STRATEGIC ENVIRONMENTAL ASSESSMENT

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STRATEGIC

ENVIRONMENTAL ASSESSMENT

■ Report specific on Île d’Anticosti

ON HYDROCARBONS

May 2016

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Legal deposit

Bibliothèque et Archives nationales du Québec, 2016 ISBN: 978-2-550-76603-2 (PDF)

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Final report on the SEA specific to ÎLE D’ANTICOSTI

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ACKNOWLEDGEMENTS

We would first like to point out that the strategic environmental assessment (SEA) on the entire hydrocarbon option and the SEA specific to Île d’Anticosti were guided by the following goals:

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Conduct work in a rigorous and structured manner

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Acquire new knowledge based on science

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Conduct an objective, integrated analysis of the environmental, social, and economic issues

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Set stringent safety and security requirements and environmental standards based on best practices in order to modernize the legislative and regulatory framework

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Be attentive to citizens’ concerns, inform them, and act responsibly and transparently

The work was overseen by a steering committee of government representatives and independent experts from the academic community. We would like to thank these experts for their commitment and for their critical input throughout the SEA process:

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Michel A. Bouchard, Full Professor, Université de Montréal, and Senior Research Associate,

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McGill-UNEP Collaborating Centre on Environmental Assessments

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Nathalie de Marcellis-Warin, Associate Professor, École polytechnique de Montréal, and Vice President, CIRANO

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Maurice Dusseault, Professor, University of Waterloo

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Christiane Gagnon, Full Professor, Université du Québec à Chicoutimi, and Researcher at Centre de recherche sur le développement territorial

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Pierre-Olivier Pineau, Full Professor, HEC Montréal

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Ariane Plourde, Director, Institut des sciences de la mer de Rimouski, Université du Québec à Rimouski

We would also like to thank the researchers who helped carry out knowledge assessments and studies as part of the Additional Knowledge Acquisition Plan (AKAP) for the SEA of the entire hydrocarbon option and the SEA specific to Île d’Anticosti. The following individuals also contributed to the SEAs:

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Lynda Roy, SEA Coordinator and Steering Committee Secretary

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Claude Leblanc and Charles Lamontagne, Society Steering Committee Coordinators

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Georges Gangbazo, Environment Steering Comittee Coordinator

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Pascal Perron, Technical Aspects Steering Committee Coordinator

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Martin Labrecque, Economy Steering Committee Coordinator

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Xavier Brosseau and Pascal Brière, Transport Steering Committee Coordinators

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Dick McCollough

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Maryse St-Jean

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Mireille Paul

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Pierre Rhéaume

We also thank the following Québec government ministries for their close collaboration:

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Ministère des Finances du Québec

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Ministère de la Sécurité publique

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Ministère des Transports, de la Mobilité durable et de l’Électrification des transports

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Ministère des Affaires municipales et de l’Occupation du territoire

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Secrétariat aux affaires autochtones

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Ministère des Forêts, de la Faune et des Parcs

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Ministère de la Santé et des Services sociaux

Thanks also to the interest groups and industry representatives that took part in the public consultation on SEAs and to Aboriginal nations for their contribution. The points of view expressed, the concerns and issues raised, and the proposals submitted helped significantly improve the reports that were produced.

Lastly, we would like to point out that this report on the SEA specific to Île d’Anticosti, as well as the knowledge assessments and studies conducted as part of the AKAP are meant to be an informative tool to help the Government of Québec in its decisions about oil and gas development on Île d’Anticosti.

Cochairs

Gilbert Charland Christyne Tremblay

Deputy Minister of Energy Deputy Minister of Sustainable Development,

and Natural Resources the Environment and the Fight Against Climate Change

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PLEASE NOTE

This document does not contain all the information provided in the consultation document. Anyone interested in reading all the results may consult the documents produced, including the report on the public consultation and the studies conducted as part of the strategic environmental assessments, which are available online at hydrocarbures.gouv.qc.ca.

LIST OF ACRONYM

CVIEPA : Centre de vigilance et d’information sur les enjeux pétroliers à Anticosti SEA : Strategic environmental assessment

GHG : Greenhouse gas EQA : Environment Quality Act

MDDELCC : Ministère du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques

MEES : Ministère de l’Éducation et de l’Enseignement supérieur MERN : Ministère de l’Énergie et des Ressources naturelles MFFP : Ministère des Forêts, de la Faune et des Parcs RCM : Regional county municipality

MSP : Ministère de la Sécurité publique

MTMDET : Ministère des Transports, de la Mobilité durable et de l’Électrification des transports AKAP : Additional Knowledge Acquisition Plan

WWPR : Water Withdrawal and Protection Regulation

RPNGUR : Regulation respecting petroleum, natural gas and underground reservoirs SÉPAQ : Société des établissements de plein air du Québec

ECRC : Eastern Canada Response Corporation SOPFEU : Société de protection des forêts contre le feu

SPEDE : Cap-and-trade system for greenhouse gas emission allowances

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OVERVIEW

A strategic environmental assessment (SEA) is an analytical and participatory process carried out before a strategic decision is made. The goal of an SEA is to incorporate environmental considerations into policies, plans, and programs and to assess their impacts on economic and social considerations to inform decision making.¹

The work completed as part of the SEA specific to Île d’Anticosti made it possible to:

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Assess current knowledge and the knowledge acquired through the Additional Knowledge Acquisition Plan

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Identify the potential environmental, social, and economic impacts

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Determine mitigation measures to develop resources responsibly while protecting people and property and respecting the environment

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Define the additional knowledge that the government or industry needs to acquire

The overview presents the main social, economic, and environmental considerations that the government should take into account in its decision on oil and gas development on Île d’Anticosti.

