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Quebec: New Oil Discoveries from North of the Border


In today’s climate of low commodity prices, massive layoffs and precipitously declining rig counts, one positive bit of industry news relatively close to home has gone largely under the radar. Quebec, our French-speaking, non-producing neighbor to the north, is poised to join the ranks of hydrocarbon producers. The eastern Canadian province apparently has one – and perhaps two – commercial light oil discoveries. How this came about is closely aligned to the chain of events dominating the industry for the past decade, namely the shale boom in North America, the resulting oversupply of natural gas, producer’s switch to tight oil plays and, last but not least, the public’s heightened concerns regarding hydraulic fracturing.

Quebec’s story began some 10 years ago when the land rush in the Utica Shale followed the Appalachian chain’s northeastern trajectory across the border into the southern portion of the province. Huge swaths of land deemed prospective for shale gas were leased between 2005 and 2008 along the lower St. Lawrence River between Montreal and Quebec City. Primary participants included Talisman Energy, Ressource & Energie Squatex, Junex, Questerre Energy and Molopo Energy. However, any exploration in the area was quickly stymied by falling natural gas prices. In 2011, operators suffered a second blow when the provincial government of Quebec bowed to public pressure and implemented a moratorium on fracking. It proved too much for Australia’s Molopo Energy, which in the first quarter of 2015 relinquished some 30 licenses encompassing 1.42 million acres (about 5,750 sq km).

As was the case in the US, operators in Quebec subsequently turned their attention toward oil plays. Southern Quebec has sedimentary basins that stretch from Ontario on its western border to Newfoundland and Labrador to the east, and drilling for oil has taken place periodically since the 19th Century. Of the more than 300 wells drilled to date, wells on the Gaspé Peninsula proved particularly promising.


Gaspé juts into the Gulf of Saint Lawrence along the south shore of the river. An extension of the Appalachian Mountains, it features sea cliffs and a rugged interior. In fact, one of the places oil has been encountered was a water well drilled at a local ski area. Like the St. Lawrence Lowlands, much of Gaspé is under lease and it was on its eastern most point that two companies drilled horizontal wells in late 2014. Junex led the way with the Galt 4, which was spudded in October about 20km west of the town of Gaspé. It reached a total depth of 2,400m a month later, encountering a 1,503m oil zone in a naturally fractured rock in the Forillon Formation. Drilled in a northeasterly direction toward the company’s Galt 3, a vertical well completed in early 2014 producing 180 bo/d, Galt 4 is Quebec’s first horizontal well and probably its first commercial producer. Tested periodically over the first half of 2015, it has yielded a cumulative 7,200 barrels of crude and produced at a steady rate of 160 bo/d. Based on these results, Netherland, Sewell & Associates has boosted its estimate of Oil Initially In Place (OIIP) at Galt by nearly 70% to 557 million barrels. Recoverable reserve estimates range from 5.7 million barrels of contingent oil resources to 50 million barrels of unrisked prospect oil resources. Junex says financing is well underway to acquire 3D seismic and drill an additional three wells.

Close on the heels of Junex’s well, Petrolia drilled the Haldimand-4 horizontal well about 25km to the east near Sandy Beach. At 400m, this well was gradually deviated in a southeasterly direction until it reached an angle of 78 degrees from vertical in order to intercept natural fracture. From there, the 2km lateral drain was oriented toward the Haldimand-1 and 2 wells, both of which encountered hydrocarbons. The top of the York River reservoir was reached at a depth of 620.5m, optimizing natural fractures. Total depth is 2,630m. Currently awaiting testing, it recovered 757 barrels of drilling fluid mixed with light crude estimated to equal 340 barrels.

What does this mean in the world of $60 oil and public resistance to fracking? By encountering oil in natural fractures at shallow depths, Junex has estimated its production costs at $20 per barrel, Petrolia $29. And it doesn’t end on the Gaspé Peninsula. Both companies have extensive leaseholds on Anticosti Island some 90km to the northeast that are also believed to also have substantial oil resources.

The target on Anticosti is the Macasty, a Middle Ordovician oil-bearing shale equivalent to the Utica. Petrolia, leading a partnership that includes provincial oil company Ressources Quebec as well as a subsidiary of Maurel & Prom and Corridor Resources, has resumed a stratigraphic drilling program it began last year. Five of the nine stratigraphic wells drilled in the summer of 2014 encountered the Macasty. Based on those early results, Sproule Associates increased its resource estimate for Petrolia’s leasehold to 30.7 billion barrels of oil equivalent.

Petrolia’s current stratigraphic drilling program will determine the location of three exploration wells to be drilled and fracked, perhaps as early as 2016. Meanwhile, the government of Quebec is preparing a Strategic Environmental Assessment (SEA) specific to the sparsely populated island that is slated to be published in the fall. If these findings “seem favorable,” it has indicated it will give the all-clear for drilling and fracking on Anticosti.

The government of Quebec has noted both the success and potential. Back to the province’s natural gas potential, supplies were of some concern during this past winter, which was particularly nasty even by Canadian standards. Therefore, the 2015-16 provincial budget provides incentives for the development of its hydrocarbons. This includes an assessment of the natural gas potential of the Gaspé Peninsula, in particular Petrolia’s 2012 Bourque 1 and Bourque 2 discoveries which are believed to have potential resources of more than 1 Tcf.

Whether Quebec retains its moratorium on fracking remains to be seen. The government will introduce new oil and gas legislation in the fall and while the ruling Liberals remain cool to the practice, Quebec has yet to join its neighbor to the south, New York, in outright banning fracking.

Perhaps the biggest optimist on the hydrocarbon front is Michael Binnon, president and chief executive officer of Questerre Energy, which has an extensive leasehold in the St. Lawrence Lowlands. Binnon, who also heads Quebec’s oil and gas lobby, recently declared it is time for Quebec to “do the right and become an oil and gas producer,” adding he believes it will happen “in a very short time.”

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Anne Leonard

In January 2015, Anne Leonard headed the team that launched the latest addition to DrillingInfo’s international publications, International Scout Frontier North America which covers the US Gulf of Mexico as well as Maritime and Arctic Canada. She has been reporting on exploration and production for more than 30 years. She began her career in Denver covering the Rocky Mountain Region, and has spent the last 10 years covering the international arena, with a particular focus on Latin America, Africa, Western Europe and the Far East. Anne received her Bachelor of Arts in Journalism from the University of Nebraska.