Ottawa and Quebec reach deal on Old Harry oil and gas prospect

Ottawa and Quebec reach deal on Old Harry oil and gas prospect

March 23, 2011 - 23:22

The Canadian Press

OTTAWA - Ottawa and Quebec have reached a deal on a disputed underwater energy prospect that could mean billions of dollars for the province.

The Canadian Press has learned that federal Natural Resources Minister Christian Paradis and his Quebec counterpart, Nathalie Normandeau, will sign a deal Thursday on the Old Harry oil and natural gas deposit.

Such a deal would come on the eve of an expected federal election call and could prove a boon to the Conservatives as they push to boost their support in Quebec.

Sources within the federal government said the new deal will see Quebec get 100 per cent of the royalties from the area.

Old Harry is located in the Gulf of St. Lawrence and straddles the border between Quebec and Newfoundland and Labrador border. It has been at the centre of a feud between the two provinces for years.

The dispute has centred around ownership of the seabed and the territorial divide between Quebec and Newfoundland.

The reservoir could represent billions of dollars in revenue and has a potential output of two billion barrels of oil and 5,000 billion cubic feet of natural gas.

Newfoundland and Labrador has already laid claim to the bulk of the offshore oil reserve and granted a permit to a company to explore the area.

Quebec meanwhile has been pushing for exclusive rights to the deposit and called on Ottawa to stop any new drilling or seismic testing permits for Old Harry until ongoing environmental studies have been completed.

The environmental work is scheduled for completion in 2012.

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