France rejects Hess bid to explore for shale oil/gas by Reuters, November 28, 2013
France has rejected a request by U.S. firm Hess Corp. to explore for shale oil and gas near Paris, the energy minister said, despite assurances it would not use the fracking process banned by law. Hess sought to take over seven permits granted in 2010 to Toreador, another U.S. company. A 2011 French law banning hydraulic fracturing, or fracking, had put the permits on hold. Hess said it would not use the banned technology, but geological conditions in some of the permit zones would require it to resort to fracking, Energy Minister Philippe Martin said in a statement. Also two of the permits have now expired and cannot be transferred to a new owner, he added.
Hess had also filed a legal case and is claiming compensation of 30,000 euros ($40,700) per permit. Martin said France would seek to reduce this amount at a Dec. 6 court hearing. France’s constitutional council last month upheld the ban on fracking, rejecting a challenge by U.S-based Schuepbach Energy, which held two permits that were cancelled. The government’s stance, while pleasing the Green allies of Socialist President Francois Hollande, has disappointed business leaders and France’s industry minister…. [Emphasis added]
France Denies Hess Energy Exploration Permits in Paris Basin by Tara Patel, November 28, 2013, Bloomberg
France blocked the transfer to Hess Corp. (HES) of seven exploration permits in the Paris Basin on the grounds that the New York-based oil company remains interested in shale-energy development despite a ban. Hess “has not abandoned its original project,” French Environment Minister Philippe Martin said in a statement today, referring to past plans for the permits that involved hydraulic fracturing for shale oil. The decision is the latest in a longstanding dispute with oil companies over the country’s ban on the drilling technique widely used in the U.S. to extract oil and natural gas from shale rock. France outlawed fracking in 2011 in the face of claims by companies including Total SA (FP) and Toreador Resources Corp., later merged with ZaZa Energy France SAS, that the country may have substantial reserves.
Hess in France is an “empty shell” that lacks technical competencies required by the mining code, Martin said. A spokesman for Hess didn’t answer a call for comment. Hess and Toreador announced plans in May 2010 to spend as much as $120 million searching for oil in the Paris basin, whose geology may be similar to that of North America’s sprawling Bakken Shale deposit. They planned to use fracking to explore for shale oil over as much as 420,000 hectares, mostly to the south and east of the French capital.
After parliament banned fracking, Toreador sold conventional oil-producing assets to Vermilion Energy Inc. and said others had been transferred to Hess. The transfer had to be approved by the government. The original plan for one of the permits called Chateau Thierry was “incontestably and exclusively” to explore for shale oil and gas, Martin said today. “Effective” exploration of the permit can’t be done without fracking. France’s constitutional court upheld a ban on fracking last month, ruling that the law is a valid means of protecting the environment. The ban remains controversial with a parliamentary report published yesterday urging the government to allow limited fracking to evaluate potential reserves. [Emphasis added]
France Should Allow Fracking to Gauge Resources, Lawmakers Say by Tara Patel, November 27, 2013, Bloomberg
France should allow drillers to use hydraulic fracturing to estimate the size of the nation’s shale oil and gas reserves, lawmakers said in a cross-party report. Dozens of exploration wells should be drilled, overseen by the state and allowed under provisions for research in a current ban on the technique, according to the parliamentary commission. … “This can be carried out without environmental destruction and the use of toxic substances,” Socialist Deputy Christian Bataille, one of the authors, told reporters today. “We can’t just keep shutting the door. That would be obscurantism.”
French President Francois Hollande and Environment Minister Philippe Martin support the ban, implemented in 2011 by opponent and presidential predecessor Nicolas Sarkozy. Business lobbies are urging shale development to help reverse industrial decline and increase competitiveness through cheaper energy supplies. France and Poland have the greatest potential for recoverable shale gas in Europe, the International Energy Agency says.
“France shouldn’t be left behind and totally dependent on others for the technology,” said Senator Jean-Claude Lenoir, a member of the opposition UMP. “Shale gas has been demonized.” Total SA (FP) Chief Executive Officer Christophe de Margerie and GDF Suez SA (GSZ) head Gerard Mestrallet have urged the government to allow companies to estimate reserves before deciding on whether to develop them. Total was among companies that had exploration permits revoked after the passage of the anti-fracking law. The company develops U.S. shale oil and gas reserves and GDF Suez has bought a stake in licenses in England’s Bowland basin.