Evidence of meeting #32 for Natural Resources in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Binnion  President and Chief Executive Officer, Questerre Energy Corporation

11:55 a.m.

President and Chief Executive Officer, Questerre Energy Corporation

Michael Binnion

I was really referring more to some of the consumer-oriented infrastructure. If we're going to have, for example, long-haul trucking on natural gas, which is something that has been successful in other places—and in other countries it has certainly been more pervasive than it is here—we need an infrastructure: how does that truck obtain natural gas between Quebec City and Windsor, for example, or ultimately longer distances? That public infrastructure to deliver the gas at the consumer end is a major public infrastructure effort, but it would allow diesel trucks to be natural gas trucks. That's the type of example. It also, by definition, is going to be an interprovincial pipeline, which means it will be, by definition, regulated by the federal government.

11:55 a.m.

Conservative

The Chair Conservative Leon Benoit

We go now to Monsieur Pomerleau for up to five minutes.

11:55 a.m.

Bloc

Roger Pomerleau Bloc Drummond, QC

Thank you very much, Mr. Chair.

I would also like to thank you, Mr. Binnion. I am from Drummondville and I know that you, or someone from your company, came to meet with a number of mayors. Thank you for doing that. Like everyone in Quebec, the people in Drummondville are quite suspicious of this situation.

I will continue along the same lines as Mr. Anderson's argument. Quebec is not Saskatchewan. Quebec will decide what it wants to do. We have multiple sources of energy and it is up to us to decide whether we want to use electricity instead of natural gas, regular gas or wind energy. That will be decided in Quebec. It is up to us to decide whether our cars will run on natural gas or on electricity in 40 years. We have all the types of energy we need to do that. So, the problems in Quebec are very different.

You must know what the situation is like in Quebec, since you participate in the BAPE hearings. Before I ask one or two quick and rather technical questions, I would just like to point out—since it will be read by other people eventually—what draws companies to Quebec. There are major reserves, as shown by the Utica example, and future markets in Quebec or in Ontario. There is no shale gas in Ontario. There are also the emerging markets, including China and India, which will be consuming a lot of energy in 15 or 20 years. We have a great capacity to connect our discoveries to the Metro gas pipeline, which covers precisely the area where Utica is. There is also a lot of water for drilling needs. We have very clean gas. That's what we are told at least. As a result, the refining costs are probably much lower.

The subsurface does not belong to people. It is really surprising. I have just found that out. Whatever is under my land is not mine. If the subsurface does not belong to the people, that benefits the companies that only have one client, meaning the Quebec government. The industry has great connections or contacts with the government. At the moment, a number of people are leaving the government to work for the industry. It is rather extraordinary.

That's what draws businesses to Quebec. That's quite fine. On the one hand, these are very objective things. On the other hand, there is something subjective that is significantly harmful to what is to come. That's what the public is getting from all that. We know that the Quebec government is currently losing steam in terms of credibility. Every day, something new undermines its credibility. People are wondering if this government is still very solid. I always say that it is as solid as the Berlin Wall, five minutes before it fell. We've reached that point.

As soon as the government takes the industry's side, it ends up harming it because of its lack of credibility. That's what we are dealing with at the moment. I feel that Quebeckers will choose to wait a year or two, in order to first get the results of the studies to be done in the United States, which will be completely neutral in terms of what is happening here. If Quebeckers decide to get on board, they will be at the back of the bus.

In this context, I would like us to clarify a situation that the government made very confusing. Is it true that, in the United States, the subsurface belongs to the landowners, unlike here? Is it true that a prospector in the United States can pay up to $28,000 per hectare to drill a well? If the well produces, is it true that the people can claim 12% to 20% in royalties for what comes out of that well?

Noon

President and Chief Executive Officer, Questerre Energy Corporation

Michael Binnion

Just to your last question, the ownership of the underground, as you say, is separate from the surface, and that's true everywhere: America, Canada, and Quebec as well. In some places, the same person can own it, and in some cases, different people own it. The majority of Alberta is owned by the Province of Alberta on behalf of the citizens of Alberta. In Quebec, 100% of it is owned by the Province of Quebec on behalf of the Quebecois. In America, a greater percentage of the land is owned by individuals, who also own the subsurface or the underground. But in many cases, somebody can sell it. This has been true in Saskatchewan. This is true in America: I sold my underground, but I kept my surface. So you still could have different owners. A lot of America is federal land, owned by the federal government. So it's not a situation where it's one way or another way. In Quebec, it is one way: 100% of the subsurface is owned by the Province of Quebec for the citizens of Quebec.

I would like to say that in Alberta, and in fact in every jurisdiction I've worked, where the subsurface is owned by the government, we still have to have a very good working relationship with the people on the surface, because of course we cannot access what's under the ground without accessing the surface. So we are required to have a relationship both with the people on the surface and with the owners of the underground. In Quebec, that means both the Ministry of Natural Resources and the people who own the surface land. That's why, when I talk about an industry that works well with farmers, we are obligated to work well with farmers or we will lose our social acceptability.