Social considerations

The qualitative survey of Île d’Anticosti residents conducted by Ministère des Ressources naturelles (MRN) in 2014 and the work carried out as part of the SEA specific to Île d’Anticosti made it possible to document the potential social impacts on the Île d’Anticosti community, as well as residents’ concerns and expectations and their level of adaptability and resiliency with regard to the changes that oil and gas development could bring.

Moreover, a number of briefs submitted during the public consultation expressed social concerns about Anticosti related, among other things to the impact on the community, the increase in GHG emissions, the reconciliation of different forms of land use, and the preservation of the island’s natural environment.

A remote and isolated island community

Anticosti residents live in a remote and isolated island environment where the high costs of transporting people and goods is a major issue. Anticosti’s population is aging and in decline.

Although forestry was an important economic engine between 1926 and 1970, today the island’s economy essentially relies on the recreation and tourism industry. Residents appreciate the diversity and quality of services available, but feel that some may be untenable. Strict enforcement of certain laws and regulations is also perceived as hindering their development possibilities.

1 Canadian Environmental Assessment Agency, 2012, André et coll.

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Concerns and expectations

The SEA helped identify the concerns and expectations of the Anticosti community, which:

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Wants to take its development in hand and curb the community’s decline through a shared vision of development, the involvement of key, socially engaged stakeholders, and access to objective information

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Is concerned about the potential impacts of oil and gas development on the quality of the environment, the quality of life, the community, and on recreation and tourism activities, such as hunting and fishing, which are currently its main sources of income

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Wants to bolster the tourism sector to ensure the community’s survival and growth and introduce permanent, affordable shore-to-shore transportation to relieve the feeling of isolation

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Has mixed feelings about potential oil and gas development, yet sees positive aspects from an economic perspective The community wants to be involved in the project’s development so long as it has capacity-building benefits for Anticosti residents, but is not convinced of the advantages it could bring them in its current form. Moreover, it wants land-use conflicts to be mitigated and constraint zones to be defined before signing off on any project.

Economic considerations

The knowledge obtained from available data and analogous situations was used to assess the potential financial profitability of oil and gas development on Île d’Anticosti based on a so-called “optimized” scenario.

In this scenario it is estimated that 448 platforms could be built over a period of 50 years ², for a total of some 4,155 wells. During the period of maximum development, production would be composed of 77.5%

natural gas and 22.5% oil, or 246 Bcf of gas and 12.3 million barrels of oil. Oil and gas development on the island would likely be sufficient to meet up to 113% of Québec’s annual natural gas consumption needs and up to 9% of its oil consumption needs. It could represent an influx of over $2 billion a year into Québec’s GDP.

Considering the lifespan of the project, which could extend over 75 years, operations on Île d’Anticosti could create and maintain an average of between 2,200 and 2,600 direct and indirect jobs a year, depending on the selected for transporting natural gas (factory vessels or a pipeline). The bulk of these jobs would derive from project operations.

It is premature to reach any conclusions as to project profitability until the presence of commercially producible oil and gas on Île d’Anticosti is confirmed. A number of exploratory wells drilled by means of hydraulic fracturing are required to assess the resources.

If the presence of resources is confirmed, economic feasibility studies will be conducted to assess the commercially producible resources and the project’s potential profitability based on the prevailing economic, technical, and regulatory conditions at the time of the studies. Some of the main factors at play include resource price forecasts, which are currently low, anticipated production costs, and the cost of building facilities for extracting, transporting, and processing oil and gas.

2 About 10 new platforms built a year on average.

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Environmental and safety considerations

If the presence of resources is confirmed, their development is deemed viable, and the government authorizes the industry to proceed, the industry will be required to take all necessary steps to limit the potential impacts of the project. This includes implementing mitigation measures adapted to the project and the local environment in order to maintain water and air quality, manage waste materials and wastewater, control GHG emissions and spills, and protect biodiversity. Through its technological choices and operations management, industry must ensure the short-, medium-, and long-term safety and security of people and the environment and optimize the performance, safety, and integrity of operations.

The main issues associated with oil and gas development on Île d’Anticosti, including those concerning hydraulic fracturing, as well as the main conditions and obligations that should be imposed on the industry are described below

Water supply

Since fracturing is generally a multi-step process, large amounts of water (sometimes up to 16,000 m³ per well) may be required. The main issues concern the availability of water and the impact of water withdrawals on natural environments. To address this, the following steps are recommended:

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Determine the source of water supplies in accordance with the WWPR

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Set up new hydrometric stations to gain a better understanding of the water regime of the watercourses where withdrawals could be made

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Consider using water from the Gulf of St. Lawrence (or other substances such as propane gel) since the amount of surface water available on Île d’Anticosti would not be sufficient to meet the needs of a possible future oil and gas development involving hydraulic fracturing

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Monitor the physicochemical quality of surface water and changes in benthic macroinvertebrate communities.

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Groundwater contamination

Recommendation: Groundwater migration and contamination

Groundwater contamination from hydraulic fracturing may be the result of defective equipment, tanks, or wells; human error; or other causes such as climate conditions and vandalism.³ To address this, the following steps are recommended:

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Characterize the initial condition of groundwater

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Determine the risk of fluids migrating into aquifers via natural and induced fissures

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Use an impermeable membrane at the site to reduce the impact of leaks and soil contamination

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Store wastewater in enclosed tanks and handle it with care (particularly when transporting it), making sure not to contaminate the natural environment through runoff and water infiltration

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Install berms around drilling sites to reduce the impact of leaks and soil contamination

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Set up a centralized water treatment plant with ocean discharge (operation phase)

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Develop a waste management plan

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Implement a groundwater quality monitoring procedure in accordance with the WWPR.

