Quebec's shale gas could generate as many as 19,000 jobs and more
than C$1 billion in annual royalties for the province, according to an
economic benefits study issued on Friday.
The Quebec Oil and
Gas Association asked Quebec-based advisory firm Secor to estimate the
economic impact of exploration and exploitation of shale gas, and more
specifically, how developing the Utica Shale would impact the province
in terms of jobs and revenue. The analysis was based primarily on the
input-output model of l'Institut de statistique du Quebec.
Secor prepared two scenarios. The base scenario is
based on drilling 150 wells per year beginning in 2015; the second
scenario assumes that drilling activity will stabilize at 600
wells/year in 2016.
"In both cases, it has been decided that there will be
six wells drilled per drill site," the study noted. "The creation of
5,000 to 19,000 jobs is then foreseeable."
According to Secor's analysis, in full operation one
well would generate C$1.85 million in
value added to Quebec and 33 jobs
annually. Under the base scenario, 150 producing wells by 2015 would
create C$278 million in value added --
gross domestic product -- and close to 5,000 jobs. The production phase
of a well, which stretches over 50 years, would create "relatively few
jobs; 28 jobs per 100 wells in production," Secor found.
"It is royalties that become important during the
production phase," noted Secor. "To identify its importance, the Secor
study was based on gas prices in the fall of 2009, C$6/Mcf and a
royalty rate of 10%. The average royalty per well under these
assumptions would be around C$150,000 per
The study noted that "at this stage we cannot predict
the level of industry development, as the potential in Quebec is not
If a thousand wells are in production on 150 sites, the government of
Quebec could receive C$150
million in royalties annually. Under the second scenario, the
exploitation of 7,000 wells, following the assumed hypothesis, would
translate into annual royalties slightly above C$1
Provincial leaders now are considering whether to allow gas
drillers to expand exploration and development of the Utica Shale. A
report by the province concerning hydraulic fracturing practices in
shale is scheduled to be issued in February (see Shale Daily, Oct. 6).