New royalties to spur Utica exploration

Quebec pushes generous shale-gas royalty regime; Fracing moratorium could delay development for two years

THE QUEBEC government has rolled out a royalty regime for development of its shale-gas resources, setting the stage for commercial production once its environmental assessment is complete. In the province’s 2011-12 budget, finance minister Raymond Bachand said Quebec will use a sliding scale of well productivity and gas prices, similar to royalties in British Columbia, which has some of North America’s largest shale-gas deposits. Some analysts, such as Grant Daunheimer with Dundee Securities, expect the environmental review to stall any new “material” activity in the Utica shale formation for up to 24 months. But Bachand says that if Quebec’s gas potential “can be developed economically and