French Parliament: blind to the bigger energy picture

In October, two new bills will be examined in the French Parliament, which, if adopted, will halt any further development of shale gas and oil in France. The bills aim at forbidding the exploitation of shale oil and gas irrespective even of future innovations in exploitation techniques. According to Boris Martor and Raphaël Chétrit, the shale gas debate in France is not based on rationality or science, but on ideology and electoral posturing. The outcome is likely to cost France billions of euros and hurt the EU's security of energy supply.

A protest against shale gas production, Marseille, France (Photo: marcovdz/EUobserver)
According to an April 2011 announcement by the US Energy Information Administration (EIA), France holds potential reserves of shale gas and oil amounting to at least 2,430 billion cubic meters (equivalent to 50 times the national annual consumption of gas), which could be extracted by hydraulic fracturing. Even though the Mining Code presently contains no particular provisions regarding this technique, hydraulic fracturing has been widely used in France for the exploration and exploitation of hydrocarbons. However, some changes should have been made to the Mining Code to address the latest developments of this technique, but the government decided to simply include past laws in the Code instead of reforming it to achieve harmonization with the Environment Code. Research permits for shale gas and oil were granted lawfully by the French government, following the mandatory consultation of the affected population. The granting of the permits triggered a strong defensive reaction from the French public, supported by environmentalist lobbying.

In response, MP Christian Jacob, the leader of Nicolas Sarkozy’s UMP group in the French National Assembly, submitted a bill to Parliament in March 2011, asking for the prohibition of all exploration and exploitation of shale gas through hydraulic fracturing. The bill was adopted on 13 July 2011, becoming law n° 2011-835 but it did not cancel the research permits as initially proposed.

Ignorance

The decision-making process surrounding this bill makes it clear that it was rushed through Parliament in the context of upcoming senatorial and presidential elections. First of all, the Parliamentarians unfortunately paid no attention to the necessary reform of the Mining Code. Experts have argued for years that this Code should be revised. The Code, which dates back to 1956, imposes drilling standards which were adopted by decree over the years and proved to be suitable for the regulation of the use of hydraulic fracturing for the exploration and exploitation of resources other than shale gas and oil. However, changes would have been necessary to implement a procedure more in line with environmental law and giving more importance to the participation of the public.

The bill was adopted even before a group of experts, which had been appointed in February 2011 to help the government in making a decision on this technical matter, had published its final report. The

The arguments voiced during the Parliamentary debate revealed a total ignorance of the technology used for the exploration of shale oil and gas and its effects
arguments voiced during the Parliamentary debate revealed a total ignorance of the technology used for the exploration of shale oil and gas and its effects. The MPs actually chose to remain ignorant by forbidding hydraulic fracturing altogether and by making further research nearly impossible. Indeed, they voted through a text that prevents stakeholders from even knowing precisely how large France’s hydrocarbon reserves are.

In accordance with the new law, a National Commission for orientation and assessment (composed of one deputy, one senator, government representatives, local authorities, NGOs, and operators) was set up to monitor and evaluate the risks of hydraulic fracturing and other alternative techniques. This Commission will give its opinion on the conditions that have to be met to allow experimental scientific research. In addition, the government will send a yearly report to the Parliament documenting technological advances, possibilities of regulatory and legal adaptations as well as the situation in other countries.

Lawsuits

Some observers had noted that the law contained a loophole in that it did not provide any definition of hydraulic fracturing. Thus, it was hoped that other technologies, still under development, could be used in future to exploit shale gas. However, the French Socialist groups in the Senate and National Assembly have now introduced two new bills, to be voted on in October. Indeed, they believe the law passed in July did not go far enough especially because it leaves the door open for experiments and research on hydraulic fracturing. Both new laws seem to be aimed at preventing shale gas and oil extraction by any kind of technique and even withdrawing all the research permits delivered so far. Such a withdrawal would open the way for lawsuits against the French administration.

These two proposals give two different definitions of shale oil and gas. Proposed bill n°3690 states that: “[shale gas and oil] are considered non-conventional hydrocarbons liquid or gas trapped in rock or

What the two bills apparently intend to do is not so much define hydraulic fracturing but to prevent the use of any technique to extract shale oil and gas
in a particularly low permeability reservoir or buried in a deposit located in deep water, and whose exploration and / or operation requires breaking, cracking or undermining the integrity of the rock or the use of floating platforms or drill ships (...)”. In proposed bill n° 775 “source rock” oil and gas, as the authors call them, are defined as “liquid or gaseous hydrocarbons that are trapped in a non-porous rock formation and whose extraction requires breaking or cracking the rock by any technique whatsoever.”

This difference in terminology makes it clear that the debates leading to voting on law n° 2011-835 were not comprehensive enough to adopt a common terminology, a matter which cannot reasonably be left to the choice of the MPs. Rather, it is necessary for such definitions to be written by scientists, engineers and experts and for MPs to follow their recommendations. The very notion of non-conventional oil and gas does not exist in French law. Indeed, this notion of non-conventionality is constantly evolving. Resources we considered as non-conventional just a few years ago are now considered as conventional. A definition of non-conventionality enshrined in a law and disconnected from scientific progress and the prohibition of the exploration and exploitation of those resources would prevent France from even considering taking advantage of its natural resources and technology progress.

Paradoxical

What the two bills apparently intend to do is not so much define hydraulic fracturing but to prevent the use of any technique to extract shale oil and gas. Even though no concrete assessment of the effects of hydraulic fracturing has been made yet in France, these bills reject in advance any alternative technique to fracture or crack rock. One of the proposals also calls for the suppression of the newly set up National Commission on orientation and assessment! Note also that extraction of shale oil and gas is mixed with deep water drilling. The aim is plainly to forbid all possible development of non-conventional oil and gas irrespective of any future scientific findings or technological developments.

Considering how the law of July 13 2011 was adopted – in a context of incomplete and distorted

What is wholly missing from the debate is any discussion of the broader energy situation of France and Europe
information, rashness, upcoming elections in the Senate, environmental lobbying, etcetera – one cannot be optimistic about the outcomes of the new debates. The discussions prior to the voting in July were directed by ideology and politics rather than by the aim of securing a legal framework to develop the energy potentials of France. The preambles of the two proposed bills reveal the same shortcomings.

In case either of the proposed bills is adopted, France would be in a paradoxical situation. Most of the proposed provisions aim at strengthening the process leading to the granting of permits to explore or exploit shale oil and gas (public enquiry, study of impact, consultations with local authorities etc.). This would help bring about a sound and well-controlled environment for making the exploration and exploitation of shale oil and gas possible. Yet at the same time the bills prohibit all techniques of exploration and exploitation!

What is wholly missing from the debate is any discussion of the broader energy situation of France and Europe. New unconventional gas and oil reserves could make the country less dependent on outside suppiers. Energy dependence is one of the greatest geopolitical challenges Europe faces, especially due to its dependence on Russian gas. But unlike its European partners, France is not considering all its options. Indeed, many people are also calling now for a ‘nuclear exit’. This ideological blindness could become very costly for France and the EU.

 

About the authors

Boris Martor is a partner with Eversheds LLP in Paris. He advised a number of oil & gas and mining companies. Raphaël Chétrit is associate with Eversheds LLP in Paris.