Bloomberg News

French Coal Gas Could Meet Demand for a Decade, Montebourg Says

February 20, 2013

Coal-gas reserves in northern France may be sufficient to meet domestic demand for as long as 10 years, boosting the competitiveness of the country’s factories, according to Industry Minister Arnaud Montebourg.

“It’s accessible gas,” Montebourg said at a parliamentary hearing in Paris. “Initial estimates indicate there are between five and 10 years of our national natural-gas consumption.”

Commercial production of coal gas, which is methane that can be used for energy, may help buoy French fuel output at a time when shale drilling remains banned. Montebourg, a long-time proponent of domestic oil and gas production, has advocated pumping methane from defunct coal mines and sees coal-gas development as one way of keeping a lid on energy price gains.

“This isn’t anecdotal; it’s worth looking into,” Montebourg told lawmakers yesterday. “We have to ask ourselves questions about our ability to remain attractive on energy prices for big industrial users. Coal gas would help to finance our industrial competitiveness.”

European Gas Ltd., an Australian explorer holding permits in northeastern France, said last May it conducted a successful gas flow test in Lorraine, a former coal-mining region. The results indicate “commerciality,” it said.

Other energy companies have been less enthusiastic, saying coal-gas production may not be economically viable.

Not Commercial

“It’s not a macroeconomic subject” for France, Total SA Chief Executive Officer Christophe de Margerie said last week. France’s coal-gas potential is “not on the same scale” as shale gas, according to the CEO, who said Total “looked at it a few times and decided that it was not worth the effort.”

Coal gas can be released by drilling vertical wells with multiple horizontal branches, according to European Gas. Flow rates depend on the natural fractures present in the coal, it said.

It may be possible to extract more than 10 billion cubic meters of methane from the northern coal beds, French energy think-tank IFP Energies Nouvelles said in a report last month. Even so, proven reserves are only about 865 million cubic meters so far, the report shows. Annual French natural-gas consumption is about 50 billion cubic meters.

“It hasn’t yet been shown whether coal gas in Lorraine can be commercially developed,” said Jean-Louis Schilansky, the head of French oil and gas lobby Union Francaise des Industries Petrolieres. “A lot of drilling is required and it only works in places where conditions are just right. It’s not profitable everywhere.”

Northern France’s coal gas could alleviate reliance on imports, according to Montebourg, who also supported a reversal of the ban on shale drilling before President Francois Hollande decided to keep the moratorium in September. “I prefer to produce it than import it,” Montebourg said. “It’s ‘Made in France’ gas.”

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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