Alot of confusion have been spreading around the web about the latest BAPE-report and what the consequences of its release will have for the shalegas-industry in Quebec.

If you feel its been hard to distinguish facts from misconceptions, at least you can find comfort in the fact that so have most of the analysts that have followed our company for a long time, when it comes to these current news. Canadian and norwegian analysts alike. Something they have in common with the waste majority of the public media and even some of the political figures in the shalegas-debate. On both sides of the fence too. To illustrate the raging confusion, take a look at these two articles I'm about to quote.

Here is one view on the BAPE-report from the activists (against shalegas in Quebec):

"Regrettably, shale gas in the province is receiving a green light or in French “un feu vert” (a green fire translated literally)."

"All in all, the BAPE’s recommendation to proceed is a major blow to environmental and health advocates calling on the Québec Liberal government to heed the many public safety and environmental risks which surround shale gas drilling and fracking."

http://www.desmogblog.com/bape-shale-gas-study-verdict-drill-baby-drill-no-fracking-now

So they are not happy because the BAPE recommends to proceed with shalegas drilling.

With that in mind, we look at another activist group, Equiterre, and their take on the BAPE-report:

Equiterre applauds shalegas freeze.

“We’re happy,” added Ribaux, Equiterre’s executive director.

“It’s a wise decision.”

Ribaux described this halt as, “for all practical purposes, a moratorium” on fracking.

http://www.montrealgazette.com/business/Equiterre+applauds+shale+freeze/4405654/story.html

Clearly they have a different understanding of either the report itself, or they haven't read the report and just based their opinions on the highlights from the reports conclusion. Because seriously, if you have a 323-page document and its summarized in the end with a conclusion, why read the full report, right? Or better yet, if someone allready interpreted those conclusions and shortened them down to more catchy slogans in big war-types, who could say no to a free lunch?

Enough about everyoneelses errors. At least for now, can't just let those QEC-analysts off the hook that easy.

So we have established that it ain't only the stockowners that are confused, but before we look at what we can establish as facts, we should take a brief look at how we can establish what is facts in this information-mess.

So we got this BAPE-report. If Canadian governments are anything like their norwegian brethren, they go through such studys (if not necessarely of this magnitude or public interest) like their were candy each year, to provide guidance in their decisionmaking.

The BAPE-report is just that, guidance. And with any guidance at any arena in life, we are free to ignore it. And politicians use this right vigourously. And at the moment, the main decisionmaking man is Pierre Arcand, the Minister of Environment, Sustainable Development and Parks in Quebec. And he is free to follow all, some or none of the guidance given in the BAPE-report.

And now we are touching what is probably the main source of the confusion, poor research aside. One article might qoute some of the guidance in the BAPE-report and claim its the new policy. And by mixing it with some of the statements Pierre Arcand have made, and topping it of with some rephrased interpretations of what he said or what the report said, you got the basic recipé for misconception.

But it gets a bit easier when you consider the fact that it doesn't really matter what the BAPE-report says. Or what the media says or the analysts for that matter. What will affect the industry, is what the government, and within that mainly what Pierre Arcand decides will be policy, at least for now. So removing all the noise, we are left with trying to figure out what Pierre Arcand actually said on the press-conference in Montreal right after the BAPE-report was launched at 4:00pm EST and what have been the governments vocal stance since.

This haven't really been that easy, since about half of the quotes is rewritten interpretations of what he said, correct or not, and not straight quotes.

Getting my hands on a transcript of that conference would have been great, but after a few hours of digging through some 30+ articles in both french and english, I finally found a recording of some of the conference. Self-made transcript next up:

Arcand: There have been 31 wells allready, right now. Any new fracturing in the future will.. will be very... we wan't to make sure it will be under the supervision of the Strategic Environmental Assessment group.

Question: In terms of public consultation, if a municipality, group, village, what ever it is, decides that they are completely against any kind of exploration, any kind of work in their neighbourhood or whatnot, do they have the power to veto?

Arcand: Well, right now they don't have the power to veto, but of course, we will look into it, but of course we understand, and its one of the clear recommendations from the BAPE, that we need to seek, absolutely, we need to seek some kind of, what we call, social acceptability.

Question: When... So we can continue to see new exploration holes drilled?

Arcand: There might be some new, but again its going to be for scientific purposes and its going to be under the Strategic Environmental Assesment.

Question: There are over a hundred recommendations, I realize its only been a week, at what level are you talking about accepting it (the BAPE-reports recommendations:heltfeil). All of them, most of them, only a few?

Arcand: I will say most of them. Of course, I can not say all of them, I can say most of them. I can say to you the main conclusion wich is the environmental assessment that we are talking about, I said to you that this have allready been accepted. We will do that. Of the one hundred recommendations, most of them will certainly be supported by us. I will say though that there are maybe some cases in wich its not necessarely either logical or its too costly, but again, all those who really means that, you know, its for the benefit of health and security purposes, of course we will take a good look at it and make sure that they are well accepted.

Question: Are there any of the hundred that you have ruled out, that you've said "okey, we won't accept that" or "we will modify it"?

