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New Brunswick sets fracking rules Objectives: North America’s strongest regulations; revenues to ease debt load; royalties raised from 10% to 40%; will be shared Gary Park For Petroleum News
The Canadian province of New Brunswick has removed uncertainty hanging over the development of its unconventional natural gas resources by unveiling new rules for hydraulic fracturing, while raising its royalties.
Premier David Alward said his government has a two-pronged objective: The strongest shale gas exploration regulations in North America and revenues from its natural resources to ease the debt load on the province of almost 1 million.
The plan, introduced in the provincial legislature by Natural Resources Minister Bruce Northrup and Environment Minister Bruce Fitch, includes a hike in oil and gas royalties to 40 percent from 10 percent.
Those revenues will go into a profit-sharing agreement with local landowners and companies, with landowners receiving 0.5 percent, while municipalities and local service districts within a 25-kilometer radius of producing wells qualifying for 2 percent.
Maximum fines raised Maximum fines for companies violating laws governing the industry will be raised to C$1 million from C$10,400, with the Department of Natural Resources being authorized to levy the fines directly rather than going through a court process.
Northrup told the legislature the current system is “too slow and not a good use of our time.”
New Brunswick has been under mounting pressure over the past year from individuals and organizations who are concerned about the use of fresh water for fracking and the treatment of waste water.
In addition to mandatory pre- and post-seismic testing and drilling regulations announced last year, New Brunswick plans to impose new surface water and groundwater monitoring requirements.
Fitch said “not one hole will be drilled without a thorough review (by his department).”
He said operators will be required to look for ways to use waste rather than fresh water, while the use of open pits for handling drilling fluids will be banned.
Separately, the Department of Health is developing ways to assess the health impact of shale gas development.
Windsor plans to drill in 2013 Calgary-based junior explorer Windsor Energy hopes to obtain government approval to start drilling in 2013, said Chief Executive Officer Khalid Amin.
Northrup announced in April that he had converted Windsor’s three-year license, including a commitment to spend C$4.5 million over the term, to a five-year lease that will expire in November 2013.
The company is exploring for oil and natural gas in the Sussex-Hampton-Quispamsis area and is currently analyzing seismic data to assemble a drilling program.
Windsor started seismic testing in 2011 before receiving permission from the local town council, but the Royal Canadian Mounted Police laid no charges and Northrup said a “grey area” that was exposed during the controversy has been removed.
Windsor could have been fined as much as C$5,200, but, under the new regulations, would face a possible penalty of C$500,000.
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