SWN abandons shale gas testing for summer

Southwestern Resources Canada isabandoning its seismic testing for shale gas in New Brunswick this summer, citing delays in obtaining provincial permits.

And that couldpush backthe company's decision on whether it's viable to extract shale gas in the province to 2016.

The government has still not issued SWNthe required permits for its summer program, according to Tom Alexander, the general manager for New Brunswick.

Theres a lot of prep work involved, including staffing and equipment, and without the permits, SWN doesnt have enough time to get ready, he told CBC News.

"Part of the process of doing anything, whether it's recording seismic or drilling a well, is lining up contractors, and they, of course, have other jobs to do as well."

The political debate over shale gas in New Brunswick and new provincial government regulations have nothing to do with the decision, Alexander said.

'We are still committed to the province and the exploration program, 110 per cent.'Tom Alexander, general manager

"We are still committed to the province and the exploration program, 110 per cent, but we still don't have our permits and we're trying to understand what we need to do to make that happen."

It's not yet clear whether one summer without testing will set back development by a year, said Alexander.

"Until this, people were maybe looking at the year 2015 when that decision [on whether its viable to extract shale gas in New Brunswick] might be able to be made.

"Does it mean now it's '16? Maybe, maybe not. There's a lot of things that will happen between now and then that will drive that decision."

Premier David Alward and Natural Resources Minister Bruce Northrup have talked about the economic importance of shale gas development to the provinceand how the potential resources revenue could help pay for public services.

SWN has the rights to explore 1.1 million hectares of the 1.4 million the province has issued licences for.

It was slated to begin testing for shale gas inKent County.

Testing was expected to be carried out on private properties for two or three months, with the permission of the owners.

Second halt of operations

This is the second time the company has temporarily halted its operations in the province.

SWN wrapped up its exploration work last August, about a month ahead of schedule, following numerous protests by people concerned about the controversial hydraulic fracturing processand alleged vandalism.

Hydraulic fracturing, also known as hydro-fracking, is a process where exploration companies inject a mixture of water, sand and chemicals into the ground, creating cracks in shale rock formations to extract natural gas from areas that would otherwise go untapped.

Opponents are concerned the process will ruin the water supply.

Stricter rules

On Tuesday, the Alward government introduced amendments to the Oil and Natural Gas Act that would increase penalties for companies that violate the act to $1 million.

Fines for most violations currently range between $640 and $10,400.

In addition, the proposed amendments would establish a new director of administrative penalties position at the Department of Natural Resources.

The director would be empowered to investigate violations and impose penalties.

The government is proposing 116 different changes to the regulatory framework that oversees the oil and gas industry, including strict rules to protect the environment and an overhaul of the royalty framework to ensure more money flows into provincial coffers and is sent to communities where mining activity is taking place.

Citizens have until July 18 to submit comments.

Windsor Energy pushing ahead

The amendments come after another shale gas exploration company,Windsor Energy Inc., ran into trouble with the provincial government last fall.

Windsor's contractor Seismotion conducted seismic testing within Sussex town limits without written permission from the town council.

Natural Resources Minister Bruce Northrup asked the RCMP to investigate, but policedid not lay any charges, saying there was nothing in the existing legislation that allowed a company to be punished.

Windsor Energy Inc. has since been granted a five-year leaseto continue exploring for oil and natural gas in southern New Brunswick.

Drilling could begin next year, with government approval, the company's chief executive officer Khalid Amin has said.