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Nova Scotia Moves to Continue Fracking Moratorium

The Liberal government of Nova Scotia followed through on a promise to continue a moratorium on high-volume hydraulic fracturing (HVHF) on Tuesday, after introducing an amendment to the province's Petroleum Resources Act.

"We've heard from many Nova Scotians that we are not yet ready for HVHF to be a part of developing our onshore oil and gas resources in shale," Energy Minister Andrew Younger said in a statement. "This legislation provides assurance to Nova Scotians that this technique will not be permitted without a public, open and transparent debate in the legislature."

Nova Scotia enacted the current moratorium on hydraulic fracturing (fracking) in April 2012 (see Shale DailyApril 23, 2012). It was scheduled to expire at the end of this year.

The amendments call for a ban on using HVHF to develop Nova Scotia's shale formations, and outline the process the provincial government would take before considering lifting the moratorium. But the amendments also give the government the authority to make regulations defining HVHF, and would allow the practice for testing or research purposes.

"We recognize that to better understand HVHF in the Nova Scotia context, we need more research and a better understanding of our resource potential -- government is providing for this," Younger said. "Before permitting this technique, government will need to be confident that it can be done safely and ensure there are stringent rules and regulations in place."

Younger added that the Energy Minister would need to consider the socioeconomic, health, environmental and regulatory impacts of HVHF before lifting the moratorium. "The government of Nova Scotia remains committed to the responsible development of our energy resources like oil and gas, wind and tidal," he said.

In early September, the Liberal provincial government said an inquiry showed widespread fear of HVHF among the general public, and 92% support for at least continuing the existing moratorium (see Shale DailySept. 4Sept. 2). They added that the province's aboriginal community, the Mi'kmaq, had separately called for an outright ban on fracking.

Development of Nova Scotia's shale formations began in 2007, when Triangle Petroleum Corp. acquired an interest in the Windsor Block through a farm-in agreement with Contact Exploration Inc. Triangle earned an initial 70% working interest (WI) in the block -- 474,625 gross (413,000 net) acres in the Windsor sub-basin, part of the Maritimes Basin -- after drilling and completing a vertical test well there in early 2008.

Triangle forged a joint venture (JV) agreement with Zodiac Exploration Corp. in the Windsor Block in 2008. Under the JV, Zodiac agreed to pay 50% of the drilling costs in a $16 million exploration and delineation program in exchange for a 13% WI. In 2009, Triangle signed an agreement with Contact to acquire its 30% stake in exchange for a 5.75% non-convertible gross overriding royalty interest. Triangle currently has an 87% WI in the Windsor Block.

Between May 2007 and March 2009, Triangle performed 2D- and 3D-seismic testing in the Windsor Block and drilled and completed five vertical test wells. The company executed a 10-year production lease with Nova Scotia in April 2009, agreeing to drill seven wells by April 15, 2014, to retain its rights to conventional oil and gas and shale gas in the area (see Daily GPIApril 17, 2009). Areas not drilled or evaluated after the fifth year of the agreement were subject to surrender.

In 2011, regulators in Nova Scotia launched an environmental review of fracking (see Shale DailyApril 12, 2011). They were to analyze fracking operations in Canada and the United States.

The U.S. Energy Information Administration, in a 2013 report on the world's shale formations, estimated that the Horton Bluff Formation -- part of the Windsor Basin -- held 3.4 Tcf of technically recoverable natural gas.

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