Questerre Energy tries to reverse public opinion on hydraulic fracturing in Quebec
CEO Michael Binnion’s work may have only just begun
The job of changing public opinion in Quebec towards hydraulic fracturing may look as hopeless as trying to persuade Albertans to abdicate resource control to Ottawa. Michael Binnion, the CEO, president and co-founder of Questerre Energy Corp., is in a tough spot as he tries to convince Quebeckers of the financial benefits and environmental safety of shale gas drilling.
Questerre Energy, a Calgary-based junior, holds leases in Quebec’s Utica play that could contain more than 15 trillion cubic feet of natural gas. Questerre’s efforts to develop its properties are on pause ever since the Quebec government placed a moratorium on hydraulic fracturing in 2011.
It wasn’t always like this. When Questerre debuted on the TSX in the summer of 2003, its prospectus listed natural gas exploration in la belle province as one of the company’s major initiatives. From this vantage things looked fairly rosy. Binnion was well-financed by Norwegian private investors (it later listed on the OSE in 2005) and the government of the day was wholly supportive of its endeavors. Actually, governments in Quebec had hung out their shingle since the mid-’80s in the hope of attracting oil and gas investment. The breakthrough for Questerre came when vertical wells in the Utica tested at rates between 100 and 800 mcf/d. “We are more confident in the potential for stacked shale plays that could, if successful, ultimately reduce F&D costs to under $1 per mcf,” wrote Binnion at the time.
Then in 2010 everything went pear-shaped. First, American film director Josh Fox released Gasland, a documentary detailing his investigation into fracking south of the border. Although the film grossed less than $50,000, it attracted widespread attention and was even nominated for an Oscar. Footage of a mustachioed resident of Colorado setting tap water on fire had an explosive effect on viewers, as it suggested that eventually fracturing shale formations could result in methane mixing with public drinking water.
Four months after the film’s release, BP’s Deepwater Horizon oil rig exploded and sank in the Gulf of Mexico, killing 11 people and triggering the biggest marine oil spill in history. By the time the gusher was capped, it had spewed 780 million liters of oil into the ocean – a volume likely rivaled only by the amount of ink used in the media’s coverage of the accident.
Industry has strongly disputed many of Gasland’s audacious claims such as the famous drinking water sequence. Paul Precht, an Edmonton-based energy economist, points out, for instance, that drinking water aquifers are separated from the targeted natural gas formations by thousands of feet of impermeable rock.
But whatever its accuracy, Gasland attracted a lot of attention, and it, combined with the Deepwater Horizon incident, made 2010 a very bad year for a company looking to secure the social license to extract natural gas with a method perceived as extremely risky. Undertaking this in a region like Quebec, whose populace is not familiar with petroleum industry activities, wouldn’t make things any easier.
Questerre watched as public opinion shifted against hydraulic fracturing across North America. In Quebec, the Liberal government of Jean Charest got cold feet about shale gas exploration and development, ordering a comprehensive environmental impact study and imposing a moratorium on drilling and fracturing in the St. Lawrence Lowlands that remains in effect to this day. With the Parti Québécois holding a minority in the National Assembly, it’s difficult to see too far down the road of Quebec politics, but Premier Pauline Marois’s government has announced its desire to extend the ban for another five years.
Binnion has keenly felt the ramifications of working in a vilified industry even back home in Calgary. “Why does my kid come home from Alberta junior high school social studies saying the oil and gas industry is evil?” he asks, mentioning the tax contributions the energy industry makes to Alberta’s education system. “It’s one thing to say there’s been mistakes and there’s room to improve and so forth, but sending kids home with the impression that it’s morally wrong – it’s hard to come up with the word that would express that ironic frustration.”
Binnion realizes this is a widespread phenomenon. “I hardly know a senior oil and gas executive who hasn’t had a similar experience,” he says. In responding to his daughter’s comments, he gently reminded her she shouldn’t believe everything she hears, but always approach new information with a healthy dose of skepticism. “It’s hard to change an opinion once it’s reached,” he says. “It took a long time to change our conviction that the Earth was flat.”
