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POTENTIAL ECONOMICS OF DEVELOPING QUEBEC'S SHALE GAS

Potential Economics of Developing Quebec's Shale Gas

Study Released March 22, 2013

Study 132

The profound impact of shale gas cannot be understated, and the impact is truly global. With natural gas being the energy source of choice across various sectors, demand continues to increase. Declines in conventional gas production both in Canada and the US have brought attention to various unconventional natural gas resources, particularly shale gas. In Canada, production from Alberta and British Columbia’s shale and tight gas will likely play a large role in mitigating the effects of declining conventional production on total production. In the past five years, the Utica Shale in Québec has received attention from a number of companies seeking to extract natural gas between Montreal and Québec City. The provincial government in Québec has since placed a moratorium on oil and gas activity, halting development at least until the completion of a Strategic Environmental Assessment, expected in late 2013. The economic impacts of two hypothetical scenarios are investigated in this study. In the first scenario, drilling takes place to build and maintain a production level of approximately 500 million cubic feet per day (MMCFPD) – Québec’s current consumption of natural gas. In the second scenario, drilling takes place to build and maintain a production level of approximately 1,500 MMCFPD, which would allow for 1,000 MMCFPD of export capacity on top of Québec’s own consumption needs. Each of the scenarios assumes that the moratorium on oil and gas activities is lifted, and makes the assumption that the cost of drilling reflects the cost of field development, rather than exploratory wells. Results for GDP, employment, tax and royalty revenue are calculated using an I/O model and are presented for each province across Canada.

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