Remember France’s ban on the shale gas revolution that has been rocking North American oil markets? That may soon be a thing of the past.
The new French government is considering the possibility of opening up a debate on the subject.
“It’s not a banned subject,” Industry Minister Arnaud Montebourg said yesterday [Thursday] in Paris. “We must confront it. For the moment, there is no government position.”
Companies like Total SA (NYSE: TOT), a large shale gas operator in the U.S., were banned from shale production operations within the country by the previous French government.
Of course, the picture is complicated because Delphine Batho, French Environment and Energy Minister, had earlier declared that the existing ban on fracking would remain in place.
Fracking, the process involving the fracturing of shale rock via high-pressure jets of chemical water, is highly controversial for numerous reasons. Opponents cite risks of the contamination of drinking water reservoirs, while some minor earthquakes in the U.K. have allegedly been the consequence of nearby fracking operations.
Last year, France banned all such operations within the country, becoming the first nation to do so.
Meanwhile, the shale boom in the U.S. has caused natural gas storage units all over the country to fill up faster than usual. The newfound reserves of potential oil and gas have caused prices to tumble 38 percent this year alone.
Patrick Pouyanne, Total’s chief of refining and chemicals, told Bloomberg:
“The U.S. has created 600,000 jobs in three years. The petrochemicals industry has announced the creation of four giant new complexes that will get nearly $20 billion in investment. Within five years they’ll be exporting petrochemical products to Europe at competitive prices.”
In 2010, several companies including Toreador Resources (EPA: TOR), Vermilion Energy Inc. (TSE: VET), Schuepbach Energy LLC., and Total all received permits that allowed them to pursue unconventional natural gas and oil prospects, including shale reserves. Last year these permits were revoked.
According to Toreador, the areas around Paris are similar in geological makeup to the famed Bakken Shale in North Dakota and contain approximately 100 billion barrels in oil and gas reserves.
France’s ban went into effect in the early days of shale exploration. This is one of the biggest arguments being used by current champions of fracking, who argue that as the process has developed, it has also become safer and more controlled. In sum, they argue, it would be to France’s benefit to remove the ban to access to so much oil and gas. Will that happen? Only time shall tell.
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