Opposition around Paris and southern France has halted the plans of energy titans such as Total
Natural gas may be poised for a post-Fukushima boom, but even it faces hurdles. In the U.S. and Europe, concerns have been growing about the environmental impact of drilling for gas trapped in shale formations. And in France, Jos? Bov???he French environmental activist, farmer, McDonald's (MCD) antagonist, and onetime Presidential candidate??as brought the nascent search for shale gas and oil to a halt.
As Total (TOT) and other energy companies readied rigs outside Paris and started to plan for drilling in southern France, local environmental groups began raising concerns about damage to water tables from the hunt for hydrocarbons locked in shale rock. On Jan. 22, Bov?? started a petition that now has about 100,000 signatures; within weeks the government ordered an exploration moratorium. On Mar. 11, Prime Minister Fran??ois Fillon extended the ban until June, when parliamentary and ministry reports on the environmental and economic effects are due.
"Opposition is building because people are shocked by the way the state pushed through drilling permits without any debate," says Bov??, a Green party deputy with the European Parliament. "It shows disdain for the population and elected representatives." On Mar. 23, French Environment Minister Nathalie Kosciusko-Morizet briefed Parliament on plans to modify rules and allow public consultation when awarding permits for oil and gas exploration.
Total and Dallas-based Schuepbach Energy were awarded permits a year ago to explore for shale gas, which is produced in the U.S. using hydraulic fracturing, or "fracking," to shoot water, sand, and chemicals into the ground and extract oil or natural gas. Opponents of fracking fear harmful chemicals could seep into groundwater.
Toreador Resources and Canada's Vermilion Energy also received permits to drill in the Paris Basin outside the capital. The geology of the saucer-shaped rock formation, which extends more than 140,000 square kilometers, is similar to the Bakken Shale formation in North America, where oil production has surged with the increased use of hydraulic fracturing, the companies say. In a Radio Monte Carlo interview on Mar. 16, French Industry Minister Eric Besson said that while chemicals used in fracturing "have caused considerable damage in the U.S. and Canada ... some industry representatives say that there may be clean technology that would permit production of shale gas without causing what we have seen in the U.S."
Riding out the political storm will be easier for diversified global producer and refiner Total than for Toreador, which moved its headquarters from Dallas to Paris in 2009 and partnered with New York-based Hess (HES). Toreador had planned to start drilling a series of wells this month. It won't proceed until the government studies are done. Vermilion will also hold off on hydraulic fracturing in three existing Paris Basin wells. It's already carried out fracturing at two wells.
France produces about 1 percent of its crude oil needs from wells near Paris and Bordeaux. The areas stirred excitement in the '80s when finds by Total and Exxon spurred a rush that slowed after dry wells and a drop in oil prices. While the Paris Basin may hold 100 billion barrels, it's unclear how much is recoverable using new techniques. Toreador Chief Executive Officer Craig McKenzie puts the number at about 300 million barrels. "If the geological potential is there, it would be a shame for France to pass up this source of energy," says Jean-Louis Schilansky, head of the Union Fran??aise des Industries P??troli??res, an association of oil companies operating in France.
Bov?? doesn't agree and is taking his battle to the European Parliament. Even exploration shouldn't be allowed, he says. "The best solution would be for [Total CEO Christophe] de Margerie to cancel his permit." Says de Margerie: "We are going to wait until things calm down. I'm not in a hurry."
The bottom line: Opposition to drilling for shale gas and oil around Paris and southern France has halted the plans of energy titans such as Total.