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Environmental battle brewing in Quebec as Junex seeks to begin oil production

MONTREAL — A battle is brewing in Quebec as Junex attempts to become the province's first oil producer in a century.

Environmentalists say they'll strongly oppose the company's (TSXV:JNX) application for a provincial permit to begin production by next spring.

Junex announced Tuesday that it's recovered through eight months of testing nearly 18,000 barrels of light, sweet crude produced at its Galt No. 4 horizontal well.

"What we see here is the most significant oil recovery in Quebec's history," Junex CEO Peter Dorrins said in an interview.

The first oil drilling in the Gaspe region started in 1865 but production stalled in the early 1900s.

Dorrins said the well should initially produce about 240 barrels a day and earn profits even at current low crude prices.

The volume is a fraction of the province's daily oil use of about 300,000 barrels a day.

"We're not saying we're going to meet or replace all of Quebec's consumption needs for energy," Dorrins said. "(But) if we can do it locally it's much better because we're using it anyway."

Environmentalists are urging the provincial government not to approve the permit, even though Investissement Quebec owns 16.5 per cent of Junex shares.

"Quebec should have a law to phase out the use of fossil fuels in Quebec, let alone produce them," said Equiterre co-founder Steven Guilbeault.

He said the province should instead focus on efforts to become a green energy leader through other means, such as the expansion of public electric vehicle charging stations which is expected to double in size by 2020.

Greenpeace called for a full environmental hearing on the project, saying it opposes any new oil, gas or coal projects that would hurt efforts to meet Canada's greenhouse emission target. 

"The climate is burning, this is going in the wrong direction and we'll definitely fight those projects," said Patrick Bonin, the group's climate and energy campaigner.

Despite environmental opposition, Dorrins said he believes there's support from the town of Gaspe, which is about 20 kilometres from the drilling site in a mountainous area in an impoverished region of eastern Quebec.

He also noted the oil could be produced without resorting to fracturing, which is highly controversial in Quebec.

Preliminary estimates say Junex's Galt property — which would contain several wells — has 557 million barrels of oil, of which about 10 per cent is recoverable.

That resource estimate would put it on par with light oil discoveries in Western Canada, such as Imperial Oil's 1947 effort in Leduc that helped to kick off Alberta's energy boom, Dorrins said.

"If that was good enough for Imperial Oil in Alberta at that time, it's good enough for Peter Dorrins and for Junex and for Quebec."

 

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