France Vote Outlaws ‘Fracking’ Shale for Natural Gas, Oil Extraction

By Tara Patel - Jul 1, 2011 4:22 AM MT

French senators voted to outlaw hydraulic fracturing, or fracking, making France the first country to pass a law banning the technique for extractingnatural gas and oil.

“We are at the end of a legislative marathon that stirred emotion from lawmakers and the public,” French Environment Minister Nathalie Kosciusko-Morizet said late yesterday before the vote. Hydraulic fracturing will be illegal and parliament would have to vote for a new law to allow research using the technique, she said.

Energy companies that plan to use fracking to produce oil and gas in France will have their permits revoked and its use could lead to fines and prison, according to the law passed by a vote of 176 in favor, 151 against by the senators in Paris.

Lawmakers of the ruling UMP party voted in favor of the bill while the opposition Socialists rejected the proposal for not going far enough. Before the French vote, the ban had moved between the upper and lower houses of parliament since March.

Fracking, widely used in North America, uses a mixture of water, sand and chemicals injected under high pressure to break dense rock to release trapped oil and gas. Green groups and politicians led protests across France, saying the method could cause environmental damage. Government ministers and industry representatives say it is the only method currently available to extract hydrocarbons from the rock.

Ban ‘Deplored’

Oil companies operating in France “deplore” the French ban, according to the Union Francaise des Industries Petrolieres, or UFIP, which represents Total SA (FP) and other explorers and refiners. UFIP, it said in a statement,“considers that the law will prevent an evaluation of shale hydrocarbon resources and their impact on the French economy.”

The French energy ministry has already granted permits to companies including Total, Vermilion Energy Inc. (VET), Toreador Resources Corp. (TRGL) and Schuepbach Energy LLC for shale oil and gas exploration. Shares of Toreador, which has the most permits to explore for shale oil around Paris, surged 10 percent in French trading today to cut their drop to 76 percent since Jan. 1.

Losing Permits

Kosciusko-Morizet has raised the possibility of lawsuits by oil companies facing the prospect of losing permits that have already been granted by the French government.

“We could have a court case, yes, probably there will be one,” she said on LCI television on June 22. During debate yesterday in the Senate, she said “financial and legal risks have been limited.”
Under the bill approved yesterday, companies with exploration permits will have two months to declare whether they intend to use hydraulic fracturing. If they do, their permits will be revoked.

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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