“Canadian Shale Gas Lawsuit Provides Lessons About What Should Have Been Done in New York”, by JIM WILLIS
Yes, the Utica Shale underlies large portions of Quebec. We often get this question when writing about the Canadian Utica because our U.S-centric maps don’t show the Utica reaching up into Canada.
Canadian Shale Gas Lawsuit Provides Lessons About What Should Have Been Done in New York
OCT 7
Guest Post by Jim Willis at Marcellus Drilling News.
The province of Québec, Canada, with a huge supply of Utica Shale gas sitting beneath it, passed a new law in 2022 outlawing all oil and natural gas production throughout the province (see Quebec Pulls Trigger & Commits Energy Suicide – Bans All O&G Prod.). It was a breathtaking grab of totalitarian power. It’s also energy suicide. Québec said it would pay a piddly $79.5 million (US) to expropriate the oil and gas drilling rights of companies owning those rights in the province. We’ve seen estimates that those rights are worth more than $5 billion. Questerre Energy, which owns more than 1 million acres of leases and an estimated 6 Tcf of Utica Shale reserves in the province, sued Quebec.
As part of the legal process, Questerre filed an independent expert report with the Québec Superior Court that quantifies the economic losses that the company may incur should its licenses to explore for oil and gas be successfully revoked by the Government of Québec. The report estimates potential losses between $700 million and a staggering $4.8 billion.
Yes, the Utica Shale underlies large portions of Quebec. We often get this question when writing about the Canadian Utica because our U.S-centric maps don’t show the Utica reaching up into Canada. But it does:
For years, Questerre has tried to convince Quebec to allow drilling in the Utica (see our Questerre stories here). Then came the out-of-left-field, banana republic move to expropriate all rights, banning new drilling and stopping production on existing wells. The companies harmed by that idiotic policy threatened massive lawsuits over “taking” their revenue streams (see Quebec to Pay “Significantly More” than $5B to Jilted Utica Drillers). They made good on the threat and sued.
We have Questerre’s announcement about the report but no copy of it (we can’t locate it online). It appears Questerre wants to keep it private, saying (in the release below) that the report is “solely for use by Questerre in the legal action.”
[Editor’s Note: The full report may be found here.]
Questerre Energy Corporation (“Questerre” or the “Company”) (TSX,OSE: QEC) reported today on the upcoming drilling program at Kakwa North.
The Company plans to participate in three (1.5 net) wells proposed by the operator at an estimated cost of $21 million net to Questerre. Subject to equipment availability, the wells are scheduled to spud early in the fourth quarter. Completion operations are planned for the first quarter of next year. Questerre holds a 50% interest in these wells.
Questerre also reported that the three (0.75 net) new wells on its Kakwa Central acreage were tied in earlier last month. Gross production from these wells over the last month is approximately 2,755 boe/d consisting of 6.8 MMcf/d of natural gas and 1,625 bbl/d of condensate and natural gas liquids. The Company holds a 25% interest in these wells. While the initial rates are encouraging, they are not indicative of the long-term performance or ultimate recovery.
Michael Binnion, President and Chief Executive Officer of Questerre, commented, “As we continue to develop the Kakwa area, we are looking forward to the new wells at Kakwa North. With success, we could see our production grow in the second half of next year. Additionally, one of these wells will test a deeper interval in the Montney formation for future development opportunities. As oil prices remain volatile, we are focused on ensuring our drilling program is well funded by our existing cash and cash flow.”
Questerre also reported that it has filed with the Québec Superior Court (Civil Division) (the “Court”) an independent expert report (the “Report”) that quantifies the economic losses that may be incurred by the Company should its licenses to explore for oil and gas be successfully revoked by the Government of Québec (“GoQ”).
The independent expert was retained by the Company’s litigation counsel on behalf of the Company to prepare the Report. The Report was prepared in connection with the legal action to assist the Court. It is solely for use by Questerre in the legal action. The Report was prepared in accordance with the Canadian Institute of Chartered Business Valuators (“CICBV”) requirements for both a Comprehensive Valuation Report and an Expert Report as defined in the CICBV Practice Standards.
Based on the scope, and subject to the restrictions, qualifications, and major assumptions, under various scenarios, all of which are set forth in the Report, potential economic losses range from approximately $700 million to $4,800 million. The Report must be considered as a whole to avoid creating a misleading view. The Report has been filed on SEDAR+ and the NewsPoint service of Oslo Børs. The Report, nor any part thereof, does not form part of nor is deemed to be incorporated by reference in this news release.
Questerre notes that there is no guarantee that it will be successful in respect of its legal action against the Attorney General of Québec, the Minister of Economy, Innovation and Energy and the GoQ which is currently before the Court or that, even if successful, there is no guarantee as to the amount of damages that Questerre may recover, if any. There are no guarantees that the amounts set out in any of the scenarios of the Report will be accepted by the Court, and such amounts may be materially different than the amounts ultimately awarded to and actually recovered by Questerre, if any. Please see “Advisory Regarding Forward-Looking Statements” below.
Questerre is an energy technology and innovation company. It is leveraging its expertise gained through early exposure to low permeability reservoirs to acquire significant high-quality resources. We believe we can successfully transition our energy portfolio. With new clean technologies and innovation to responsibly produce and use energy, we can sustain both human progress and our natural environment.
Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment, and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.*
We remain interested in this story for two reasons: (1) There is a huge chunk of Utica Shale under Québec and Questerre owns a significant amount of Utica acreage there, and (2) Québec’s ban is not dissimilar to New York State banning fracking and blocking all shale drilling. Are there lessons from Questerre’s lawsuit that we can borrow and use here?
#Canada #Questerre #UticaShale #Quebec #Lawsuit #NewYork #Marcellus DrillingNews
