Questerre Energy Corporation reports on recent developments in the St. Lawrence Lowlands, Québec.
The Company advised that activities on its shale gas assets in the St. Lawrence Lowlands are unaffected by the announcement from the Deputy Prime Minister and Minister of Natural Resources and Wildlife earlier this week. Minister Nathalie Normandeau announced that following the analysis of the first strategic environmental assessment, the Québec government has decided to suspend any oil and gas activity in the basin of the estuary and northwest Gulf of the St. Lawrence River. This is an offshore area located approximately 180 km away from the northeastern edge of the Company's acreage in the Lowlands.
Questerre also confirmed that public hearings on how shale gas will be developed in Québec are scheduled to begin next week. Michael Binnion, President and Chief Executive Officer of Questerre, commented, "These hearings are an excellent opportunity to inform the citizens of Québec about an established and proven industry. The Utica shale has the potential to be an integral part of the province's energy strategy and it is important to have an open discussion on all aspects including the economic, environmental and social acceptability."
Questerre reported on the status of testing the Gentilly No. 2 horizontal well. The 700m horizontal section of the well was successfully completed with three stage fracs targeting the middle Utica interval and two stage fracs targeting the lower Utica interval. The fracs were completed within one week without any significant operational issues or cost overruns.
The well was placed on a 30-day test to clean up and flow back the middle and lower Utica intervals. During this period, the well flowed at an average rate of 720 Mcf/d. The average rate over the last seven days was approximately 700 Mcf/d with a final flowing tubing pressure of 482 kPa (70 psi). The well appeared to be continuing to clean up and exhibited minimal decline in the first 30 days.
Questerre's interpretation of the production data suggests that the contribution from the lower Utica interval is very limited. The completion program contemplated testing the two intervals separately and the operator is currently evaluating options.
Mr. Binnion noted, "Our target for average rates of 2 MMcf/d for the pilot horizontal well program was based on 1000m laterals with eight stages in the middle Utica interval or 250 Mcf/d per stage. While the small number of fracs contributed to lower overall flow rates, we are pleased with rates from the middle Utica that we estimate at approximately 240 Mcf/d on a per stage basis. We were also very pleased with the operational effectiveness adding an important data point relative to projected project costs."
Questerre updated the timing for completion operations on the Fortierville No. 1 and St. Gertrude No. 1 horizontal wells. The operator has recently advised that, due to higher than expected costs for the completion, it has decided not to contract the necessary equipment this fall as planned. The operator anticipates proceeding with the completions next spring when it believes it can optimize costs and operational efficiencies.
Mr. Binnion remarked, "We are obviously disappointed with the half year delay relative to publicly announced plans for the pilot horizontal wells in the Lowlands. Questerre will continue to advance in areas that it reasonably can to minimize the impact of this delay as much as possible."
Questerre also provided an update on its planned commercial demonstration project. It has concluded an agreement with GazMé'e9tro to construct a natural gas pipeline in Québec. Actual construction is contingent on a number of regulatory and economic factors.
The plan calls for a pipeline of approximately 20 km and would tie-in the St. Edouard area to the GazMé'e9tro distribution system in St. Flavien. It will be designed for an initial capacity of 15 MMcf/d and can be upgraded with some modifications. It is contemplated that if the construction proceeds, Questerre would enter into a firm transportation and distribution agreement with GazMé'e9tro to contract the pipeline capacity for the next 10 years.
Permitting operations on the Company's 3-D seismic program are underway. The survey plan targets the St. Edouard area for potential pad locations to follow up on the St. Edouard No. 1A discovery.
Questerre Energy Corporation is an independent energy company focused on shale gas in North America. The Company is concentrated on establishing commerciality of its Utica shale gas discovery in the St. Lawrence Lowlands, Québec. Questerre is committed to the economic development of its resources in an environmentally conscious and socially responsible manner.