CALGARY, Alberta, Oct 15 (Reuters) - Weak natural gas prices as well as the lack of infrastructure and a regulatory regime in Quebec have delayed Questerre Energy Corp's plans to develop a shale gas play there, it said on Friday.
The small explorer, which is developing the Utica shale acreage with partner Talisman Energy Inc, said moves by the Quebec government to establish rules for shale gas drilling and delays completing wells have likely pushed plans back by about six months.
Shares in Questerre fell nearly 14 percent on Friday to C$1.67 on the Toronto Stock Exchange. They have lost more than a third of their value since the company first disclosed the delays on Sept. 30.
'The unavailability of service equipment, and therefore the cost, and the absence of this regulatory regime has clearly delayed things,' said Jason D'Silva, Questerre's chief financial officer.
The partners have drilled four wells this year in Quebec, where there is little oil and gas activity. They did not perform rock fracturing, or 'fracking', operations on two of them.
Shale reserves tend to be large, but difficult and expensive to tap. In recent years, the energy industry has been successful in developing them using horizontal drilling and fracking techniques in such plays as the Marcellus in Pennsylvania and New York state, Haynesville in Louisiana and Texas, and Horn River in British Columbia.
Along with production increases have come concerns about the effects the operations and frac fluids have on groundwater.
The Quebec government has launched public hearings into shale gas drilling in the province as the industry seeks to develop what could be a major resource.
Regulators are expected to develop operating rules for disclosing frac fluid additives and protecting groundwater, D'Silva said.
On Thursday, the company released a document that it said showed its water use would be less than that of car washes and pulp and paper plants.
Questerre aims to be able to complete and test its wells by next spring, when Talisman can free up equipment from Alberta operations due to the spring thaw.
'So, by the time we've got the test results out, you then will have the legislation in place and everything in place to move forward,' he said.
Questerre has a 25 percent stake in the Utica acreage and Talisman has the remaining interest.
Talisman shares fell 19 Canadian cents, or 1 percent, to C$17.99 in Toronto.
($1=$1.01 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: QUESTERRE/ (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The small explorer, which is developing the Utica shale acreage with partner Talisman Energy Inc, said moves by the Quebec government to establish rules for shale gas drilling and delays completing wells have likely pushed plans back by about six months.
Shares in Questerre fell nearly 14 percent on Friday to C$1.67 on the Toronto Stock Exchange. They have lost more than a third of their value since the company first disclosed the delays on Sept. 30.
'The unavailability of service equipment, and therefore the cost, and the absence of this regulatory regime has clearly delayed things,' said Jason D'Silva, Questerre's chief financial officer.
The partners have drilled four wells this year in Quebec, where there is little oil and gas activity. They did not perform rock fracturing, or 'fracking', operations on two of them.
Shale reserves tend to be large, but difficult and expensive to tap. In recent years, the energy industry has been successful in developing them using horizontal drilling and fracking techniques in such plays as the Marcellus in Pennsylvania and New York state, Haynesville in Louisiana and Texas, and Horn River in British Columbia.
Along with production increases have come concerns about the effects the operations and frac fluids have on groundwater.
The Quebec government has launched public hearings into shale gas drilling in the province as the industry seeks to develop what could be a major resource.
Regulators are expected to develop operating rules for disclosing frac fluid additives and protecting groundwater, D'Silva said.
On Thursday, the company released a document that it said showed its water use would be less than that of car washes and pulp and paper plants.
Questerre aims to be able to complete and test its wells by next spring, when Talisman can free up equipment from Alberta operations due to the spring thaw.
'So, by the time we've got the test results out, you then will have the legislation in place and everything in place to move forward,' he said.
Questerre has a 25 percent stake in the Utica acreage and Talisman has the remaining interest.
Talisman shares fell 19 Canadian cents, or 1 percent, to C$17.99 in Toronto.
($1=$1.01 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: QUESTERRE/ (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.