Binnion’s instinct to reach out and talk to people with anti-oil and gas biases doesn’t end with his close relations. He’s a regular blogger, and a vociferous defender of his industry’s position on Twitter. He tweets in both English, his mother tongue, and French, which he picked up specifically to better understand the Quebec situation and educate Quebeckers about his point of view.
This makes him an easy target, and he knows it – just like he knows he’ll never convince a diehard anti-fossil fuel zealot that fracking won’t cause the planet’s ruin. But he sees the free-for-all of social media as a way to promote his message without a filter. And by freely admitting his pro-industry bias, he feels he forces some of his critics to engage him in conversation. Unlike some larger public energy companies facing intense public scrutiny on environmental performance, Binnion doesn’t see the need for phalanxes of press officers and communication consultants. “You can’t fight zealots with mercenaries,” he says. “Hiring consultants is expensive and a lot less effective.”
Binnion’s grass-roots approach to persuasion goes beyond the Internet. For the past two years, Questerre, along with the Oil and Gas Services Association of Quebec and the Petroleum Services Association of Canada, organized tours that brought Quebec farmers with land on or near natural gas deposits to Albertan farms where fracking has taken place.
“I don’t think we are in position, economically, to say no to this production,” says Francois Tousignant, who went on the tour and farms maple syrup on the south shore of the St. Lawrence. “As long as people put gas in their cars and heat their houses and use barbecues, we need this energy from somewhere… Everybody knows it, but no one wants to accept it. Everybody knows it will have to be done.”
René Bérubé, another farmer with land on which Questerre would one day like to drill, said the tour changed his opinion of the safety of fracking, and that he would allow wells on his land – with what he vaguely describes as appropriate oversight.
Most of the farmers on the tour were not fluent in English, so communication depended on awkward translating and gesticulating. But the sight of hulking homes and new-model pickups, Tousignant and Bérubé both say, spoke for itself: allowing oil or gas production on your land is clearly a money-making proposition.
The amenability of Tousignant and Bérubé to oil and gas development stands in contrast to the attitude of the farmers on the 2012 tour. Daniel Gauthier, a sexagenarian farmer with land above the Utica shale, told reporters after the trip that it reinforced his conviction that Quebec ought to wait and make sure it develops intelligent, strict regulations before it lifts the fracking moratorium.
Shale-shy Quebec lawmakers can look to other jurisdictions for support. In February, New Brunswick released a comprehensive set of rules for its nascent oil and gas sector, including ones that govern hydraulic fracturing. In May, the Alberta Energy Regulator released Directive 83, an updated set of rules for hydraulic fracturing in the province, and in September the National Energy Board followed suit for onshore drilling and production in the North.
Precht says modern regulations like these do a pretty good job of minimizing the risk that fracking will cause problems, Nevertheless, even in industry-friendly Alberta there are strident opponents as witnessed by the recent high profile lawsuit against Encana over alleged groundwater contamination from fracking activities on a property just east of Calgary.
It might take Quebec a long time to decide whether it wants to allow hydraulic fracturing. That may not be good news for Binnion, but Questerre is not fixated solely on Quebec. The company produces some light oil in the Bakken in Saskatchewan, holds rights in the Montney in western Alberta and is developing an oil shale mining technology that could one day pay big dividends. Questerre is committed to a long-term approach in Quebec.
Binnion is acutely aware of the distinct character of the Quebec “nation,” and the substrata of history underlying each day’s headlines. This contrasts with Alberta, where some are frivolously convinced that nothing really happened here before provincehood was declared in 1905. Quebec’s distinct character comes to the fore in highly visible social movements. Witness the widespread protests and abiding fury of students after the Charest government decided to gradually raise the lowest tuition fees in the country, or the more recent dust-up over the PQ proposed provincial charter of values.
If government decides it’s a good idea to turn the Utica’s proposed development into a political football, Questerre’s decade-long dance of exploration and persuasion could be just the prelude. “What really keeps me going,” Binnion says, “is that I’m a big believer that oil and gas is one of the industries that’s bringing people around the country together.” To keep plugging away in Quebec, it seems, you have to be.