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Quebec Proposes Modifying Oil, NatGas Regulations

The provincial government of Quebec has published a draft version of proposed regulations governing oil and natural gas activities in the province.

In Wednesday's issue of Gazette officielle du Quebec, used to announce government decisions, Quebec outlined a series of regulatory changes to allow for oil and gas development.

Specifically, the government has proposed modifying the existing Building Act to cover pressure installations used by the oil and gas industry, and to revoke parts of the Mining Act that covered petroleum, natural gas and underground reservoirs. Quebec would also enact the Petroleum Resources Act (PRA), which calls for regulating oil and gas exploration, production and storage activities in both the onshore and offshore. The PRA would also cover licensing and pipeline construction.

Last December, after a lengthy political debate in the National Assembly, Quebec lawmakerspassed a law creating the PRA. At the time, the Liberal government of Premier Philippe Couillard also rejected an amendment that would have banned horizontal drilling and hydraulic fracturing (fracking) in the province.

Quebec said the draft regulations on pressure installations "harmonize the requirements in that field with the regulations of the other provinces and territories of Canada and to make stakeholders more accountable."

For onshore oil and gas activities, the government conceded that the draft regulations would impact companies that hold rights to explore for and produce oil and gas in the province. Those operators would need to obtain authorizations to carry out activities not previously regulated,  such as stratigraphic surveys and fracking.

The operators “will also have to furnish a guarantee representing the totality of the costs for well or reservoir closure and site restoration," the government said. "They will have to contend with greater accountability, in particular in respect of the information sent to the Minister of Energy and Natural Resources. The additional requirements may impose, in certain cases, a significant burden."

Questerre Energy CEO Michael Binnion applauded the government for publishing the draft regulations on schedule.

"Our step-by-step approach to engaging with the government and other stakeholders is working," Binnion said. "Our preliminary review suggests these regulations reflect some of the highest standards in North America for oil and gas activity."

According to Binnion, the draft regulations incorporate results from more than 100 studies conducted in the province "and best practices in other jurisdictions. They are designed to facilitate development while recognizing the importance of protecting the environment and securing local acceptability.

"Along with other license holders in Quebec, we will be studying these regulations in detail and providing feedback to the Ministry. We are looking forward to the implementation of the final regulations by year-end."

Calgary-based Questerre said the PRA would take effect at a future date set by the provincial government. That is expected to occur about the same time that the government adopts the final regulations.

Last February, Questerre, which explores in Quebec's Utica Shale within the St. Lawrence Lowlands, said independent engineers estimated that some resources in the play are 30% larger than previously thought, an estimated 5.8 Tcf, or 965 million boe. Questerre is focused on 735,910 gross acres prospective to the Utica in Quebec.

Canadian petroleum engineering firms estimate the commercial gas production potential of Quebec's Utica layer is 3.5-18 Tcf. The deposits are said to include liquid byproducts such as gasoline-like condensate and propane. Meanwhile, the Macasty Shale, on oily formation underlying Quebec's Anticosti Island, is estimated to contain 20-45 billion bbl of oil.

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