I appreciate that you heard that we had been in the MRC of Drummondville, because we have been making an effort to get to all of the MRCs on the south shore that are interested in meeting with us. In terms of Quebec politics, right now the single most important people we need to support us are the regions. That's really where we've been focusing our efforts. I agree that the owner of the resource in Quebec is important, but so are the owners of the surface land on the south shore. They are also very important to our success.

12:05 p.m.

Conservative

The Chair Conservative Leon Benoit

Merci, M. Pomerleau.

We go finally to Mr. Harris for up to five minutes.

November 18th, 2010 / 12:05 p.m.

Conservative

Dick Harris Conservative Cariboo—Prince George, BC

Thank you, Mr. Chair.

Mr. Binnion, I want to thank you for coming here today.

I have to admit I knew very little about the shale gas industry, but this has been an experience. I appreciate the direct and complete way that you've responded to questions from all of the parties. What I'm gathering is that we have a pretty good news story here, from the point of view of energy security, of cutting greenhouse gases, and also from the economic benefits.

I guess I'm not surprised to see how fast our colleagues from the NDP and the Bloc appear to be trying to run away from this good news story. It's really a shame, because this is going to have a monumental impact on our energy supplies for decades to come. So I thank you for the way you've responded to those questions and particularly to their concerns.

I just have a couple of questions. We have for many decades been getting conventional natural gas from conventional sources. When we go from that to extracting it from shale, are we going to see a dramatic decrease in the conventional sources of natural gas? Is one going to replace the other, or is there enough demand that both will stay around? One, of course—shale gas—will likely be a bigger item than conventional natural gas.

12:05 p.m.

President and Chief Executive Officer, Questerre Energy Corporation

Michael Binnion

I think that gets to the point, and this is a really important point to understand in Quebec as well. Where does natural gas come from? Right now, more than 50% of new gas comes from shale gas, and that's expected to continue. It's 10 Bcf a day now. I don't remember the number exactly, but by 2015 it will be something like 25 Bcf a day.

The real choice for Quebeckers is, do you want to burn shale gas in Quebec? The decision in Quebec has already been made. Already, 200 Bcf per year is being used in Quebec. I agree with you, Quebeckers are the ones who will make the choice, but they have made the choice; they already burn it. That's why they were making the Rabaska Terminal, so that they could be supplied with gas in Quebec.

Now the choice for Quebec is, do you want shale gas from western Canada or do you want shale gas from Quebec, because there is no other conventional source of gas to supply the market?

12:05 p.m.

Conservative

Dick Harris Conservative Cariboo—Prince George, BC

Thank you.

You mentioned a price that I didn't quite hear: was it $3 per cubic...?

12:05 p.m.

President and Chief Executive Officer, Questerre Energy Corporation

Michael Binnion

Gas is sold by thousands of cubic feet. So 1,000 cubic feet currently in North America is trading somewhat below $4, and the price in Britain is currently trading somewhat above $7. Using my napkin math, we can infer that this difference of $3 is a direct saving to people in North America from having the shale gas situated in North America.

12:10 p.m.

Conservative

Dick Harris Conservative Cariboo—Prince George, BC

Would that be directly evident as a benefit to the consumers?

12:10 p.m.

President and Chief Executive Officer, Questerre Energy Corporation

Michael Binnion

Getting to your overarching point, I think it's really important for us to respect that we're in new areas that haven't seen our industry, that don't understand the impacts, and are now having choices to make about their local economy and their local energy supplies that they've never had to make before. I think we must have a lot of respect for that.

But when we started to look for natural gas in Quebec, I was reminded of Jim Buckee when he took over Bow Valley Energy, saying that Bow Valley Energy was so poorly run they were even exploring for gas in Quebec. People were literally laughing at our company for the idea that we could find commercially viable gas in Quebec. Having discovered it, we thought some people might be happy.

But I do realize we have to be respectful that having discovered it, people now are asking what does it mean, and let's make sure we understand what it means before we go forward. We do respect that, but I'm with you in being a little surprised that there hasn't....

At the BAPE, I was surprised there were a lot more positive memoirs in support of us than I had expected. So there are constituencies in Quebec who see the benefits.

12:10 p.m.

Conservative

Dick Harris Conservative Cariboo—Prince George, BC

Well, I can imagine that, Mr. Binnion, and thank you for it. You will be a big spokesman for the industry, and I appreciate the way you deliver your message.

Thank you, and all the best.

12:10 p.m.

President and Chief Executive Officer, Questerre Energy Corporation

12:10 p.m.

Conservative

The Chair Conservative Leon Benoit

Thank you, Mr. Harris.

Again, thank you very much, Mr. Binnion, for coming today and getting us off to a great start on the shale gas portion of our study. We very much appreciate it. We will get your information circulated, once it's translated, and we hope to see you again.

We will suspend the meeting now for a couple of minutes to move in camera to discuss future business of this committee.

[Proceedings continue in camera]