Global Shale Law Compendium: Shale Governance in Canada (New Brunswick, Québec, and Nova Scotia)

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by some of the Provinces in Eastern Canada to develop policies specific to shale gas development. Another article will address shale gas development in additional Canadian Provinces.

Canada has substantial natural gas resources and is the world’s fifth largest natural gas producer according to the Canadian Association of Petroleum Producers. Much of the country’s natural gas production occurs in western Canada, which is also home to a significant potential of shale gas resources. According to the U.S. Energy Information Administration (EIA), Canada holds an estimated 573 Tcf of technically recoverable shale gas resources in Canada, mostly occurring in British Columbia, Alberta and the Northwest territories. Other Canadian provinces, including New Brunswick, Quebec, and Nova Scotia, also may possess promising shale gas prospects. These provinces, however, are still at an early stage in the development, with companies and governmental entities acquiring basic knowledge and understanding of the nature and extent of hydraulic fracturing in this area.

New Brunswick:

According to the Government of New Brunswick, the province holds significant shale gas resources within the Maritime Basin, including approximately 67 Tcf of proven reserves in the McCully Gas Field and 11 Tcf in the Stoney Creek Oilfield. The Department of Energy and Mines (DEM), along with the Department of Environment and Local Government (DELG), are responsible for regulating oil and gas activities in the province of New Brunswick. There are no specific regulations governing shale gas extraction activities in the province of New Brunswick; however, the Government of New Brunswick issued a set of rules in February 2013 applicable to the oil and gas industry requiring responsible environmental management practices. In line with those rules, in May 2013, the Government also released the New Brunswick Oil and Natural Gas Blueprint intended to help better manage future resource exploration and development activities, including shale gas.

Due to numerous uncertainties regarding the development of shale gas within the province, legislation was introduced on December 18, 2014, prohibiting shale gas extraction using hydraulic fracturing within New Brunswick. Subsequently, the Premier of New Brunswick, Brian Gallant, appointed a panel of experts on March 24, 2015, to determine whether the Government would be able to meet five conditions to develop shale gas resources, including 1) a social license in place; 2) clear and credible information about the impacts of hydraulic fracturing on health, environment and water to allow for the development of a country-leading regulatory regime with sufficient enforcement capabilities; 3) a plan that mitigates the impacts on public infrastructure and that addresses issues such as wastewater disposal; 4) a process in place to respect obligations to First Nations, and 5) a mechanism in place to ensure that benefits are maximized for New Brunswickers, including the development of a proper royalty structure.

The Legislative Assembly of New Brunswick voted in favor of the moratorium on March 26, 2015, which became effective on June 26, 2015. In February 2016, the appointed New Brunswick Commission on Hydraulic Fracturing published a three-volume report setting out their analysis and conclusions about shale gas development in New Brunswick. As part of their findings, the Commission suggested that “the Government could proceed with hydraulic fracturing but set restrictions related to variables such as geographic location, land ownership, population density, wastewater technology, environmental setbacks and/or geographical depth.”

Interestingly, on May 27, 2016, Energy and Mines Minister Donald Arseneault announced the indefinite continuation of the moratorium on hydraulic fracturing stating that “it is clear that our conditions cannot be satisfied in the foreseeable future.” Minister Arseneault also added that “the global market for natural gas has seen a precipitous drop in prices, which makes it further unlikely that industry will invest the necessary efforts to address the conditions in the short or medium term.”

Québec:

According to Natural Resources Canada, shale gas resources in Québec are located in the Utica Shale of Québec’s St. Lawrence lowlands where drilling activities took place from 2006 to 2010. It is estimated that the province of Québec holds between 100 Tcf to 300 Tcf of shale gas reserves in the Utica shale formation and the Government reported 18 wells being hydraulically fractured during the period cited above.

On May 15, 2013, however, former Environment Minister Yves-François Blanchet introduced legislation banning shale gas development using hydraulic fracturing within the Saint Lawrence Lowlands. The moratorium must stay in place for a period of five years or until specific regulations addressing hydraulic fracturing are decided. The Québec Government had previously prohibited shale gas exploration activities in 2011.

In a report dated November 2014, the Canadian Environmental Public Hearing Office found that it has not been yet been established whether shale gas exploration and development activities in the St. Lawrence lowlands would be beneficial for the province of Québec. The Office stated Québec’s densely populated area as being a major constraint in the development of shale gas resources. In a few days following the release of this report, Québec Premier Philippe Couillard reiterated his opposition to shale gas development in the province saying that “developing shale gas would bring economic and financial benefits, but there isn’t enough support from the population to move forward,” according to a local media report.

Nova Scotia

The province of Nova Scotia is part of the prolific Maritime Basin and holds an estimated 69 Tcf of shale gas resources located nearby Kennetcook in the Municipal District of East Hants.

Following the same initiative as the provinces of New Brunswick and Québec, the Government of Nova Scotia declared on September 3, 2014, that it would soon introduce legislation to prohibit shale gas development using hydraulic fracturing following the release of an independent review on hydraulic fracturing from the Cape Breton University. This independent review was commissioned by the Government of Nova Scotia in August 2013 and was issued on August 28, 2014.

On September 30, 2014, the Government of Nova Scotia introduced amendments to the provincial Petroleum Resources Act putting in place a moratorium on hydraulic fracturing for onshore shale oil and gas development.