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Plus ça change: Quebec reverses fracking ban

The province will allow the technique. But it may be too little too late

Quebec's National Assembly has taken the first steps to reversing a decade-long ban on hydraulic fracturing, moving closer to opening what could prove to become one of North America's largest shale plays.

The province was the first Canadian jurisdiction to implement a formal fracking moratorium, in 2006, then moving to implement a full ban in 2014. But the new Liberal government has now reversed course by issuing drilling licences to a local partnership led by Montreal's Pétrolia, called Hydrocarbures Anticosti, to conduct a C$100m ($70m) exploration programme on Anticosti Island in the Gulf of St Lawrence, off Canada's east coast.

Drilling on the remote outpost has gone on for decades. These have mainly been saltwater brine wells that have produced smaller amounts of associated gas. Last year, Hydrocarbures Anticosti drilled three wells. The consortium plans to frack and carry out test production on them this year.

While the tiny island of Anticosti isn't likely to be the next shale hotspot, the policy change is significant for what it might mean in other parts of the province, namely the Utica shale that stretches across a geographic area extending from Montreal to Quebec City.

The potential is huge. Initial resource estimates for Quebec's Utica, an extension of the Marcellus in Pennsylvania and Ohio in the US, pegged the size of the resource at well over 600 trillion cubic feet of recoverable resources, attracting the interest of foreign investors like Forest Oil and Talisman Energy (now Repsol).

Such a bounty would have a meaningful impact on the economic fortunes of one of Canada's poorest regions. Quebec presently imports virtually all its gas from Alberta and the northeastern US.

The fracking moratorium has spawned lawsuits under the North American Free Trade Agreement, due to what the oil companies claim are undue permitting delays. In 2012, Toronto-listed Lone Pine Resources filed a C$250m suit claiming damages on leases in the St Lawrence River Valley holding 3.3 trillion cf of stranded reserves, or about a third of Canada's annual gas production.

Critics complain the legal assault could undermine environmental laws under separate free-trade deals such as the proposed TransPacific Partnership and the pending Comprehensive Economic and Trade Agreement with the EU.

Even with provincial backing, shale development is likely to run into strong opposition from environmental groups. Unlike Anticosti, the French Townships along the St Lawrence River are some of the oldest continually inhabited communities in North America. It is also one of Canada's most prolific agricultural areas, making Quebec the world's largest producer of maple syrup.

Given Quebec's famous French palate, food tends to trump oil. The St Lawrence River is a lifeline that provides drinking water for 8.3m people and is the backbone of the province's agricultural sector that generated C$18bn in 2016, including C$11bn worth of exports. Even a full repeal of the fracking ban wouldn't create a gas business to challenge those numbers.

Neither is time on Quebec's side. The US experience shows it would take years, if not decades, to become a major gas producer even if it were to allow full-scale development immediately. Even then it would have to compete with the major nearby US basins that have an almost insurmountable lead.

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