Air quality and noise pollution

At the local level, air quality could be altered from between a few hundred meters to a kilometer away from exploration and production sites. To address this, the following steps are recommended:

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Install an air quality control and monitoring station

Operations associated with oil and gas exploration and production, notably road and well site construction and hydraulic fracturing operations, may create some noise disturbances for cottagers. To address this, the following steps are recommended:

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Limit noise disturbances by using obstacles to block noise or by using quieter equipment

3 Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources, Environmental Protection Agency (EPA), 2015, http://www.epa.gov/sites/production/files/2015-06/documents/hf_es_erd_jun2015.pdf

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Induced seismicity

Hydraulic fracturing rarely causes earthquakes, but when it does, they are usually small to moderate in magnitude. The Geological Survey of Canada installed three new seismic measuring stations on Île d’Anticosti to monitor seismic activity. If the government decides to authorize this kind of development, the following steps are recommended:

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Determine the geological constraints and stability of the main faults on Île d’Anticosti to limit the risks of induced seismicity stemming from hydraulic fracturing

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Monitor seismic activity on Île d’Anticosti to measure natural seismicity

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Document the seismic events that may be triggered by hydraulic fracturing GHG emissions

Under the first scenario, where gas recovery facilities would be in place at the start of gas production in 2020, annual GHG emissions would be in the range of 1.4 million tons of CO₂ equivalent during the peak well operation period.

To put this into perspective, these GHG emissions would represent about 2% of Québec’s target of 67.6 million tons of CO₂-equivalent GHG emissions for 2020. This data is based on Québec’s inventory of greenhouse gas emissions in 2012 and their evolution since 1990, which was the inventory available at the time the sectoral studies were done. Under the second and third scenarios, annual GHG emissions would likely be much higher at between 2 and 4 million tons of CO₂ equivalent, accounting respectively for between 3% and 6% of Québec’s emissions based on the 2020 target.

Wildlife concerns

The industry’s development strategy and the technological choices to be made must take into account the protection of Atlantic salmon and white-tailed deer. Specific mitigation measures and environmental monitoring of the anticipated impacts are needed. The restoration of abandoned sites must also be an integral part of the projects submitted.

Biodiversity

Most of the impacts of oil and gas exploration and development on biodiversity are attributed to the construction of roads and pipelines and the transportation of people and goods.

Oil and gas development must be carried out without compromising Île d’Anticosti’s conservation interests, including the possibility of expanding protected areas or creating new ones. Other mitigation measures could also be required before authorization certificates are issued.

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Technology and operations management

Best practices have been identified for risk mitigation and environmental protection in oil and gas exploration and development (GTEC02, GTEC03, and 04).

The new legislative and regulatory framework to be implemented must take into account best practices in terms of work planning, well design, and other related activities in order to limit the risks of incidents related to work and operations management. Best practices must also be followed to ensure a rapid response in the event that an anomaly is detected during work monitoring or control.

In addition, to properly regulate hydraulic fracturing work, the government should require developers to submit a detailed plan of the work that includes water management, the list of additives used, the measures taken to ensure well integrity, and the conditions in which fracking will be carried out. All of the items that should be included in the work plan are listed in Section 3.3.2 of the SEA on the entire hydrocarbon option.

Spill management

Given the lack of emergency response capabilities on Île d’Anticosti, all incident prevention, preparation, response, and compensation measures must be coordinated with municipal authorities and carried out by the licensed corporation. The company must therefore have an emergency response plan that is adapted to Île d’Anticosti’s geographic situation and the risks associated with oil and gas exploration and development to ensure the safety and well-being of citizens and protect the environment.

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OIL AND GAS EXPLORATION AND DEVELOPMENT RAISES A NUMBER OF CONCERNS AND CHALLENGES WITH REGARD TO SUSTAINABLE DEVELOPMENT FOR ALL STAKEHOLDERS (BUSINESSES, GOVERNMENTS, LOCAL COMMUNITIES, CIVIL SOCIETY, ETC.), PARTICULARLY GIVEN THE NON-RENEWABLE NATURE OF THESE RESOURCES.

The government must develop a strict legislative and regulatory framework to make it possible to:

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Develop resources responsibly in a manner that is respectful of the environment, protects people and property, and minimizes GHG emissions

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Maximize the benefits of oil and gas exploration and development for local communities,

Aboriginal people, and all Quebecers and ensure they are compensated for any externalities these activities may generate

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Get local communities more involved in the decision making process

For its part, industry must take all the necessary measures to mitigate, or eliminate, the social and environmental impacts that oil and gas exploration and development can generate.

It must also take the necessary steps to foster the social acceptability of its project by meeting local community needs and expectations in terms of project monitoring, communication, quality of life, resource protection, and economic spinoffs.

The government must take the following factors into consideration in decisions about the next steps in the work on Île d’Anticosti:

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The Anticosti community does not have the capability to deal on its own with the changes likely to be spurred by the introduction of oil and gas development on the island. Regardless of the chosen development scenario—including the status quo—the community will need support.

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The Anticosti community wants to be consulted on the choices to be made concerning the development plans envisaged for the island.

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More exploration work is needed, including drilling with hydraulic fracturing, to confirm the presence of the resources and determine whether they are commercially producible.

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The project presents environmental risks that must be controlled and limited, especially in light of the island’s specific geographic and socioeconomic characteristics.

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The project may generate GHG emissions that require other sectors in Québec to further limit their own emissions in order for reduction targets to be met.

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Additional knowledge about Île d’Anticosti is required at every step of the project’s development.

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The project may yield major economic benefits if the economic climate, which is strongly linked to the price of resources, is favorable.

