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Questerre to Defer Utica Shale Projects

Questerre Energy Corp. said late Monday it is deferring two exploration projects in its primary development area, the Utica Shale in Quebec's St. Lawrence Lowlands, and will decide whether to proceed after the provincial government's environmental review panel issues a report on shale gas development in February.

The Calgary-based producer said it is delaying a seismic project as well as construction of a natural gas pipeline that it planned in the Saint-Edouard area, which is southwest of Quebec City. In addition to waiting for some direction from provincial leaders, Questerre said it also wants to review the results from two horizontal wells that have been completed.

"Questerre received excellent cooperation from the citizens of Saint-Edouard and from the municipal government on its plans to acquire seismic and construct a natural gas pipeline," the company stated. "Both projects are ready to proceed. However, Questerre has elected to defer both projects pending receipt of the BAPE [Bureau des audiences publiques sur l'environnement] report, introduction of new hydrocarbon legislation and the results from its two horizontal wells."

BAPE conducted public hearings last fall in areas of the province where gas producers have requested to drill, and it expects to issue a review by Feb. 28 (see Shale Daily, Dec. 23, 2010).

"We had over 90% support from 449 land owners," said Questerre CEO Michael Binnion. "If our reception in Saint-Edouard is a guide, once citizens are properly informed, people in the region are overwhelmingly in favor of shale gas development. I am especially grateful for the tremendous help and support from community leaders to inform their citizens about shale gas development. The delay is a disappointment. Not only are the payments to land owners delayed but so are local jobs."

Questerre said it still plans to hydraulically fracture and test its Fortierville and St. Gertrude horizontal wells in the Utica play. The producer now is working with Talisman Energy Inc., which is its joint venture (JV) partner in the Utica play, about the "consequences of its decision" to delay the completions, its impact on the JV and Questerre's timeline for future work. Talisman is the operating partner of the JV.

"We are confident in the benefits of shale gas development for Quebec," said Binnion. "2011 will be the year to address the prerequisites we believe are essential to the development of Utica natural gas." To advance his case, Binnion recently launched a blog on the company website to tout shale gas benefits (see Shale Daily, Jan. 13). The Utica Shale extends well into the Lower 48, including into New York, and underlies some of the Marcellus Shale. It also extends into parts of Michigan.

According to the province, 13 companies as of last September had received permits to drill in the Utica Shale areas of Quebec that are prospective for natural gas.

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