Thursday, March 30, 2017

Global Shale Law Compendium: Shale Governance in France

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. Our first article highlighted governance actions within the European Union generally. In this, the second article in the series, we will discuss legal, policy, and governance issues related to shale gas development in France.

According to the U.S. Energy Information Administration (EIA), France is one of the European countries with the highest potential for developing shale gas, with reserves estimated at 136.7 Tcf. Despite these promising reserves, development has not yet happened, primarily due to public concerns about the technique of hydraulic fracturing and skepticism about the ability of the existing legislation to address these concerns.

The controversy over shale gas development in France began in early 2010 when the French government granted three exclusive licenses for the exploration of shale gas, without any public participation, to the French energy company Total and the multinational Schuepbach Energy. The French Mining Code provides for two types of mining titles, namely an exclusive permit for the exploration phase and a concession for the exploitation phase.  The French government was criticized quite broadly for acting with a lack of transparency and for failing to comply with the provisions of the French Environmental Code in the granting of these exploration licenses. 

Generally, public participation is required in regard to all decisions that could have a potential impact on the environment pursuant to the Charter for the Environment of 2004 contained in the French Environmental Code. The principles and aims of the Environmental Code, however, are not explicitly expressed within the provisions of the Mining Code. Thus, the French government relied solely upon the Mining Code to grant licenses without any public participation or consultation. Due to a public outcry about the lack of public participation and expression of public concerns that the risks associated with the use of hydraulic fracturing had not been fully identified, the French government withdrew the three exploration licenses issued to Total and Schuepbach Energy companies and enacted the Prohibition Act in July 2011 forbidding the use of hydraulic fracturing. The French government announced that the ban would remain in place until a comprehensive body of evidence relating to the environmental risks associated with shale gas development had been submitted to the government.

Interestingly, the Prohibition Act of 2011 does not forbid shale gas extraction itself, but merely the use of hydraulic fracturing. As a result, with hydraulic fracturing being the only technology currently used to fracture into underground shale formations, the Act functions as a de facto prohibition on shale gas development. The Prohibition Act does provide that exploratory research for scientific purposes is allowed in order to determine the effects of hydraulic fracturing on the environment. In addition, the Act provided for the creation of a National Commission on the Orientation, Monitoring and Assessment of the Exploration and Exploitation Techniques of Liquid and Gaseous Hydrocarbons. The purpose of this Commission is to define the conditions under which exploratory research would be envisaged. To date, however, the Commission has not been established.

In January 2013, Schuepbach Energy challenged the Prohibition Act, arguing that the Act was contrary to the French Constitution by infringing upon economic freedom, affecting guaranteed property rights protection, and ignoring important principles of the Charter for the Environment of 2004.  In a decision dated October 11, 2013, the French Constitutional Court upheld the Prohibition Act as a valid means of protecting the environment. 

Since the enactment of the Prohibition Act, the government has consistently expressed a negative opinion towards the development and production of shale gas, through the use of hydraulic fracturing, in France. There have been some political figures, however, including the President of the French Republic, François Hollande, who have indicated an interest in shale gas production if alternative techniques could be developed to replace the use of hydraulic fracturing. In this regard, two recent reports have reignited the debate on whether the exploration and exploitation of unconventional hydrocarbons could be done in an environmentally sound way. In November 2013, the French Parliamentary Office for Evaluation of Scientific and Technological Options issued a report addressing alternative techniques to hydraulic fracturing for the development of unconventional hydrocarbons. In this report, the Office recognized that, if improperly performed, hydraulic fracturing for the exploitation of unconventional hydrocarbons could have dramatic impacts on the environment. It states, however, that new technologies are now available to improve and further control hydraulic fracturing operations. The Office therefore openly maintained that French shale gas reserves should be exploited and pointed out that “technological choices are . . . primarily political choices . . . but research must nevertheless follow its course, without prejudging its results.”

Another report, dated April 2015 and commissioned by former French Minister of Industrial Renewal, Arnaud Montebourg, recommended the safe exploitation of shale gas resources using fluoropropane, a non-flammable gas generally used in extinguishers. This method, which was developed by the American energy company eCorp International, LLC, as an alternative to hydraulic fracturing, does not require the use of water nor does it require chemical additives. This report was at the center of a scandal that was uncovered by The Figaro, a French newspaper, alleging that the French government – still firmly opposed to shale gas development – had purposely buried the report in an attempt to avoid commenting on the merits of its conclusions.

The pending reform of the French Mining Code, proposed in January 2017, may reinitiate discussion on the subject of shale gas development. The purpose of this long-awaited reform – undertaken in 2012 – is to strengthen access to information and public participation in addressing the granting of mining permits pursuant to the Charter for the Environment of 2004. Interestingly, the Reform makes no mention of shale gas development in its text, and opponents to such development fear future flexible arrangements from the government. As a result, the Chairman and Rapporteur of the French National Assembly’s Sustainability Commission, Deputy Jean-Paul Chanteguet, introduced an amendment to the Reform to completely prohibit shale gas development on French territory.

At the end of February, the French Parliament suspended its session as a result of the upcoming May election without adoption of the Mining Code Reform. This leaves some room for speculation as to whether the ballot results will impact the adoption of the reform text. Stay tuned!

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