OTTAWA - An American company intends to sue the Canadian government for more than $250 million over Quebec's controversial moratorium on hydraulic fracturing or fracking.

Lone Pine Resources Inc. (TSX:LPR), which is incorporated in Delaware but headquartered in Calgary, has filed notice that it intends to sue under provisions of the North American Free Trade Agreement.

Lone Pine says the Quebec government's move to cancel a natural gas exploration permit for deposits beneath the St. Lawrence River last year was "arbitrary, capricious and illegal."

Details of the claim for arbitration are contained in a notice filed Nov. 8 on the website of the Department of Foreign Affairs and International Trade.

Lone Pine cites Article 1117 under NAFTA in making its claim for the loss of a "valuable right ... without due process, without compensation and with no cognizable public purpose."

Lone Pine says the suit has been filed against Ottawa because it is responsible for acts by provinces both under NAFTA and international law.

Quebec passed the moratorium in order to study the controversial process in which fluid under high pressure is pumped underground to release petroleum from rock formations.

Environmentalists contend fracking risks contaminating ground water, while the industry says it can be done safely.

Quebec Finance Minister Nicolas Marceau told reporters Friday that NAFTA prohibits discrimination against individual companies.

"(But) if all companies who wanted to exploit Quebec's shale gas were subject to the same provisions, be they foreign or Quebec, the complaint is unfounded," he said after speaking about his budget to the Montreal board of trade.

Lone Pine said that between 2006 and 2011 it had spent millions of dollars as well as time and resources to obtain the Quebec permits.

"Suddenly, and without and prior consultation or notice, the Government of Quebec introduced Bill 18 ... to suspend all exploration for oil and gas in the province (except for the purposes of scientific studies onshore.)"

Lone Pine said all attempts to discuss the matter with the province were "repeatedly rebuffed" and that it had been told the move was "a political decision and that nothing could be done to prevent it from being passed."

"It is Lone Pine's hope that this dispute can resolved amicably through consultation and negotiation," the company said in its notice. "However, is such consultation and negotiation is unsuccessful, Lone Pine will pursue arbitration" under NAFTA.

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  • PRO: Potential Energy Independence

    Estimates by the <a href="http://www.eia.gov/pub/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/current/pdf/arrsummary.pdf" target="_hplink">United States Department of Energy</a> put the number of recoverable barrels of shale gas at around 1.8 trillion. To put that into perspective, Saudi Arabia is estimated to have roughly <a href="http://www.opec.org/opec_web/en/data_graphs/330.htm" target="_hplink">2.6 trillion barrels of oil reserves</a>. Christopher Booker writes for <em>The Telegraph</em><a href="http://www.telegraph.co.uk/comment/columnists/christopherbooker/8500496/Shale-gas-could-solve-the-worlds-energy-problems.html" target="_hplink"></a> that there are enough world reserves to "keep industrialised civilisation going for hundreds of years"

  • CON: Water Pollution

    A <a href="http://switchboard.nrdc.org/blogs/amall/incidents_where_hydraulic_frac.html" target="_hplink">blog post by the Natural Resource Defense Council</a> explains that "Opponents of such regulation [of fracking] claim that hydraulic fracturing has never caused any drinking water contamination. They say this because incidents of drinking water contamination where hydraulic fracutring is considered as a suspected cause have not been sufficiently investigated." It then goes on to list more than two dozen instances of water pollution to which hydraulic fracking is believed to have contributed. A <a href="http://insideclimatenews.org/news/20111104/gasfrac-propane-natural-gas-drilling-hydraulic-fracturing-fracking-drinking-water-marcellus-shale-new-york" target="_hplink">new waterless method of fracking</a> has been proposed, but environmentalists are skeptical.

  • CON: Leaks More Emissions Than Coal

    Methane is a greenhouse gas and <a href="http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-natural-gas-works.html#enviroimpacts" target="_hplink">major component of shale's carbon footprint</a>. Cornell Professor Robert Howarth said about a study he conducted, "Compared to coal, the footprint of shale gas is at least 20 percent greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years."

  • PRO: Burns Cleaner Than Other Fossil Fuels

    <a href="http://www.scientificamerican.com/article.cfm?id=natural-gas-could-serve-as-bridge-fuel-to-low-carbon-future" target="_hplink">Researchers at MIT found that</a> replacing coal power plants with natural gas plants could work as part of a plan to reduce greenhouse emissions by more than 50 percent.

