The Quebec Government presented its budget last week. The most significant change is a plan to revive SOQUIP and back it up with part of a $1.2 billion dollar investment fund. SOQUIP was created in the 1960's to find oil and gas in Quebec. After a large investment without commercial success it was wound down and its permits made available to the private sector.
- The justification for winding down SOQUIP wasn't so much the poor track record of Governments at finding oil and gas. Rather the justification was more that Quebec simply didn't have any hydrocarbons to find. Over time, in good Orwellian 'double speak' tradition, the idea grew that it was actually a good thing not to have oil and gas because it's greener if others produce it.
- SOQUIP created a brain trust of local industry expertise. Virtually all of Quebec's local expertise today can be traced to people who worked at SOQUIP. Some of these people disagreed that Quebec didn't have oil and gas and created small private exploration companies to prove it. Without these small companies all of Quebec's local expertise would have disappeared over the last thirty years (not that anyone listens to them or anything).
- Most important in my opinion is that Terrenex, our predecessor company, was the first in the 1970's to take out licenses after SOQUIP. This ultimately led to our August 2008 natural gas discovery at Gentilly proving to Quebec's great surprise that it does in fact have natural gas and also that private companies are better at finding it.
- competitive bids (should have been done as soon as we announced our discovery in late 2008),
- higher royalties (maybe but respect for property rights demands grandfathering or who would trust the system to risk exploring again in future),
- shorter licenses (makes sense post discovery), and
- much higher fees (no problem if the Government does something for them).