The Quebec government tabled Bill 21 on February 3 that intensified discussions of effective resource and hydrocarbon development and energy transition, shining a spotlight on Quebec’s choices. Exploration companies that have their fortunes tied to Quebec’s shale gas industry have been facing headwinds for more than a decade and several have been commenting regularly on the public debate over resource development.
One of the more balanced voices for years has been Michael Binnion, CEO of Questerre Energy who had noticed the value of Quebec’s Utica shales since 1998. In his website blog, he noted that the Quebec government in 1998 was working hard to market the province’s oil and gas resources to companies with “little success.” By 2004-2005, Binion partnered with Talisman and this sparked interest in Quebec’s natural gas development.
“No more than one company might have bid for land in Quebec until after we announced that Talisman had become interested… It was not until 2008, after our discovery was made public, that there was any meaningful demand to be in the natural gas business in Quebec… it took Talisman and others like Forest, Junex, and Gastem to give it the push and credibility it needed to succeed,” said Binnion.
But natural gas development in Quebec had to pass tough challenges for social acceptability as well environmental standards. However, a 2021 Leger poll has confirmed a majority of decided Quebecers – 66% in fact – support local natural gas development, which demonstrates a favourable degree of acceptability. Environmental concerns, however, have centred around the practice of fracking gas shales in production.
In his search for environmentally sensitive solutions, Binnion happened upon a solution. He engaged with geothermal companies that used a different reservoir stimulation process. Instead of high-pressure hydraulic fracturing, the companies used a low-pressure process called hydro-shearing.
Instead of breaking new fractures in the subsurface rock, hydro-shearing uses existing fractures and “parts” the fractures – in essence, dilating open fractures and shifting the rock minimally. The geothermal companies asserted their process was distinguishable from fracking because it used much lower pump rates and lower pressures and involved less disturbance of the rock.
Since the Utica reservoir in Quebec is already naturally, extensively fractured, a new approach with lower pump rates was a good choice to avoid fracturing new rock in the process.
Binnion approached rock mechanics specialist Maurice Dusseault PhD University of Waterloo who has published articles on hydro-shearing. Dusseault was also a technical adviser on the strategic environmental evaluation for the Quebec government. He asked Dusseault to conduct a study of hydro-shearing in the Quebec Utica – using lower pump rates and lower pressures.
The practice is already reported to deliver better stimulations in the Montney. The study is not yet completed but Binnion anticipates a positive outcome. With some analysis of the rock mechanics, companies can find a rate and a pressure that would give high confidence that they not making any new fractures. The Quebec government regulations define fracking as creating new fractures.
Binnion says in general, fracking is a loosely used term for any hydraulic stimulation. With more precise process identification coming from technical experts, governments and regulatory bodies can identify exactly what processes are occurring.
“That’s become clear to me in my discussions in Quebec about production processes. When I talk to people, they are concerned about fracturing new rock. It makes sense in day-to-day life fracturing a bone or a teacup are not good things. They are much less concerned when I explain we’re only going to be doing this in natural fractures. You’re not going in and creating new fractures and the worries they associated with them,” Binnion said.
Quebec Indigenous groups are interested in natural gas development and one group, the First Nation of Abenakis of Wolinak wants to see negotiations with the Quebec government result in moving forward with natural gas exploration using clean technology in their traditional territory. The Abenakis of Wolinak have already entered into a preliminary agreement with Questerre to extract natural gas.
“We’re looking for green energy and that is the potential of this technology,” said Dave Bernard, general director with Abenakis of Wolinak.
“We are pleased that Questerre has spent the past few years getting to know us, our history, and our land in Quebec. They are the first company to fully recognize our traditional-use territories and commit to moving forward with full consultation and cooperation with our people. This agreement could bring prosperity to our nation and equality for our people while protecting the environment.”
Binnion points out that recognition of First Nations’ traditional-use territories and offering an economic benefit is “business as usual” in Western Canada.
“What we’re doing is nothing different than the many joint ventures that the industry has with First Nations- like the equity participation that is offered in TMX and other pipeline projects,” said Binnion.
