrative deal to a legislative one that could provoke greater federal-provincial bickering.
However, there still remains potential for friction between Quebec and Newfoundland.
Quebec is keen to have any deal recognize a 1964 agreement between the four Atlantic provinces that left the majority of Old Harry inside its borders.
Newfoundland maintains that agreement was negated by a federal-provincial tribunal that ruled, in 2002, that it had never been submitted to Ottawa for approval.
In the meantime, Newfoundland has granted a Halifax company, Corridor Resources Inc., a licence to go ahead with exploratory drilling in an uncontested area of Old Harry.
It is not yet clear whether the hydrocarbon deposits contain oil or whether they contain gas but Corridor is confident that, either way, something valuable lies underneath.
"This would be a company-maker, no question about it," said Norman Miller, Corridor’s president and CEO.
Despite the optimism expressed by both Quebec and Ottawa about the potential for a deal in the near future, Miller is not holding his breath.
"We’ve concluded that it will happen in its own good time," Miller said. "We’ve done everything we can do to communicate what the potential is."