  • CON: Hydraulic Fracking Has Been Linked To Earthquakes

    <a href="http://oilprice.com/Energy/Natural-Gas/U.S.-Government-Confirms-Link-Between-Earthquakes-and-Hydraulic-Fracturing.html" target="_hplink">Several earthquakes both in the U.S. and abroad </a> have been linked to the hydraulic fracturing process. One British company, <a href="http://www.cuadrillaresources.com/cms/wp-content/uploads/2011/11/Cuadrilla-Resources-Press-Release-02-11-11.pdf" target="_hplink">Cuadrilla Resources</a>, admitted in a report that its hydraulic fracturing process well "did trigger a number of minor seismic events."

  • PRO: Jobs

    <a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink">The industry currently employs more than 1.2 million people</a> in the U.S., and the Department of Energy estimates that natural gas resources have increased nearly 65 percent due to fracking, according to a TreeHugger graphic. Additionally, <a href="http://www.bu.edu/energy/files/2011/07/Fracking-article-Sept-14-2011.pdf" target="_hplink">the gas industry accounts for about $385 billion</a> in direct economic activity in the country, a <em>Nature</em> piece reports.

  • CON: Companies Don't Have To Disclose Chemicals Used In Process

    <a href="http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm" target="_hplink">Fracking is exempt from the Safe Drinking Water Act of 2005</a>, thus allowing companies to conceal the chemicals used in the process.

  • PRO: Buys Time To Develop Renewable Energy

    Former chief of staff to President Clinton and former head of the Center for American Progress <a href="http://www.businessweek.com/magazine/could-shale-gas-reignite-the-us-economy-11032011_page_2.html" target="_hplink">John Podesta says natural gas can serve</a> "as a bridge fuel to a 21st century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels."

  • CON: Requires Large Amounts Of Water

    The fracking process can require around <a href="http://www.hydraulicfracturing.com/Water-Usage/Pages/Information.aspx" target="_hplink">five million gallons</a> of water. In some cases<a href="http://www.treehugger.com/fossil-fuels/facts-on-fracking-pros-cons-of-hydraulic-fracturing-for-natural-gas-infographic.html" target="_hplink"> less than a third of that water is recovered</a>.


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  • In this file photo from Oct. 14, 2011, a drilling rig is seen in Springville, Pa. State regulators blamed faulty gas wells drilled for leaking methane into the groundwater in nearby Dimock, Pa. It was the first serious case of methane migration said to be related to the Pennsylvania Marcellus Shale gas field drilling boom. (AP Photo/Alex Brandon, FILE)

  • British police secure the area where demonstrators erected a mock fracking rig with a banner reading 'No fracking in the UK' in a protest against hydraulic fracturing for shale gas outside the Houses of Parliament in London on December 1, 2012. AFP PHOTO / JUSTIN TALLIS

  • SPRINGVILLE, PA - JANUARY 18: A truck with the natural gas industry, one of thousands that pass through the area daily, drives through the countryside to a hydraulic fracturing site on January 18, 2012 in Springville, Pennsylvania. (Photo by Spencer Platt/Getty Images)

  • SAN FRANCISCO, CA - MAY 30: Protestors stage a demonstration against fracking in California outside of the Hiram W. Johnson State Office Building on May 30, 2013 in San Francisco, California. Dozens of protesters with the group Californians Against Fracking staged a protest outside of California Gov. Jerry Brown's San Francisco offices demanding that Gov. Brown ban fracking in the state. (Photo by Justin Sullivan/Getty Images)

  • People demonstrate on August 3, 2013 in La Petite Brosse, near Jouarre, outside Paris, to protest against an exploratory oil shale drilling, considering that it opens the door to the exploration of shale gas in the Parisian Basin. Banner reads 'Stop gas and oil shale'. AFP PHOTO / PIERRE ANDRIEU

  • In this Nov. 26, 2012 photo, Steve Lipsky demonstrates how his well water ignites when he puts a flame to the flowing well spigot outside his family's home in rural Parker County near Weatherford, Texas. The U.S. Environmental Protection Agency had evidence a gas company's drilling operation contaminated Lipsky's drinking water with explosive methane, and possibly cancer-causing chemicals, but withdrew its enforcement action, leaving the family with no useable water supply, according to a report obtained by The Associated Press. The EPA's decision to roll back its initial claim that hydraulic fracturing, or “fracking,” operations had contaminated the water is the latest case in which the federal agency initially linked drilling to water contamination and then softened its position, drawing criticism from Republicans and industry officials who insisted they proved the agency was inefficient and too quick to draw conclusions. (AP Photo/LM Otero)

