Note: “Tabling” in Canada means bringing it formally for discussion and consideration

On May 15, 2013, Quebec’s Minister of Sustainable Development, Environment, Wildlife and Parks, Mr. Yves-François Blanchet, made two announcements that stand to have major consequences for shale gas exploration and production in Quebec: (1) tabling in the National Assembly of a bill to prohibit certain shale natural gas exploration and production activities in the St. Lawrence Lowlands¹ and (2) a draft Water Withdrawal and Protection Regulation² to be published in the Gazette officielle du Québec on May 29, 2013, which regulation would require a hydrogeological study to be carried out before any oil or gas drilling activities are undertaken and would enlarge the protected zone around drinking water withdrawal sites within which drilling is prohibited.

An Act to prohibit certain shale natural gas exploration and production activities

Bill 37 would place a moratorium on all drilling, fracturing operations and injectivity testing, but not stratigraphic drilling, related to shale natural gas exploration or production in the territories of certain municipalities located mainly in the St. Lawrence Lowlands where deposits forming part of the Utica shale formation are found. The municipalities covered are listed in a schedule to the bill.

Authorizations previously issued under the Environment Quality Act³ for the above-named prohibited activities would be suspended. During the suspension, the authorizations could not be transferred, modified or revoked.

Any well drilling, conversion or completion licence issued under the Mining Act⁴ would also be suspended.

Anyone engaging in a prohibited activity would be guilty of an offence and liable, in the case of a natural person, to a fine of $10,000 to $1,000,000 or a maximum term of imprisonment of three years or to both, and in other cases, to a fine of $30,000 to $6,000,000.

Application of the bill would not entitle current licence holders to receive any compensation from the government. The bill’s provisions would cease to have effect no later than five years after the bill becomes law or once a new law establishing rules applicable to hydrocarbon exploration and production comes into force. The bill was introduced in fulfilment of a promise made as part of the electoral platform of the current government, which came to power in September 2012.

Draft Water Withdrawal and Protection Regulation

The new draft Water Withdrawal and Protection Regulation, which will soon be published, for consultation purposes, in the Gazette officielle du Québec, would set up a new administrative regime for water withdrawals and include measures limiting the areas where oil and gas exploration and development projects could be located and imposing standards on those activities where they would be permitted.

In fact, the draft regulation implements the regime that was provided for in Bill 27,⁵  which was adopted in 2009 and is now incorporated in the Environment Quality Act. It aims to ensure that groundwater and water catchment facilities are optimally protected and to address the concerns that have been expressed by numerous citizens, organizations and municipalities over the risks associated with oil and gas drilling activities, in particular those carried out using hydraulic fracturing technology. Some of the specific measures proposed include the following:

• A ban on oil or natural gas drilling for exploration or development purposes within 300 metres of a location where water is extracted for human consumption or food processing;
• The obligation to carry out a prior hydrogeological study within 2 kilometres of the projected site of an oil or natural gas well in order to assess the potential repercussions of drilling and subsequently operating the well. Depending on the results of the study, the protected zone could extend beyond the 300 metres, which is a minimum distance;
• The obligation to construct at least three (one upstream and two downstream) groundwater observation wells less than 100 metres from the drilling site;
• The obligation to carry out preventive monitoring of groundwater at the periphery of the drilling site, taking samples from the observation wells three times a year for a period of five years following the drilling, once a year during the operation of the well and up to ten years following the permanent closure of the well, so that intervention could be done quickly in the event of contamination;
• The obligation, for a person in charge of stratigraphic drilling, to plug the survey hole in accordance with good industry practice once the drilling work was completed;
• The addition of standards for fracturing of an oil or natural gas exploration or production well:
  • A ban on fracturing a well less than 400 metres below the base of an aquifer;
  • The obligation to carry out a study allowing fracture propagation to be predicted prior to completion of a well segment using fracturing;
  • The obligation to monitor fracturing operations so as to ensure that fracture propagation is occurring as predicted.

Currently, the Regulation respecting petroleum, natural gas and underground reservoirs⁶ prohibits drilling as follows:

22.  A well drilling licensee may not drill a well:

[…]

(6)    within the supply area of the catchment site of groundwater established in accordance with section 25 of the Groundwater Catchment Regulation (chapter Q-2, r. 6) made under the Environment Quality Act (chapter Q-2) and supplying drinking water to a waterworks system operated by a municipality;

(6.1)    less than 200 m from a groundwater catchment site supplying drinking water to an educational institution, a health and social services institution, a waterworks system operated by a municipality or a private waterworks system serving mostly private residences;

[…]

[our emphasis]

The draft regulation would repeal subparagraphs 6 and 6.1 of the said section of that regulation.

The Minister considers that urgency warrants an exception being made from the normal public consultation period of 60 days for regulations under the Environment Quality Act and is shortening the consultation period to 30 days.

If adopted, this draft regulation will add substantially to the protection of groundwater and water catchment facilities in Quebec. Minister Blanchet has characterized the new standards as the “safest in North America.” During the public consultation period, stakeholders will have an opportunity to comment on and propose changes to the proposed normative scheme. They will undoubtedly wish to comment on the adequacy or inadequacy of the proposed rules and especially on the viability of the administrative formalities that would be imposed on persons applying for authorizations, operators of water systems using groundwater or surface water, and persons wishing to engage in oil or gas drilling operations. This regulatory initiative comes in the midst of a debate taking place all over North America as scientists, elected officials and regulatory bodies consider the risks to groundwater aquifers that are or could be posed by oil and gas drilling. In Quebec, the file on shale gas drilling is currently under study by the Bureau d’audiences publiques sur l’environnement, the province’s environmental review agency.