Canadian Province to Ban Shale Gas Fracking

The Canadian province of Quebec said June 6 it will ban all fracking for shale gas in its territory, throwing yet another roadblock in the efforts of Questerre Energy to develop its extensive Utica resources in the St Lawrence Lowlands.

The announcement came just hours before Questerre’s annual general meeting in Calgary and prompted a stinging rebuke from CEO Michael Binnion.

“Questerre condemns the decision today by the government of Quebec to capitulate to a vocal minority that are seeking to both block the progress on our global environment and the growth of Quebec’s economy,” Binnion said. “This decision is motivated solely by short-term politics around the upcoming election.”

Quebec voters are to go to the polls October 1, and most opinion surveys are suggesting the current Liberal government led by premier Philippe Couillard is in danger of falling to the right of centre Coalition Avenir Quebec party.

The ban was announced in regulations released by the provincial energy department that put flesh on the bones of new provincial legislation adopted in late 2016 that appeared to support natural gas developments in the province. A first set of draft regulations issued in the fall of 2017 expressly permitted hydraulic fracturing anywhere in the province but were widely criticised for not doing enough to protect the province's drinking water and were never implemented.

The latest draft regulations, which also ban drilling near 13 provincial waterways and tighten rules on drilling in close proximity to residential areas, will remain open to public comment for 45 days.

The 2016 legislation followed a three-year moratorium on fracking during which time the science of the technology was examined extensively, including in 134 independent studies by Quebec scientists. None of those studies showed any link between hydraulic fracturing of natural gas wells and drinking water, Binnion said.

“The decision is contrary to the objectives of the government's own energy policy adopted after more than a year of public consultation,” he said. “Local natural gas production will reduce global emissions while providing significant economic benefits including well-paying jobs in Quebec.”

At the annual meeting, Binnion likened this latest move by the government to an attempt by a previous Parti Quebecois government to ban shale gas fracking. “That was actual legislation, not regulations, and it died on the order paper at the time,” he said.

Later, Binnion told NGW Questerre will “hunker down", await the conclusion of the 45-day comment period - it intends to file its comments to that process - and the outcome of the October election, which may install a more business-friendly administration.

The Quebec Oil and Gas Association reacted quickly to the announcement of the ban, releasing a recent Ipsos poll showing that 60% of Quebecers support local natural gas development, while 22% were opposed, the rest being undecided.

“We have been told for years we need social acceptability,” Binnion said. “When a strong majority of Quebecers support modern natural gas development that is cheaper, cleaner, more reliable, and better for the economy, we can't be too far away.” 

Questerre's shares, which trade on the TSX, dropped about 12% after the announcement, ending trading on June 6 at C$0.99/share. On June 7, they fell more, to as low as C$0.99/share before gaining some of that back by mid-morning to trade at C$0.70 at 11:30 am EDT (3:30 pm GMT). On the Oslo stock exchange, Questerre shares also fell sharply through the day, reaching a 52-week low of NKr3.97 (C$0.64) before settling at NKr3.99 at the close from the June 6 close of NKr7.23.