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ACKNOWLEDGEMENTS ... I PLEASE NOTE ...III LIST OF ACRONYM ...III OVERVIEW ... IV

Social considerations ...iv

Economic considerations ... v

Environmental and safety considerations ...vi

1. INTRODUCTION ... 1

1.1 Background and Perspective ...1

1.2 Participative approach ...6

2. STATE OF KNOWLEDGE ON HYDROCARBON POTENTIAL AND RESOURCE ASSESSMENT ... 9

3. ÎLE D’ANTICOSTI... 14

3.1 Overview of the Anticosti community ... 14

3.2 Biophysical characteristics ... 18

3.2.1 Water resources ... 18

3.2.2 Ecosystems ... 21

3.2.3 Air quality ... 25

3.2.4 Acoustic environment ...26

4. ISSUES, FINDINGS, AND AREAS FOR IMPROVEMENT ... 27

4.1 Social issues ... 28

4.1.1 Concerns of the Anticosti community ... 28

4.1.2 Ability to adapt and resilience ...30

4.1.3 Local governance ... 31

4.1.4 Areas to explore ... 32

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4.2 Environmental issues ...35

4.2.1 Water protection ...35

4.2.2 Nature and biodiversity protection ...39

4.2.3 Control of disturbances and induced risks ... 41

4.3 Safety issues ...48

4.3.1 Geological risks ...50

4.3.2 Technological risks ... 51

4.3.3 Operations management ...54

4.4 GHG emissions ...54

4.5 Economic issues ... 57

4.5.1 Development scenarios ... 57

4.5.2 Costs and economic benefits ...62

5. ADDITIONAL REQUIRED KNOWLEDGE ... 70

6. CONCLUSION AND RECOMMENDATIONS ... 72

APPENDIX 1: MEMBERS OF THE STEERING COMMITTEE ...76

APPENDIX 2: OVERALL SEA OBJECTIVES ...78

APPENDIX 3: ADDITIONAL KNOWLEDGE ACQUISITION PLAN – STUDIES IDENTIFIED FOR ÎLE D’ANTICOSTI ...79

APPENDIX 4: SUMMARY OF MAIN POSITIVE AND NEGATIVE EFFECTS ANTICIPATED WITH AND WITHOUT DEVELOPMENT ... 84

APPENDIX 5: MAIN OBSERVATIONS AND TOPICS FOR REFLECTION ON THE ANTICOSTI COMMUNITY’S RESILIENCE AND ABILITY TO ADAPT TO THE OIL AND GAS INDUSTRY’S ARRIVAL ON THE ISLAND OR A RETURN TO ITS INTIAL STATE ... 86

APPENDIX 6: REFERENCES ...87

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LIST OF TABLES

Table 3.1: Population of Municipalité de L’Île-d’Anticosti over time from1870 to 2014 ... 15

Table 3.2: Population from 2005 to 2014 by age group ... 16

Table 3.3: Area of the ten largest watersheds in Anticosti ... 19

Table 3.4: Distribution of vegetation types on Île d’Anticosti ...22

Table 3.5: Wildlife habitats on Île d’Anticosti protected under the Act Respecting the Conservation and Development of Wildlife ...23

Table 3.6: Occurrences of wildlife species on Île d’Anticosti recorded in the database at Centre de données sur le patrimoine naturel du Québec ... 25

Table 3.7: Stations used to estimate baseline air quality on Île d’Anticosti ... 25

Table 4.1: GHG emissions based on the Economy Steering Committee’s three scenarios and the SPEDE ...56

Table 4.2: Construction costs for each considered infrastructure scenario (millions of $CAN) ...62

Table 4.3: Costs estimate for the two proposed road infrastructure scenarios ...64

Table 4.4: Economic, tax, and financial benefits – 2020–2095 (average annual direct and indirect impact in 2020 dollars) ...64

Table 4.5: Economic benefits and job creation over the duration of the Anticosti project ...65

Table 5.1: Additional required knowledge ... 70

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LIST OF FIGURES

Figure 1.1: Thermal maturity in the Macasty Formation ...9

Figure 3.1: Île d’Anticosti ... 15

Figure 2.2: Location and surface area at the outlet of Île d’Anticosti’s main watersheds ... 19

Figure 3.3: Emplacement des 24 bassins de rivières à saumon sur l’île d’Anticosti ... 24

Figure 4.1: Map of potential development area based on the “optimized” scenario ...58

Figure 4.2: Preliminary proposed road infrastructure ...63

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1. INTRODUCTION

1.1 Background and Perspective Background

On May 30, 2014, Pierre Arcand, Minister of Energy and Natural Resources, and David Heurtel, Minister of Sustainable Development, the Environment and the Fight Against Climate Change, announced the government’s Hydrocarbon Action Plan.

The plan’s approach reflects a global trend encouraging countries to initiate energy transitions in preparation for life after oil and to reduce greenhouse gas (GHG) emissions. With a wealth of renewable energy at its disposal, Québec is in a good position to start this transition.

Québec’s renewable energy consumption and clean energy production are among the highest in the world.

With the ongoing fight against climate change and the desire to increase energy security, the value of Québec’s green energy is expected to grow.

Together with the 2013–2020 Climate Change Action Plan and the 2015–2020 Transportation Electrification Action Plan, the 2030 Energy Policy will enhance Québec’s position as a leader in renewable energy, energy efficiency, and innovation and help pave the way for a less fossil fuel–dependent economy. That said, natural gas has a role to play as a transition fuel in areas where alternative technological solutions are not yet available.

Developing Québec’s subsurface hydrocarbons may not be vital to achieving the goals associated with a transition to a low-carbon economy, but it may still be beneficial. Oil and gas exploration with a view to sustainable development still presents a range of challenges for all stakeholders (businesses, governments, local communities, civil society, etc.), particularly given the risks involved, the non-renewable nature of these resources and the GHG emissions associated with them.

Despite the potentially significant economic benefits of oil and gas development, a number of social and environmental issues arising from the development process (from site preparation to restoration) must be taken into account and mitigated or eliminated in the design phase of any project, in particular through the use of best practices.

