A new frontier is emerging for work-starved western Canadian oilfield contractors. Look to Quebec and the Maritimes for the next expansion of natural gas production, say business and government participants in an embryo eastern branch of the energy industry.

Lower Canada and the East Coast have so few services that Quebec City-based Junex Inc. has reverted to Alberta’s all but forgotten pioneer era. The exploration and production firm operates its own drilling rigs. No contractor was available for gas wells along the St. Lawrence River by Junex and partner Forest Oil Corp. of Denver.

The drilling is speculation on an infant development prospect, Junex chief operating officer Peter Dorrins admitted at a 2009 annual fall investment fair held by the Small Explorers and Producers Association of Canada. But the payoff could be big if new techniques for tapping gas in dense rock can be transplanted to the Quebec target, the Utica Shale geological formation, he added.

The budding Quebec gas scene has economic attractions that financial analysts and industry leaders described as sorely missing from Alberta at a gloomy 2009 fall annual meeting of the Petroleum Services Association of Canada (PSAC). Eastern production fetches a price premium of about $1 per thousand cubic feet on vast markets along the Atlantic seaboard of the United States because it does not have to pay stiff tolls to travel thousands of kilometers through pipelines, said Dorrins. And Quebec’s gas royalties top out at 12.5 per cent, with no sign of any provincial plans to raise the rates, he reported.

At home in Alberta, the 270-company PSAC foresees stagnation this year due to low gas prices and slow progress on replacing 2007 provincial royalty hikes with a regime more suited to changed energy markets. The association predicts only about 8,000 wells will be drilled across Western Canada in 2010. The bleak outlook calls for a repetition of 2009, with western Canadian activity stagnating at one-third of the record 24,666 wells in 2005 and most of the losses concentrated in Alberta while the smaller British Columbia and Saskatchewan industries perk up.

The action represented by Junex, although still tiny by Alberta standards, shines a ray of hope that new outlets might develop for underemployed western contractors. The Quebec City firm alone has 24,375 square kilometers of eastern mineral rights, and its holdings are in turn only a fraction of the new eastern energy frontier.

Wells and associated sources of demand for oilfield services could eventually multiply in a geological region that sprawls across an area about 40 per cent of Alberta’s total size, suggests the nation’s earth sciences agency. There will be no shortage of fresh, large drilling targets as exploration spreads out east of Montreal, says a report by the Geological Survey of Canada (GSC).

The new resource assessment is a bulky, densely technical document by seven specialists that has nevertheless become an instant GSC bestseller. The report points to high potential across 250,000 square kilometers of sedimentary rock deposits beneath swaths of Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, the Gulf of St. Lawrence and Cabot Strait.

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