“We understand that we need to respectfully involve First Nations in projects. It’s an approach that has been adopted by the industry in Western Canada, and I don’t think anybody would even consider a major project anymore without involving First Nations.”
The Abenakis were offered the option to be 10% equity partners at cost. In addition, the company will design a local employment program and connect Abenakis to Western Canadian specialty service companies to collaborate so there is an option to gain business expertise.
As European energy shortages continue to make news, one has to wonder why a province or state would limit its options to produce its natural gas, which is now recognized in Europe as a green transition fuel.
Natural gas prices have more than doubled and in the US, a manufacturing trade group is urging the Department of Energy to reduce exports. Quebec’s dependence on imported natural gas is called into question with some industry proponents calling for more domestic production in Quebec.
“Producing zero-emission natural gas is possible. And by combining it with CO2 capture, recycling, and storage, we would have a complete cycle of zero-emission natural gas,” said Association Energie Quebec president Eric Tetrault.
“In addition to the environmental benefits, the production of natural gas at home would ensure security for users, in a market strongly subject to political imperatives. With the energy crisis in Europe, it is possible that the United States will favour its domestic market or other markets.”
With Quebec’s Bill 21 proposing not only a ban on fossil fuel production but also expropriation of existing leases being introduced in the National Assembly on February 3, the conversation is heating up.
Compensation from expropriation is a hot topic with Quebec producer Utica Resources’ president Mario Levesque.
“The bill, as tabled, is unfair and inequitable for companies that have invested in good faith and in compliance with all Quebec laws to discover the immense hydrocarbon resources in our subsoil,” said Levesque.
“The government’s bad faith is all the more evident in that it is proposing to reimburse the expenses incurred since only 2015 while being aware that the vast majority of the investments that led to the discoveries of oil and natural gas were made between 2006 and 2014.”
Binnion says the government is closing the door on energy transformation and a fast emerging solution to global environmental pressures. He suggests the Quebec government may be trapped in old environmentalist concepts and try to ban and block any practice they deem to be a threat.
“It’s the old generation of environmentalism. They see protesting, banning, and blocking everything they don’t like as the solution for the environment, which a large number of people are concerned is not sustainable for the planet,” says Binnion.
Binnion says he has been working with what he calls “a new generation of environmentalists” who are solutions-oriented. He suggests perhaps it’s time for the old generation environmentalists to evolve or retire. They did their job. They warned us about the problem, but they haven’t evolved into giving us a solution.
“Energy transformation requires us to look at all of our energy options and look for technologies to reduce their impacts,” says Binnion.
“For wind and solar – they use too much land & materials. They need to improve that technology because we’re going to need that energy. Fossil fuels are 80% of the world’s energy. The solution is not to ban it, the solution is to transform it into low emissions energy.”
Questerre plans to employ low emissions energy in its project in Quebec by using hydroelectricity to produce gas with zero emissions. The plan is to capture and sequester the carbon from production to be a true net-zero operation.
However, Binnion says in proposing Bill 21, the Quebec government is saying “No” to energy transformation. He says the government is trapped in an old paradigm, where they’ve moved from the idea that emissions are bad to a position that all oil and gas is bad – even zero-emission oil and gas.
He also says the government is not proposing an expropriation in Bill 21. He says because of the wording, they are offering drastically insufficient compensation for the assets – which is a confiscation.
“What they’re really offering is a partial refund of the money you spent over 20 years to make a multi-billion dollar discovery which is proven, says Binnion (in the case of Questerre, $200mn has been invested in the project).
“And by the way, we will only give you some of your money back if you abandon your well. It’s really like saying we’ll give you a small bonus, but we’re giving you zero for a 20 TCF discovery, which is hard to imagine is worth less than 20 billion.”
Perhaps the rapid energy transformations that are being implemented globally will influence discussions in Quebec. Binnion is an avid fan of the technological advancements that are happening in Europe, America, and Western Canada.
He closed our discussion by saying he would be delighted to meet with the government and all stakeholders interested in his proposal for a zero-emission circular economy in Quebec.
Maureen McCall is an energy professional who writes on issues affecting the energy industry