Related Articles
Forward article link
Share PDF with colleagues

Europe’s rocky path to shale

Despite their struggling economies, some European governments are hesitant to allow fracking

France, one of Europe’s struggling major economies, has huge potential for shale gas but a ban on hydraulic fracturing (fracking) has killed any short-term development of a sector that could generate inward investment and employment.

The US Energy Information Administration (EIA) says two main formations in the Paris basin – the Lias Shale and the Permian-Carboniferous Shale – hold 690 trillion cubic feet (cf) of shale gas.

Around 129 trillion cf is considered technically recoverable. This dwarfs the country’s 200 billion cf of proved conventional gas reserves. The basin is also thought to hold 118 billion barrels of shale oil (4.7 billion recoverable).

France banned fracking in 2011 following protests over environmental concerns. The government revoked exploration licences it had awarded to several companies, including Schuepbach Energy and Total.

US-based Schuepbach unsuccessfully challenged the fracking ban in French courts saying it was unconstitutional and there was no evidence fracking caused environmental damage. In October, the constitutional court upheld the ban. Total has also launched a legal challenge and is waiting to find out if its shale hopes will have a similar fate.

Frack free zone

France does technically allow exploration as long as fracking is not part of the exploration process. Companies such as ZaZa Energy and Canada’s Vermillion Energy have held onto their exploration licenses by saying they won’t frack.

As for the frackers, though, there seems little hope for now. President François Hollande says France won’t allow shale gas development on environmental grounds. Environment minister Philippe Martin says the ban is “absolute”. Nuclear energy and imported oil make up more than 70% of France’s energy mix.

All this sits uncomfortably in France’s deteriorating economy, which the European financial crisis hit hard. Unemployment remains high, credit-ratings agencies have downgraded the country, and debt is soaring. Those problems may eventually bode well for supporters of shale who want the ban overturned. “They will ultimately reverse their decision,” Hamish McArdle, a lawyer at Baker Botts, says. “It’s hard to explain to your electorate why you’re not exploiting natural resources when you can, unless it’s completely environmentally unacceptable.”

BNK Petroleum, which also has lodged drilling applications in France, is also hopeful that legislation will eventually allow its project. But France isn’t the only country stalling in the shale. Bulgaria is also thought to have potential for development – the energy minister claims 11-35 trillion cf – though data is sparse. Only drilling could confirm the true size, but the country imposed a fracking moratorium at the beginning of 2012.

It too, could be lifted one day, believes Chavdar Georgiev, Bulgaria’s deputy minister of environment. Bulgaria, like other east European countries, depends heavily on Russia for its gas and wants to diversify supplies.

Then there’s Germany. The EIA estimates the Lower Saxony basin could have 80 trillion cf of shale gas in place, with around 17 trillion cf thought to be recoverable. But last month, Germany’s coalition said it would bar fracking until the process had been proved environmentally safe. Instead Germany is pursuing an ambitious renewable energy policy.

BNK Petroleum recently handed back five of its eight concessions in Germany because of the political uncertainty. Red tape was getting in the way, too. “We knew Europe was going to be slow. We didn’t anticipate it was going to be quite this slow,” says BNK boss Wolf Regener said. “I still like the acreage that we have in Germany but with all the bureaucracy I’m not going to chase a half billion cubic feet target.” BNK Petroleum is now focusing on Spain, as well as Poland, as its next exploration target.

Spanish outlook sunnier

Spain is one of the continent’s bright spots for frackers. In October, the government amended its oil-exploration law to include guidelines for fracking, signalling its support for the technique.

The EIA thinks Spain could have more than 8 trillion cf of recoverable shale gas. Others are more optimistic. Spain’s oil and gas trade group, Aciep, believes the country could hold almost 70 trillion cf of shale gas in the Basque and Cantabrian regions alone.

Spain wants to diversify its energy mix away from liquids-rich and high-carbon forms of electricity generation, such as oil, by expanding its use of natural gas and renewable energy.

Despite the molasses-like progress, Regener remains upbeat, saying the continent would eventually warm to fracking. “The average person doesn’t really understand that carbon is needed in the fuel set. They don’t realise you can’t do it all on renewables,” he says. “I think Poland and Spain will get there. Germany will hopefully get there but it’s going to be a while.”

Table 1: Prospective shale basins in Europe
Also in this section
Latest licensing rounds
13 August 2020
The industry's most comprehensive list of current and recent rounds for onshore and offshore licences
Inaugural Somali regulator plots confident course
11 August 2020
Newly appointed Somali Petroleum Authority chairman and CEO Ibrahim Ali Hussein speaks to Petroleum Economist about his hopes for the Somali oil and gas industry
Oman leans towards bilateral awards
11 August 2020
The sultanate’s drawn-out bid round is ending in a whimper as breakout gas contracting discussions take priority