Measures must be taken to compensate future generations for resource depletion and negative externalities, and replacement solutions must be found so growth can continue after the wells are closed. Finally, the government and industry must promote the hydrocarbon sector’s social acceptability by honoring their commitments to stakeholders and by taking into account how local communities want the land to be developed and encouraging them to get involved.

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When the government introduced the Hydrocarbon Action Plan, it mentioned that:

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While it is in favor of developing the oil and gas sector, the public and environment must be protected

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The hydrocarbon potential must be confirmed, economic profitability assessed, and best practices applied before any extraction is authorized

For this reason, as part of its Hydrocarbon Action Plan, the Government of Québec announced two strategic environmental assessments (SEA), one of the entire hydrocarbon option and the other on Île d’Anticosti.

Ministère de l’Énergie et des Ressources Naturelles (MERN) and Ministère du Développement Durable, de l’Environnement et de la Lutte Contre les Changements Climatiques (MDDELCC) were tasked with performing the two SEAs.

The Comprehensive SEA option, which is addressed in a separate report, covers all aspects of onshore and offshore oil and gas exploration and extraction in Québec, including transport.

The SEA specific to Île d’Anticosti, which is the subject of this report, was required to:

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Learn more about the poorly documented island and its community, which the oil and gas industry is targeting

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Document any potential social or environmental impact on the island to ensure the safety of residents and natural habitats, which are vulnerable due to being insular and isolated

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Further assess the commercial viability of hydrocarbon resources

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Document all relevant factors to help the government make an informed decision regarding the Île d’Anticosti Hydrocarbon Development Project

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Exploration efforts on Île d’Anticosti have already confirmed the presence of oil and natural gas through comparative analysis with similar geological locations. Furthermore, based on currently available information, it was determined that the Utica and Point Pleasant formations in Ohio are the best geological analogues to the Macasty Formation on Île d’Anticosti. Using production data from these formations, it was inferred that natural gas operations could account for up to 80% of the Île d’Anticosti Project.

Should the natural gas potential be confirmed, the gas could be converted to liquefied natural gas (LNG), an alternative source of energy that is competitive with diesel fuel and fuel oil in areas not connected to the electrical grid and natural gas distribution network, as is the case for Côte-Nord, Nord-du-Québec, Gaspésie, and Bas-Saint-Laurent. With its low carbon footprint, natural gas can contribute to the energy transition in a major way and is attracting growing interest from many sectors (transport, mining, distribution, etc.) for:

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Truck and ship conversion (e.g., Transport Robert and Société des traversiers du Québec)

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Industrial conversion projects (e.g., ArcelorMittal)

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New distribution methods in remote areas

Along with the SEAs, the government developed the 2030 Energy Policy. The projects were backed by round table discussions between experts from various energy sectors, in particular oil and gas, and the involvement of concerned citizens.

The policy’s main principles, which will guide our energy transition over the next 15 years, are the following:

1. Ensure the energy transition’s integrated governance 2. Promote the transition to a low-carbon economy

3. Provide consumers with new, more diversified energy options 4. Define a new approach to fossil fuels

To carry out its energy transition, Québec will have to use all forms of energy. This means relying on various energy sources, which includes developing any resource contributing to its security of supply and improving its trade balance.

This transition reflects the global trend toward low-carbon economies, which culminated in the signing of the Paris Agreement in December 2015. Through the agreement, the parties of the United Nations Framework Convention on Climate Change (UNFCCC) agreed to keep global warming to less than 2°C above pre-industrial levels.

Still, to carry out its energy transition, Québec will have to use all forms of energy. This means relying on various energy sources, which includes developing any resource contributing to its security of supply and improving its trade balance.

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Hydrocarbons are one of the options mentioned in Québec’s Energy Policy. Hydrocarbon development may help Québec’s energy transition if done in a way that respects local communities; protects the environment, water resources, and biodiversity; and minimizes GHG emissions.

If exploration activities confirm the presence of commercially producible resources in Anticosti, our legislative and regulatory framework and strict environmental standards will help:

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Ensure that development activities are in line with best practices in terms of governance, technology, and environment and that GHG emissions are kept to a minimum

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Develop petroleum products intended for non-energy purposes and for limited use in the transport industry.

Strategic environmental assessments (SEAs)

The information provided by SEAs is used to define the legislative and regulatory framework on hydrocarbons, spread the benefits of oil and gas, and mitigate their negative effects for as long as they account for a significant portion of Québec’s energy balance. In that sense, the Energy Policy and SEAs complement each other.

To learn more about the principles behind SEA evaluation procedures and the various steps the government has taken with respect to onshore and offshore oil and gas, please refer to Section 1.1 of the report on the entire hydrocarbon option.

The SEA on the entire hydrocarbon option (comprehensive SEA) and the SEA specific to Île d’Anticosti made it possible to assess the current state of knowledge and acquire information required to define government policies with respect to environmental, social, economic, technical, and safety issues associated with the hydrocarbon industry. The purpose of this approach was to:

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Further assess the commercial viability of Québec hydrocarbons

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Address the lack of information on techniques used, namely hydraulic fracturing and offshore hydrocarbon exploration and development conditions

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Analyze environmental, socioeconomic, technical, and transport issues in order to determine measures to implement to minimize negative impacts and ensure proper management

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Study consultation and cooperation mechanisms encouraging community involvement in decision- making with a view to sustainable land development Identify best practices to implement with the industry and partners

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Compare risks associated with various transport methods

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Take into account externalities associated with the potential development of the hydrocarbon industry in Anticosti

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Update the legislative and regulatory framework

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In summer 2014, a steering committee (committee) was established to oversee work on the two SEAs.

