MONTREAL-- Energy exploration company Gastem Inc. is set to announce a newshale-gas operation in the Quebec Lowlands before winter, even as otheroil and gas firms continue to caution that the province’s much-hypedUtica shale-gas play won’t see a drilling boom anytime soon because ofhigh costs and better opportunities elsewhere.
The Montreal-basedcompany is involved with partners in several shale-gas drillingoperations in Quebec and will launch a new gas site in the St. LawrenceRiver corridor this fall, spokesman David Vincent said Friday. Hedeclined to give further details.
“[The potential of Utica] ishuge actually,” Mr. Vincent said. “We proved in 2007 and 2008 that therewas gas there. We proved in 2008 and 2009 that we were able to recoverit. Now we have to prove that we can do it economically.”
TheQuebec government has issued exploration permits to 13 companiessearching for natural gas in Quebec as of this September. The firms havespent roughly $135-million in all to drill 28 wells but the resource’sdevelopment is still considered to be in its infancy.
Duringgovernment-led environmental impact hearings on shale gas over the pasttwo weeks, officials with certain companies have downplayed thenear-term commercialization expectations of the Utica find — a majorswath of natural gas buried in rock stretching from the south shore ofQuebec City to the United States.
Some cited high drillinginfrastructure costs in the province. Others noted that current naturalgas prices below $4 per million British thermal units is making theeconomics less attractive.
“This is a long-term project for us,”James Fraser, vice-president of Calgary-based Talisman Energy Inc., toldthe hearings last week. “We have to lower costs.”
Talisman andpartner Questerre Energy Corp. of Calgary, the leading developers of theQuebec Utica play, are now pushing back a planned test-drilling programby a minimum of six months.
Pierre Arcand, Quebec’s EnvironmentMinister, said Friday that there will be many such stops and restartsahead of commercialization. “Some companies pull back for a certain timebut others are pushing forward,” he told reporters. “We’re still in theexploration phase here.”
Paul Myers, chief executive ofCalgary-based Canbriam Energy Inc., said there are simply better placesthan the St. Lawrence Lowlands in the immediate term to use thecompany’s Alberta drill crews, which have to travel to Quebec because ofa lack of local workers.
Canbriam has drilled three horizontalgas wells in Quebec but won’t do the completion work on those wellsuntil likely next spring, he said. It is drilling in more advanced playsin British Columbia called Montney and Horn River.
“We’redefinitely early days here for Quebec,” Mr. Myers said. “At the end ofthe day, the big question mark is what are you going to recover from ahorizontal well? And no one really knows that yet.”
Financial Post