30 July 2010

Game on! Feds and Quebec start talks on Gulf Accord

The Government of Quebec and the federal government started talks recently aimed at achieving an agreement on revenue sharing for any oil and gas in the Gulf of St. Lawrence, Canadian Press reported.

Details about what the deal would entail, and when it would be implemented, remain vague. But [federal natural resources minister Christian] Paradis described the broad outlines while standing next to [Quebec natural resources minister Nathalie] 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."

At the heart of the move is a potentially lucrative field known as Old Harry.  Believed to contain significant natural gas or oil reserves, the field lies across a boundary between Quebec and Newfoundland and Labrador proposed in 1964 but never accepted. 

Both Quebec and the Canada-Newfoundland and Labrador Offshore Petroleum Board have issued permits to Corridor Resources to explore Old Harry.

- srbp -



Mark said...

Hmm. Curious. Leaving aside the boundary issue for just a moment, why should Quebec share offshore oil revenues with the feds?

Ed Hollett said...

Where does provincial jurisdiction end?

My understanding, Calamity Kathy notwithstanding - is that it ends at the low water mark everywhere except NL.

The Gulf thus winds up being federal. This would be more a case of the feds sharing with Quebec, no?

Peter said...

What did you think the Atlantic Accord was all about? Quebec should feel lucky Trudeau's not still around.

Mark said...

Yes indeed. What was the Atlantic Accord about? Glad you asked, Peter.

In the eighties, arguably under Mulroney, the Atlantic accord was about Newfoundland keeping 100% of its offshore revenues. With offset provisions, that percentage was effectively well above 100%, depending on Newfoundland's fiscal capacity relative to other provinces, and, of course, the revenue generated by offshore production. It also depended, each fiscal year, on what choice of royalty regime (and offset provision) it selected.

Under Chretien, the terms were varied in the province's favour. A floor was set at 130%. The province obtained not only a choice between offset regimes, with a floor set by the generic formula of 130%, but a right of retroactive selection, allowing them to choose which regime they preferred at the end of the year, instead of at the beginning. effectively, the province was guaranteed, at minimum, 130% of its offshore royalties.

This arrangement, was of course, scandalous.

And so, under the next Prime Minister, whose name escapes me, the province agreed to accept 200% of its royalties, a large portion of which would be received as an up front lump sum payment.

Which begs the question, in the presence/absence of Trudeau or otherwise, if Newfoundland & Labrador and Nova Scotia, get to keep 200% of their offshore royalties, why on earth would Quebec settle for 50%?

Thanks, Peter, for asking a very, very relevant question.

Peter said...

Well, that's a fun way of looking at the numbers. Old territory, really. But the point is, an accord is needed because offshore oil is under federal jurisdiction. Under Trudeau, there would have been no joint management. Just "take what we give you."

Mark said...

What's fun about it? And of course it's old territory until such time as mythology is required as a convenient substitute for substance in an election campaign. Meaning it'll be "new" territory again in a year or so. You can set your watch to that.

And the point isn't whether or not an accord is "needed", the question is why should Quebec settle for anything less than the other provinces received? Afterall, isn't all of this supposed to be about fairness or some such sacred term?

On a side note, is there another country in the world that devolves offshore jurisdiction in any way to sub-national governments? I don't know the answer to that. Just curious.

WJM said...

As far as I can recall, it has gone completely unreported in Dannystan that Quebec, for long time now — certainly as long as Charest's been in, possibly back to the notionally separatist Bouchard-Landry era, and maybe even into the time of Bourassa II — has been pushing to have the same deal on subsea petroleum that NL and NS have.

That's how "bad" those deals are; so bad that other provinces want them, too.

Ed Hollett said...

Well, Peter those are facts and yes facts are fun.

They are only not fun for people who prefer the lies we've had in this province for the past decade.

And while we are at it Peter, you seem obsessed with being negative.

Why can't you just stop living in the imaginary, dreary past and celebrate all that the 1984 deal brought?

Peter said...

I think Quebec should be the primary beneficiary of those resources. I just don't think they should be the primary beneficiary of OUR resources. Ha!
And yes, Wally, my Newfoundland includes Labrador.
PNC Pete

Ed Hollett said...

Well that's marvelous Peter.

Now if only you could be as positive about Newfoundland and Labrador.

Mark said...

My god Peter, you'd make a great politician.

"... Quebec should be the primary beneficiary of those resources."

When confronted with facts, or a genuine question of policy, utter a popular (but meaningless) slogan in response. Well played.