firms to push forward on quebec shale plans

Calgary Herald August 31, 2010 1:03 AM
Calgary Companies Undeterred; Province launches environmental review of fracking.

Calgary companies exploring for shale gas in Quebec say they will move ahead with development plans even as the province reviews environmental issues with hydraulic fracturing that have been blamed for polluting groundwater in the United States.

The Quebec government announced on Sunday that it will hold public hearings starting on Sept. 14, which will eventually lead to a new hydrocarbon law in the province.

The independent review will also include an examination of the hydraulic fracturing process that uses water and chemicals to force open fissures in shale to release trapped natural gas and allow it to flow to the surface.

On Monday, the Quebec Oil and Gas Association -- which includes Calgary-based producers Talisman Energy and Questerre Energy, who are jointly developing a major shale gas discovery in the St. Lawrence River valley -- said it welcomes the review and looks forward to the chance to promote the benefits of natural gas to the region.

In an interview with Postmedia News, association president Andre Caille said Quebec could be producing 500 million cubic feet of gas daily by 2020, creating 7,500 jobs over several years. Caille said the association hopes to convince Quebecers shale gas drilling is safe and can be done in an environmentally friendly way.

"People have legitimate questions and we need to provide them with answers," he said.
Caille was the head of Hydro-Quebec from 2004-2007 and was previously the chairman of the World Energy Congress, which will be holding its triennial gathering in Montreal next month. Underscoring the infancy of the industry in Quebec, the QGOA was only formed in April of 2009.

Although the shale gas potential of Quebec has been known for decades, the province presently has no regulatory framework specific to the oil and gas sector and energy companies currently operate under mining laws.

In 2008 Questerre announced what it said could be one of Canada's largest natural gas finds and partnered with Talisman to launch a commercial pilot program to test the Utica shales, which could rival B.C's Horn River and Alberta's Montney deposits.

Quebec's review will likely form the basis of new legislation to be introduced next spring after the commission reports Feb. 4, according to a news release posted in French on the province's website.

The CBC reported that Sunday's announcement was met with protests from environmental groups. Opposition to natural gas drilling is gaining momentum after concerns about the fracturing process were raised in the U.S.

Last week a Montreal-based environmental group called for an immediate moratorium on shale gas development similar to a ban in New York state that has all but shut down gas drilling on the American side of the border.

But activity is continuing to gain momentum in Canada. So far this year Talisman and Questerre have drilled five horizontal wells in Quebec with plans to finish and test two of them starting in October.

Despite the review, Talisman spokeswoman Phoebe Buckland said the company will complete its 2010 program in Quebec, where it holds about 300,000 hectares of gas prone land in the area. In addition to Quebec, the company is also a major unconventional player in Pennsylvania, where shale gas drilling has continued despite the concerns in New York.

"There has been no impact to our activities. It's not like New York where the industry is at a standstill," she said in an interview. "This is a very new process to Quebec . . . Talisman has welcomed the announcement and will participate in the process."
Jason d'Silva, Questerre's chief financial officer, said his firm operates under standards that have allowed fracturing in Western Canada for more than half a century. In an interview, he said Quebecers are understandably leery given the lack of oil and gas drilling outside of the Prairie Provinces and stressed that the natural gas industry is still in its infancy there.

Unlike the U.S., he said his company publishes the chemicals used in its fracturing fluids and discloses the amounts used in the fracturing process. In addition, it translates technical reports into French and posts them on its website in a bid to keep local residents informed. The Quebec wells are more than a kilometre deep, which poses no threat to groundwater, he added.

"I think one of the reasons you've seen so many problems is that the regulations aren't as strict in the U.S. as they are in Canada," he said.