A marathon campaign to revive dormant natural gas drilling in Quebec advanced a step in an asset transaction announced Wednesday by Questerre Energy Corp.
The Calgary firm closed a takeover of an 1,150-square-mile strip of French Canadian Utica Shale gas prospects in a region between Montreal and Quebec City known as the Lowlands, south of the St. Lawrence River.
Questerre President Michael Binnion said completing the deal with Repsol Oil & Gas Canada Inc. means, “we have regained control and operatorship of our giant natural gas discovery in the Lowlands.”
The transaction settled a legal dispute between Questerre and Repsol, which inherited a partnership role in Quebec shale gas exploration with the C$15 billion ($11 billion) purchase of Talisman Energy Inc.
Before the Repsol-Talisman takeover, first announced in late 2014, an environmental review by the Quebec government halted a Lowlands shale pilot program of horizontal wells and hydraulic fracturing. The review ended in enactment of a provincial fracturing ban.
To earn provincial approval for taking over full ownership of the Quebec shale gas campaign, Questerre posted security to cover well abandonment and reclamation liabilities accumulated to date. Counting all transaction expenses, the Quebec shale acquisition cost about C$11 million ($8.2 million).
The deal with Repsol tripled Questerre’s total Quebec Lowlands shale gas properties to about 1,560 square miles. Potential reserves have been estimated to be 3.9-21.3 Tcf by GLJ Petroleum Consultants.
“There is no certainty that it will be commercially viable to produce any portion,” said GLJ’s assessment of Questerre’s shale targets.
The fracturing ban remains in force and popular, with the Quebec government making no promises to change the rule.
Binnion vowed to develop production by adopting shale gas methods that achieve the province’s environmental goals.
“We are now well positioned to engage the government and all stakeholders on our Clean Tech Energy project,” he said.
Questerre has engaged oilfield services giant Schlumberger Ltd. and Quebec engineering firm SNC Lavalin for advice on crafting a shale production package with zero emissions, drinking water consumption or underground use of toxic chemicals.
The plan includes using electric drilling methods and production hardware that would use power bought from provincial government-owned Hydro Quebec.