Arcand: Well, there is a few that, you know, need to be discussed with other ministries. Don't forget that there is a bunch of ministries involved, and of course, over the last eight days we haven't had a chance to really discuss all of those issues with them.

http://www.cbc.ca/quebecam/2011/03/09/reaction-to-the-bape-report-on-shale-gas/

As you can see, there wasn't that much of the press-conference on the podcast, and several additional hours of searching gave no result.

But here is an interview done with Pierre Arcand after the report was made public. In french, so didn't do me much good.

http://www.radio-canada.ca/audio-video/pop.shtml#urlMedia=http://www.radio-canada.ca/Medianet/2011/CBF/Desautels201103081717_2.asx&epr=true

And here is a video-interview with Pierre Arcand, that looks like it was made shortly after the press conference. Again in french, so if anyone speaks it, feel free to let me know what he is saying.

http://www.radio-canada.ca/audio-video/pop.shtml#urlMedia=http://www.radio-canada.ca/Medianet/2011/RDI2/RDIEnDirect201103081600_8.asx&epr=true

After looking at the collective body of direct quotes and the interviews I could get my hands on, there still is some clearification to be desired. Especially when it comes to how the cooperation between the SEA and the industry will pan out. Not unreasonable, considering the ministers probably don't know for sure how they going to solve all the practical parts yet. But here is my current short-list of facts we do know for certain (to the degree anything can be considered a certainty when it involves politicians):

*It will be done a Strategic Environmental Assessment (SEA) of the shalegasindustry in Quebec. This was the main recommendation from the BAPE-report, and pretty much what made up the entire conclution-section of it. The preliminary commitee will be ready by spring, and the full commitee will be made up of scientists, government, municipal and industry representatives. This evaluation is guesstimated by the BAPE commisioners to take from one to two years.

*A temporary legislation and regulation is being rushed to handle the "new" situation. Anything is probably better then the current 100+ year old mining law we are under. The final regulation is likely being pushed back until the SEA is finished. We can also expect some changes to have how the governments slice of the cake is calculated, though rather irrelevant during our pilot-stage.

*Fracking of the allready drilled pilot-wells in Utica, will be allowed for the entire industry. Yes, thats what those who decide are saying. Ignore the rest.

*Drilling of new pilot-wells will be allowed for the entire industry, if the individual wells get local approval. What lies within this "local approval" is not given, but judging by the Q/A-part we do have from the press-conference, the locals ain't going to get all the saying.

*Future pilot-wells will also be allowed to get fracked. Obviously assuming they get the local approval to drill the wells in the first place. Again, its there behind the noise.

*All drilling and fracking will be done with the SEA looking over the industrys shoulder. This is also the key to the industry being able to continue as usual, even though most of the world thinks pretty much all operations are shut down. And while it might be a few strings attached, I doubt the industry could get a better chance to prove themselfs to the public then this coop.

*Commercial exploitation will not be approved until the SEA is done. Going by the BAPE estimate for SEA-duration, we are talking no commercial exploitation until about 2012Q1-2013Q1. QEC's timeline dating right before Talisman announced their delayment last year, commercial development was guesstimated to december 2012, allmost two years from now. So no risk of this restriction having any affect on our progress.

These are the main takeaways from the news the last couple of days.
In this "review", I haven't given the statement given by QEC through Anela Dido. Not because I don't have my full confidence in its validity, but because I wanted to purely look at the information given through those that will be making these regulations.

In conclusion, given these facts, every analyst talking about one, two, three and four year delays in QEC's Utica-progress are wrong. At least from the current standpoint. While there might be some hickups here and there due to a new regulation and the SEA wanting to tag along, small delays is nothing new in the exploration-business. When the noise settles a bit, and the rest of the world figures out how this actually will go down, we won't be at a more unsecure place. Then the analysts might just see what really happened. We avoided a moratorium and could continue our exploration phase. Wich is more then we knew before the report was made public.

Due to all the noise, and the uncertainty in regards of how everything will work out on the practical level with the SEA and new temporary regulation, I'm sure there is room for a SP staying low for some time. Personally I'd like to see it go as far down as possible, for an even better oppertunity to increase my holding, but I doubt we will get that much closer to our cash-value. Our Antler assets might have sneaken up on someone not paying too much attention to where we spend our money too, with alot more CAD invested there last year, then in Utica. Wasn't it 11 new wells and quite a bit more acreage?

But to bring a small patch of grey cloud on our blue sky; the biggest concern in my opinion, is TLM. It have been since we made partners, and it will continue to be so until we have made a few more solid flowrates. And a higher NG-price would probably increase their motivation too. Cause we are really dependent on TLM to have any reasonable speed in our progress. Even though the latest BAPE-circus haven't really done anything to either our timeline or Utica's potential, all the negativ media probably doesn't encourage a partner that has allready distanced himself a bit from shalegas. 30% less investments in that genre for TLM now, wasn't it?

Too bad I can't edit this post later, but I'll probably make another message under it, with sources to the actual statements that make the list a list of facts and not assumptions. Now I need some sleep, after reading tens of articles claiming there is both a moratorium and allowed to drill and frac, a man in the moon, a monkey on my back and that NG is actually pure liquid plutonium, I'm getting pretty tired.