Co-chaired by Christyne Tremblay, Deputy Minister of Sustainable Development, the Environment and the Fight Against Climate Change, and Gilbert Charland, Deputy Minister of Energy and Natural Resources, the committee includes six independent university representatives as well as representatives from Ministère des Affaires Municipales et de l’Occupation du Territoire, Ministère des Finances, Ministère de la Sécurité Publique, Ministère des Transports, Ministère de la Mobilité Durable and Ministère de l’Électrification des Transports (see members’ list in Appendix 1).

Ministère de la Forêt, de la Faune et des Parcs, Ministère de la Santé et des Services Sociaux and Secrétariat aux affaires autochtones also made contributions.

The comprehensive and Anticosti SEAs were divided into four phases and five focus areas (each overseen by a steering committee): Society, Environment, Technology, Transport and Economy. Appendix 2 presents the objectives of each steering committee for both SEAs.

Phase 1: Knowledge review

As part of the knowledge review for each focus area, a consultation with various stakeholder groups was held in January 2015. It made it possible to learn what information was already available and define and orient studies to be conducted as part of an Additional Knowledge Acquisition Plan (AKAP). The AKAP was released on April 2, 2015, at the same time as focus area knowledge reviews and a comprehensive overview of available knowledge. Out of the 63 studies conducted by research teams from various backgrounds, 27 studies focus on Île d’Anticosti (Appendix 3). ¹

The gaps in knowledge identified in previous government SEAs, such as the shale gas and offshore SEAs, were considered in the knowledge reviews and AKAP.

Phase 2: Consultation document

A consultation document released on October 28, 2015, reports the results of the aforementioned AKAP studies, which are listed in Appendix 3. In preparation for the public consultation, 43 studies were released at the same time as the consultation document. Those that were incomplete when the consultation document was drafted were taken into account.

Phase 3: Public consultation

The strategic environmental assessment procedures provide for consultation with local and Aboriginal communities as well as Québec’s general public. The participative approach developed as part of the consultations on both SEAs is presented in detail in Section 1.2.

Phase 4: Drafting of final report on each SEA

This final report on the Île d’Anticosti SEA provides food for thought on how the government should proceed regarding the development of the island’s oil and gas.

1 At first, 64 studies were planned, including 28 on Île d’Anticosti, but three were canceled and two added, bringing the total down to 63 (27 for Anticosti).

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It mainly covers the current state of knowledge regarding Île d’Anticosti’s hydrocarbon potential and briefly addresses work recently carried out in the region. It also presents a social and biophysical description of the island as well as issues, findings, possible solutions, and knowledge to acquire in the social, environmental, and economic spheres and with respect to GHGs and safety.

The positions expressed, suggestions presented, and concerns and issues raised during the public consultation on Île d’Anticosti were considered in the report.

Work carried out as part of the comprehensive SEA is covered in a separate report.

1.2 Participative approach

The SEA process includes an approach encouraging public involvement. The following activities were planned for the comprehensive SEA and in particular for the Île d’Anticosti SEA:

▪

An AKAP presentation to public, research, and business community stakeholders; to

representatives from First Nations and environmental groups; and, above all, to representatives of the Anticosti community (January 2015), to encourage discussion

▪

A presentation to the Anticosti community detailing drilling platform implementation scenarios, which is a component of the AECN01-02 study on development scenarios (May 2015)

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Biweekly telephone conversations with representatives of Centre de vigilance et d’information sur les enjeux pétroliers à Anticosti (CVIEPA)

▪

An information session on the consultation document, available via webcast, was held in Québec City two weeks before the public consultation sessions so members of the public and interest groups could get explanations on the main SEA findings and continue the discussion on hydrocarbon development (November 2015)

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Open consultation sessions held from November 16 to 19, 2015, in

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Montréal, Bécancour, Québec City, Anticosti, Gaspé, Sept-Îles, and Îles-de-la-Madeleine

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Meetings with concerned Aboriginal communities and groups present in the areas the hydrocarbon industry is looking to get established (Montréal and Gaspé in November 2015 and Québec City twice in February 2016)

▪

Submission of briefs from October 28, 2015, to March 18, 2016

▪

Online participation through a website open to all Quebecers.

Also, Anticosti residents were invited to participate in three workshops on:

1. Characterizing their community 2. Anticipated social effects 3. Their ability to adapt

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Fieldwork for this study was conducted from April to September 2015. The results were considered in this report (see conclusion).

Public consultation

The public consultation held as part of the SEAs was aimed at communicating with local and native communities in the study area and the general public. To participate in the public consultation, citizens and organizations had access to AKAP study results. Forty-three studies and a consultation document and its summary were released to the public on October 28, 2015, nearly three weeks before the public hearings.

Summary of public consultation results

The main suggestions made by citizens and municipal bodies regarding oil and gas development on Île d’Anticosti during the public consultation concerned the need to:

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Work out a common development vision for the island with the local community before deciding what to do regarding the Anticosti Hydrocarbon Development Project

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Enhance tourism development

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Develop an oil and gas development project that provides capacity-building benefits for the community and limits potential usage conflicts with recreational and tourist activities

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Legally exclude vulnerable areas before authorizing any project, protect regions of archeological interest and the Rivière Jupiter watershed, and create new hunting zones to compensate for anticipated losses in the tourism offering

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Assess the risks associated with oil spills and their economic impact on tourist and fishing activities

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Develop a risk management plan and a contingency plan for the island and provide the community with the facilities and services required to implement them

▪

Continue to acquire knowledge (e.g., geological or hydrogeological) on the potential impact of hydrocarbon-related activities on animal habitats and aquatic ecosystems on Île d’Anticosti and in the Gulf of St. Lawrence

Some citizens who participated in the consultations put forward positions and suggestions regarding the entire hydrocarbon option that also apply to hydrocarbon exploration and extraction on Île d’Anticosti.

