After months of very public wrangling culminating on November 8 with a full page ad taken by Gaz Metro, Quebec’s gas utility, in the Globe and Mail opposing the Energy East Pipeline, followed on November 18 with the embarrassing leakage of TransCanada’s 2014 Quebec communication strategy, Québec’s government has had enough and has taken control of the process in the province. The effect is to dial down the rhetoric and provide a calmer and more structured environment within which to evaluate the pipeline.

On November 19, Quebec’s environmental minister wrote to TransCanada’s CEO and set out 7 conditions precedent before Quebec can approve TransCanada’s oil terminal in Cacouna on the St. Lawrence River:

  1. Local communities must be consulted so as to ensure local acceptability;
  2. Quebec’s portion of the pipeline (all 700 km) must be subject to a comprehensive environmental assessment. This assessment must take into account greenhouse gases;
  3. The pipeline must meet the highest technical standards and be continuously monitored;
  4. First Nations must be consulted and participate to the fullest extent of the law;
  5. The pipeline must generate economic and tax benefits in every region it crosses;
  6. TransCanada must put in place safety measures of the highest standard, assume full responsibility for all damages, create an indemnification fund and provide proof of its financial capacity to discharge such obligations; and
  7. Natural gas transport to Quebec sufficient to meet Quebec’s foreseeable needs must be secured. Quebec’s energy regulator, La Régie de l’énergie, was tasked a few months ago with quantifying Québec natural gas needs.

The leakage of the letter to the press (Radio Canada in this case) means that the “guidance” offered by Quebec is crystallized and cannot be negotiated away. Environmental organizations were very quick to endorse Québec’s position.

It is evident that in the thinking of the Québec government the proceedings before the National Energy Board, replete with 30,000 pages of English language text, are now very secondary.

Interestingly, TransCanada could reduce Quebec’s clout if it abandoned its plans to ship oil from Cacouna. The selection of this site for an oil terminal is a conundrum as far as Québec City is concerned. Why would TransCanada want to complicate an already complex process by building an oil terminal in an environmentally sensitive area? Waters off Cacouna are an essential habitat for beluga whales, an endangered species and world class tourist attraction. The belugas make it very easy to rally opposition to the pipeline.

The silver lining here, and it’s a very important one, is that the Québec government is not against pipelines. On the contrary, Quebec would like to re-industrialize and hydrocarbons and petrochemical is one avenue being encouraged.

What Québec wants is a win-win scenario that it can defend before the National Energy Board and, more importantly, before the Québec electorate.