  • In this file photo of Jan. 17, 2013, Yoko Ono, left, and her son Sean Lennon visit a fracking site in Franklin Forks, Pa., during a bus tour of natural-gas drilling sites in northeastern Pennsylvania. Ono and Lennon have formed a group called “Artists Against Fracking,” which has become the main celebrity driven anti-fracking organization. (AP Photo/Richard Drew, File)

  • In this March 29, 2013 file photo, a worker checks a dipstick to check water levels and temperatures in a series of tanks at a hydraulic fracturing operation at a gas drilling site outside Rifle, Colorado. (AP Photo/Brennan Linsley)

  • In this March 29, 2013 file photo, a worker switches well heads during a short pause in the water pumping phase, at the site of a natural gas hydraulic fracturing and extraction operation outside Rifle, in western Colorado. (AP Photo/Brennan Linsley)

  • In this March 29, 2013 file photo, workers tend to a well head during a hydraulic fracturing operation at a gas well outside Rifle, in western Colorado. (AP Photo/Brennan Linsley)

  • Josh Fox, director of the anti-fracking, Oscar-nominated documentary “Gasland” testifies during a House Committee hearing on oil drilling, "fracking" legislation at the Illinois State Capitol Tuesday, May 21, 2013, in Springfield, Ill. (AP Photo/Seth Perlman)

  • This is a Thursday Aug. 15, 2013 image of the Cuadrilla exploration drilling site in Balcombe, southeast England. (AP Photo/Gareth Fuller/PA)

  • A child plays near a farmers' protest in an area where oil company Chevron plans to put a drilling rig exploring for shale gas in the south-eastern Polish village of Zurawlow on June 11, 2013. AFP PHOTO / JANEK SKARZYNSKI

  • Protesters hold a banner during a protest outside of the Momentive resin plant, Monday, July 8, 2013, in Morganton, N.C. Dozens of environmental activists blocked a chemical plant Monday to protest against the company's sale of products used in the natural gas drilling process called hydraulic fracturing, or fracking. (AP Photo/The News Herald, Mary Elizabeth Robertson)

  • A fracking rig exploring for shale gas of oil company Chevron on June 11, 2013 in a village of Ksiezomierz in south-eastern Poland. AFP PHOTO / JANEK SKARZYNSKI

  • People demonstrate on August 3, 2013 in La Petite Brosse, near Jouarre, outside Paris, to protest against an exploratory oil shale drilling, considering that it opens the door to the exploration of shale gas in the Parisian Basin. AFP PHOTO / PIERRE ANDRIEU

  • Opponents of hydraulic fracturing in New York state attend a news conference and rally against hydraulic fracturing, also known as fracking, on January 11, 2012 in New York City. (Photo by Spencer Platt/Getty Images)

  • Eric Weltman of Food & Water Watch attends a news conference and rally against hydraulic fracturing, also known as fracking, in New York State on January 11, 2012 in New York City. (Photo by Spencer Platt/Getty Images)

  • Opponents and supporters of gas-drilling, or fracking, walk into the last of four public hearings on proposed fracking regulations in upstate New York on November 30, 2011 in New York City. (Photo by Spencer Platt/Getty Images)

  • Engineers on the drilling platform of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Engineers at work on the drilling platform of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • General views of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Engineers look at the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • A lump of shale rock on display at the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Engineers on the drilling platform of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Engineers at work on the drilling platform of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Drill heads on display at the entrance to the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • An engineer displays a lump of shale rock at the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. (Photo by Matthew Lloyd/Getty Images)

  • Actor/director Mark Ruffalo (C) speaks at the Hydraulic Fracturing prevention press conference urging the protection of the drinking water source of 15 million Americans at Foley Square on April 25, 2011 in New York City. (Photo by D Dipasupil/Getty Images)

  • (L-R) Actor/director Mark Ruffalo, Denise Katzman, Wenonah Hauter, and Water Defense co-founder/campaign director Claire Sandberg attend the Hydraulic Fracturing prevention press conference urging the protection of the drinking water source of 15 million Americans at Foley Square on April 25, 2011 in New York City. (Photo by D Dipasupil/Getty Images)