These citizens indicated that:

▪

They are against oil and gas development due to environmental, health, and transport risks

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They questioned the government’s investment in projects of companies looking to develop the island’s oil and gas

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There is a lack of information on risks associated with hydraulic fracturing and that developers will need scientific support if work is authorized

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▪

More knowledge is needed regarding the social and environmental impact of onshore and offshore hydrocarbon extraction and spill risks

▪

A moratorium must be imposed on onshore drilling and that the one on the Gulf of St. Lawrence must be maintained until the legislative and regulatory framework has been updated

▪

Financial guarantees and a spill compensation plan must be established

Côte-Nord economic stakeholders expressed their support for natural gas development as a way to supply and develop certain industrial projects and businesses already established in the region. However, tourism and recreation businesses on Île d’Anticosti feel that hydrocarbon development would hurt the hunting and fishing industry. Representatives of this sector are concerned that oil and gas development may have an adverse effect on white-tailed deer and Atlantic salmon habitats, the quality of the services available, and lastly, the revenues generated from hunting and fishing.

Côte-Nord companies and the island’s outfitters argued that:

▪

Transporting natural gas produced in Anticosti to Côte-Nord would help maximize the region’s economic benefits

▪

The risks of having a pipeline pass through the most salmon-rich rivers must be properly assessed People who participated in the consultation sessions raised some points that also apply to hydrocarbon exploration and development on Île d’Anticosti, including that:

▪

Hydrocarbon extraction must be done in a safe and responsible way through the implementation of best practices, that cutting-edge technology must be used, and that a variety of mitigation measures are required to reduce the industry’s impact and the environmental, health, and transport risks

▪

Suitable conditions for oil and gas development must be established

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The legislative and regulatory framework must be reviewed to integrate best practices currently used elsewhere

▪

Best practices must be followed with regard to social acceptability, e.g., establishing a liaison committee between the industry, community, and government, or sharing royalties with local communities.

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2. STATE OF KNOWLEDGE ON HYDROCARBON POTENTIAL AND RESOURCE ASSESSMENT

Île d’Anticosti constitutes the bulk of the above-water area of the Anticosti Platform, a geological subprovince of the St. Lawrence Platform. The island’s geological potential started drawing attention in the early 1960s and various exploration and geoscientific knowledge acquisition projects have been conducted over the years.

Recent work carried out in Anticosti focused on the Macasty Formation’s source rock, which consists of siliceous and bituminous black shale. Its properties are relatively well known due to a variety of studies on material recovered from earlier oil and gas drilling activities.

Prior work also made it possible to determine that the Macasty Formation’s hydrocarbon content is high enough for productive source rock where thermal maturity is adequate.

To illustrate that point, Granger et al. (2013) identify three areas, shown in Figure 1.1, where the Macasty Formation gradually increased in thermal maturity.

Figure 1.1: Thermal maturity in the Macasty Formation

Source : Pétrolia, avril 2013, http://www.petrolia-inc.com/imports/medias/pdf/presentation-corpo/2013-04-petrolia-utica-shale-congress.pdf

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Thermal maturity is similar in concept to degrees of doneness in cooking—a standardized index making it possible to estimate how maximum source rock temperatures affect the hydrocarbons produced. At relatively low temperatures, the rock is in the “oil window” and mainly produces oil. As it gets hotter, it reaches the

“condensate zone” and gradually produces less oil and more natural gas. At higher temperatures, within the “gas window,” natural gas is the only hydrocarbon present.² At temperatures above the gas window, hydrocarbons become unstable and break down into graphite and CO₂.

Exploration efforts carried out on the island so far have confirmed the presence of hydrocarbon and made it possible to ascertain its potential to some extent. In 2011, based on available information, Sproule Associates and Netherland Sewell & Associates (NSAI) estimated the Macasty Formation’s potential hydrocarbon resources at 30.9 billion oil-equivalent barrels³ for licenses then held by Pétrolia and Corridor Resources and 12.2 billion oil-equivalent barrels for licenses held by Junex. For reference, oil consumption in Québec is about 130 million barrels a year. Still, it should be noted that only a fraction of these resources could actually be extracted.

Exploration efforts did not, however, provide any information on the relative proportions of the different types of hydrocarbons, nor on recoverable quantities or potential production levels.

Given that knowledge on the Macasty Formation is still fragmentary, and that the source rock has never been subject to fracturing operations or extraction testing, we can only base ourselves on drilling data from similar rocks in other oil regions seen as geological analogues. Geological formation data closely resembling that of the Macasty Formation was used in some AKAP studies,⁴in particular data on hydrocarbon proportions, recoverable quantities, and production levels.

2 For more information on the subject, consult the report by S. Séjourné and M. Malo, Géologie et potentiel en hydrocarbures des bassins sédimentaires du sud du Québec, INRS, January 2015. Other sources and maps present similar information.

3 For more information on the hydrocarbon potential, consult the report by S. Séjourné and M. Malo, Géologie et potentiel en hydrocarbures des bassins sédimentaires du sud du Québec, INRS, Centre Eau Terre Environnement, 2015. Note that other companies have also carried out potential resource assessments.

4 In particular, studies AECN01-02, GECN02, GTEC01, AENV01 and GENV30.

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Identifying geological analogues

A geological analogue is a known and well-documented geological environment with a production history bearing fundamental geological similarities with the Québec geological environment, of which knowledge is limited. Many criteria can help identify an analogue, including the formation’s age, composition, porosity, structure, thermal maturity, and total organic carbon content. In this context, identifying analogues is beneficial in a number of ways. For example, analogue properties can be used to establish criteria for high potential sites sharing geological attributes, thereby making it possible to consider location-specific hydrocarbon potential in land development planning.

