Quebec hasn’t been declared a frack-free zone, but it’s close. New petroleum regulations (O.C. 1251-2018, O.C. 1252-2018 and O.C. 1253-2018) that take effect September 20, 2018 prohibit hydraulic fracturing (fracking) in shale and also effectively prohibit most other forms of hydrocarbon exploration in or within one kilometre of a water body or an urban area.
According to the Quebec government, there are on average fewer than two kilometres between water bodies across the province, which means that there should be very few parcels of land that will be open to oil and gas exploration without special approval from the Ministry of Energy and Natural Resources.
The door isn’t firmly shut. The Minister of Energy and Natural Resources may authorize work that would otherwise be prohibited, provided the licensee carries out a range of engineering studies that demonstrate that the work will not threaten the environment.
The petroleum regulations accompany the province’s new Petroleum Resources Act, which also comes into force on September 20, 2018. The new Act was welcomed by many in the oil and gas industry as providing a comprehensive foundation for hydrocarbon development in the province. The hydrocarbon-rich Utica Shale extends into portions of Quebec and has been viewed as promising for development.
Questerre Energy Corporation was one of those oil and gas developers that welcomed the new Petroleum Resources Act, but its position has taken a 180-degree turn now that the petroleum regulations have been made public. It says it will take the province to court.
According to a Questerre statement, the restrictions on hydraulic fracturing were a last-minute addition before the drafts of the petroleum regulations were made public earlier in summer 2018. It calls the limitations “beyond the legal power and authority of the government, contrary to the independent scientific studies, and moreover they do not meet the consultation requirements detailed in the Quebec government’s green book for social acceptability.”
Questerre has plenty at stake. It provisionally settled a dispute with its former partner Repsol Oil & Gas Canada Inc. (formerly Talisman Energy Inc.) over exploration rights to more than 750,000 acres in Quebec. Final settlement of the lawsuit was contingent on the province enacting its petroleum regulations under the Petroleum Resources Act.
Questerre will also be keeping an eye on the October 1, 2018 provincial election, and may even be betting on a particular result. In the Questerre statement, President and Chief Executive Officer Michael Binnion said: “The last-minute electioneering by the Government has added a new legal challenge for us which we are confident in overcoming. After the election on October 1, 2018, we are looking forward to working with the government to align the regulations with the enacted legislation.”