U.S. Firm to Launch Fracking Suit Against Canadian Government
An American energy firm is launching a $250 million lawsuit against the government of Canada after the province of Quebec revoked permits that would have allowed for hydraulic fracturing in the region surrounding the St. Lawrence River, a major waterway in that part of the country.
Lone Pine Resources Inc. disclosed its November 8 filing with the United States Securities and Exchange Commission this week, detailing its suit against the Canadian federal government under the much-argued Chapter 11 of the North American Free Trade Agreement (NAFTA), a chapter that allows private companies to pursue the federal governments of participating countries — Canada, Mexico, and the United States — if they feel that their ability to operate profitably is infringed upon unfairly.
The original problem stems from legislation that passed in Quebec over the summer that enacts a total moratorium on fracking throughout the province, with an added ban on all oil and gas activity on lands that lie below the waters of the St. Lawrence River, the region’s main waterway. The new laws caught many firms unaware, including Lone Pine Resources, who owns 33,460 acres of land in the area that the company had planned to exploit for natural resources.
The legislation, which makes no promise of compensating companies who have had permits and activity rights suspended, is set to stay in effect until a full governmental review of the dangers of the fracking process is completed by 2014.
Most analysts agree that winning a NAFTA Chapter 11 case against the Canadian government is a long shot for Lone Pine Resources, especially given public opinion on fracking, a method of extracting oil and natural gas deposits that some environmentalists say poses a great danger to local environments, leading to outright bans in many European countries and continued debate in North America.