From a technical perspective, identifying geological analogues makes it possible to:

▪

Address the lack of information on reactions to hydraulic fracturing, e.g., by estimating the properties of rocks on which little is known using similar rocks for which more data is available as reference

▪

Anticipate geological risks for structures with hydrocarbon potential

▪

Identify design, development, and integrity issues associated with hydrocarbon extraction to optimize quality, yield, and safety in a similar context

▪

Present or determine best practices to adopt

▪

Designate parts of the land and operations for which particular conditions are justified.

From an economic standpoint, if enough quality information is available, identifying geological analogues is the first step toward establishing production scenarios that can gradually be improved as more data on geological structure and production potential becomes available.

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Despite minor differences in mineral composition and geological history, the Utica and Point Pleasant formations in Ohio were identified as the best available geological analogues for Anticosti’s Macasty Formation ⁵ due to similarities in:

▪

Lithology and technostratigraphic context

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Formation age

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Composition and organic matter maturation

▪

Average and maximum potential free or residual hydrocarbon content

Production data from geological analogues can be used to develop oil and gas production scenarios if information on a geological formation is lacking. We were therefore able to develop various models for Île d’Anticosti as the Macasty Formation is relatively similar to the analogues used and production data was available for many wells. This was not the case for the oil and gas fields in Gaspésie, Bas-Saint-Laurent, or the Gulf of St. Lawrence, which had to be modeled as part of the comprehensive SEA.

As more information is acquired on the geological formation, in particular through exploration efforts (such as drilling and hydraulic fracturing operations and extraction testing) and new geological and economic studies, real data will gradually replace that of analogues. Analogues can therefore be useful in documenting the impacts and externalities of projects in the preliminary stages.

5 The geological analogue was established in Phase 1 of the SEAs.

Source: Bertrand, R. and M. Malo, Comparaison entre la Formation de Macasty, l’Île d’Anticosti, Québec et quelques roches mères à hydrocarbures de l’Amérique du Nord, INRS, Centre Eau Terre Environnement, 2015. (complementary study).

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Recent exploration efforts

Exploration work was carried out on the island as part of the SEA specific to Île d’Anticosti. The government authorized Hydrocarbures Anticosti—a limited partnership of which Ressources Québec, a subsidiary of État Investissement Québec, owns 35%—to perform stratigraphic surveys. The government set out specific conditions for work to be carried out on the island, adopting a ministerial decree on July 4, 2014.

These conditions were established to ensure the safety of persons and property and the protection of the environment.

Moreover, to ensure that work was strictly monitored and controlled, MERN inspectors were onsite for the entire operation, which included 12 stratigraphic surveys conducted from summer 2014 to fall 2015.

MDDELCC representatives were also regularly present.

This regional survey campaign was intended to provide more accurate data on the Macasty Formation, especially its geomechanical properties, to help define certain preliminary parameters to consider for upcoming work. The 12 surveys cross-checked information on the Macasty Formation and found the thickness, total organic content (TOC), porosity, permeability, and maturity to be in line with expectations and comparable to those of similar oil and gas fields in North America ⁶. Furthermore, the surveys confirmed that the Macasty Formation is located at a depth of 1.3 to 1.5 km in the optimized scenario area, and complementary studies indicate that overlying rocks form a natural barrier against the propagation of fractures to the surface.

However, recent exploration results are insufficient to confirm the models and development scenarios established by AKAP studies.

6 The Anticosti stratigraphic survey campaign is over, Hydrocarbures Anticosti S.E.C. press release, October 8, 2015

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3. ÎLE D’ANTICOSTI

Île d’Anticosti is located in the Gulf of St. Lawrence, separated from Côte-Nord by the Jacques-Cartier strait and from Gaspésie by the Honguedo strait (Figure 3.1). At 7,943 km² in size, the island is the largest in Québec. Municipalité de L’Île-d’Anticosti is part of the Minganie regional county municipality (RCM).

The island is almost entirely covered in forests (7,259 km²). Wetlands, especially bogs, take up much of the land (2,000 km²), as do water bodies and coastal areas (233 km²). Anticosti residents are concentrated in Port-Menier (about 1 km²), a built-up area at the west end of the island.

This section presents an overview of the Anticosti community and the characteristics of the island’s biophysical environments.

3.1 Overview of the Anticosti community

Anticosti has 200 residents. The island’s population drops down to 175 in winter and swells up to about 400 in fall. From June to November, thousands of hunters and vacationers flock to the island, generating much economic activity. Unemployment is high in winter. In winter 2009, the municipality assessed unemployment at 60% (ASOC01).

Local culture and economic activity primarily revolves around hunting, fishing, and tourism, due to the island’s beautiful landscapes. Occupancy statistics from Société des Établissements de Plein Air du Québec (SEPAQ) and Parc National d’Anticosti indicate that, in 2014, the island welcomed 2,307 hunters, 670 vacationers, and 211 fishers, for a total of more than 15,000 overnight stays. Logging operations, which drove the island’s economy from 1926 to 1970, have ceased.

The community’s isolation makes it special in many ways, and locals cherish it for a number of reasons, but it also presents many challenges.

A detailed overview of the community has been drawn up, providing key characteristics and fifty or so sociodemographic indicators (ASOC01) on land use and development, the local economy, and employment.

Other indicators cover quality of life and the environment.

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Figure 3.1: Île d’Anticosti

Source : GSOC01 Map 61

Sociodemographic indicators

Data in Table 3.1 shows that the population has been steadily declining since 1987. Data in Table 3.2 shows that the population is gradually getting older, with the proportion of young people (ages 0–14 and 15–29) declining and that of older people (ages 45–64 and 65 and over) rising.

Table 3.1: Population of Municipalité de L’Île-d’Anticosti over time from1870 to 2014

Year 1901 1921 1927 1930 1964 1969 1974 1984 1987 1991 1997 2001 2007 2011 2014

Number 250 532 800 454 475 301 235 364 306 270 264 287 256 243 205

Source : ASOC01, Plante et al. (2015), p. 38