Thank you very much for inviting us, Mr. Chairman.
I would also like to thank my colleague Vincent for preparing this presentation with me. We will be pleased to answer any questions you may have.
I want to recall that the Montreal Economic Institute is an independent, and thus non-partisan, government policy research centre and that we receive no government funding.
What is required to ensure Canada's energy security is the development of our natural resources, both natural gas and oil. If that development is based on the principles of the market economy, private property and entrepreneurship, it will be possible for Canada to achieve sustainable economic growth.
The development of the natural gas industry is an excellent job and wealth creation opportunity for Canada. Canada is ideally placed to benefit from its resources as it is home to the Utica formation in Quebec and the Horton Bluff formation in the Maritimes as well as the Horn River, Montney and Colorado deposits in western Canada.
In Quebec, nearly 600 wells were drilled and developed between the 1960s and 1990. This means that the industry has acquired significant expertise, particularly in horizontal drilling. This gigantic potential must be developed further. Since 2007, 28 wells have been drilled in Quebec, including oil wells, representing nearly $200 million in investments. Quebec's department of natural resources and wildlife estimates that 200 horizontal wells represent $1 billion in investment, not to mention thousands of jobs and good prospects for corporate profits.
Economic potential potential on this scale cannot be summarily dismissed when assessing the costs and benefits involved in developing this resource. Of course, an attempt must be made to minimize the environmental risks for this kind of project. However, it is important to say that there is no such thing as zero risk. This is as true for energy development as it is for most human activities. Of course, it's not easy to strike an acceptable balance between risk and economic benefits, but that has to guide decision-makers' actions. If we allow ourselves to be paralyzed by development risks, we will in fact prevent all progress. One need only think of the automobile, airplanes and hydroelectric dams. All these things are now an integral part of our lives and well-being, and they necessarily involve a significant share of risk when they are being developed.
It is also important to mention that natural gas development also has environmental benefits, since gas produces 31% less greenhouse gas emissions than residential fuel oil, for example, and nearly no atmospheric contaminants that are harmful to health. By developing gas, we will be able to reduce our emissions, and, if it is possible to develop these resources within our own borders, supply will only be more stable and secure.
Now, how should the resource be developed? In our view, development of our energy resources is clearly the best way to ensure greater energy security while promoting economic development.
There is a simple and legitimate way to ensure respect for individuals and businesses concerned in this development, and that is respect for private property. Respect for property presupposes that all orders of government refrain from adopting unwarranted barriers to free negotiation between the various players. There are two things: we must avoid granting excessive expropriation authority and, second, special regulations must not be used to block businesses wishing to negotiate with landowners, just as there must be no regulations preventing individuals from enjoying or using their property as they wish.
Whether it be the federal or provincial government or municipal governments, no one should intervene to compel or prohibit the development of shale gas. Authorities must simply allow free negotiations between businesses and landowners. Businesses wishing to develop this resource must have a right to negotiate for the purpose of compensating individuals for the use of their property, in whole or in part, whether it be to lease it or to purchase it. Individuals who are ready to negotiate with businesses must simply have a right to profit from their property in the manner they consider most profitable.
This kind of negotiation may be conducted on a one-to-one basis, obviously, among a number of parties or based on the bidding principle. Whatever the case may be, landowners and businesses must neither be compelled to work together nor prevented from doing so by legislation. Such negotiations based on the right to property, make it possible to assess the real costs of these undertakings more effectively, reduce the risk of conflict, permit healthy arbitration and help determine the best locations for this type of business and avoid the "not in my backyard" phenomenon.
I will conclude my presentation by saying that a property-rights-friendly approach can assist in the economic development of our resources, with the cooperation of all parties involved. Energy security inevitably depends on the development of our resources and on legislation that promotes economic exchange free of unwarranted obstacles.
Thank you very much.