Questerre Energy

Mike's Blog

Oct
18

This 3% payment is legal

There has been much talk about 3% payments in Quebec recently.  Interestingly, there is a 3% payment that is legal, but almost as secret as the one the Charbonneau Commission has been investigating.   OGSAQ announced last week they found there are approximately 7 million hectares of land affected.  Potentially hundreds of thousands of Quebecers who owned land or whose family owned land in 1982 could find themselves receiving 3% payments on natural gas extracted legally.   This has been in the mining act for a long time.  It is complicated and unfortunately the Government did not keep a registry.  Quebecers will need to seek the advice of an expert notary to know whether they are part of the group that qualifies for 3% payments.   It's pretty clear from recent news reports that these 3% payments can be pretty lucrative.   Let me use the example of the Questerre's St. Edouard de Lotbiniere well that tested at over 5 MMcf per day.  The current price of natural gas in Quebec is among the highest in North America.  At the well head it is about $4.50 per thousand cubic feet of gas.   So the royalty from 5 million cubic feet from just one well would be $675 per day including weekends and holidays.  You can see with hundreds or even thousands of wells how this can add up.  As my Grandmother would have said $675 per day is better than a kick in the teeth.   It's not just individuals who are affected and benefit from natural gas.  So it's not enough that just individuals get compensated.  Communities are impacted too.  In Alberta we pay property taxes to the local communities to pay for all the services and nuisances we cause.  Why is there no local revenue sharing in Quebec?   Even more important than clarifying the 3% is for Government to share their local benefits plan for communities.   Questerre supports the following local benefits from local natural gas development:  

  • revenue sharing with municipalities to compensate for no property taxes
  • road upgrades to handle more traffic
  • hydro line upgrades to quietly power natural gas facilities
  • reuse of our pipelines to bring natural gas to farms and small towns
  • and of course the 3% for individual Quebecers.
  Currently the Government has a defacto moratorium on any and all benefits in Quebec.  Perhaps when Charbonneau is done finding out why the other 3% was being paid she could look in to why this 3% isn't being paid.

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