QuebecUpdate
Molopo Energy Limited is pleased to provide an update on the BAPE (Bureau d’Audiences Publique sur l’Environnement) report released by the Quebec Government (the “Report”).
Although it remains very unclear which recommendations will be adopted by the Government, Molopo believes that as a consequence of the Report, there may be up to a two year period of study and limited, tightly controlled activity in the evaluation of shale gas opportunities (the “Review Period”). During the Review Period allowed by the Government, Molopo is unlikely to drill any wells in Quebec.
The Report provides a suggested way forward – a strategic environmental assessment to be undertaken by the Quebec Government to allow it time to acquire scientific knowledge about hydraulic fracturing and the environmental impacts of shale development which will enable it to develop the necessary regulatory regime.
Importantly, this is an opportunity for Quebec to develop a world class regulatory regime for shale gas development in Quebec. Molopo believes that with such a framework in place competent industry professionals can safely develop shale gas to the benefit of all stakeholders.
Molopohighlights the following points related to the Report:
1. Creation of a committee to lead Strategic Environmental Assessment of shale gas development in Quebec
Molopo supports the creation of a multi-stakeholder committee, with clearly defined terms of reference, to lead Quebec’s Strategic Environmental Assessment during the Review Period.
2. Fracturing
Hydraulic fracturing is a critical piece of the Strategic Environmental Assessment as it is fundamental to the successful development of the shale play.
3. Fiscal and Royalties
The Report suggests changes to the Fiscal and Royalty regime in Quebec which will be considered by the Quebec government as part of its budgeting process.
4. Municipality/ Stakeholder Engagement
Industry must engage with municipalities and local stakeholders – Molopo supports this across all of its operations.
5. Regulatory
Regulation evolves alongside development, however it is important that the framework is neither overly burdensome nor careless.
6. Land tenure issues
Both the industry and Molopo will seek the Government’s support to offset land management obligations given the potential slowdown in activity levels during the Review Period.
The current approach is supported by the Quebec Oil and Gas Association, of which Molopo is a member. The Review Period allows for better definition of the economic benefits that will come with a viable gas business and supportive regulatory regime, fiscal environment and services industry in Quebec.
Molopo currently holds 1.42 million acres of exploration licenses in Quebec following relinquishment of 0.75 million acres of less prospective acreage outside the main Utica play fairway.
Quebec potentially remains an attractive longer term investment opportunity for Molopo. However, during the Review Period, Molopo has within its overall portfolio significant other opportunities for shareholder value realization.
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