France has the second largest economy in Europe and the fifth largest economy in the world. As France produces very little domestic energy, it relies heavily on imports from bordering countries to meet the majority of its natural gas demands (EIA). But is it really necessary?

Source: ZE

Source: ZE

France is currently the fourth largest consumer of natural gas in Europe, preceded by Germany, Italy, and the UK (Eurostat). France imports the vast majority of its gas from Algeria, Nigeria, Norway, Russia, and the Netherlands (Energy Delta). Although France has potentially substantial unconventional gas resources, the government’s ban on fracking in 2011 due to concerns about its potential impact on the environment has halted further explorations of this lucrative resource. Consequently, domestic natural gas production in France is negligible.

Unlike most other countries with ample shale deposits, France was the first country to pass a law prohibiting fracking. As of July 2011, energy companies planning on utilizing the technique to locate oil and gas had their permits revoked and were unable to undertake extraction. Tara Bloomberg reported in 2011 that the ban was deplored by energy companies. Bloomberg notes that the French government granted oil and gas companies with exploration permits two months to declare “whether or not they intended to use hydraulic fracking. If they did, their permits would be revoked” (Bloomberg).

Bloomberg suggested in 2011 that oil and gas companies might instigate lawsuits over their lost permits. An attempt to appeal the ban was recently made by Dallas-based Schuepbach Energy LLC, an organization which held two exploration permits in France which were cancelled in 2011. Schuepbach Energy LLC filed an appeal in July 2013. In the meantime, French President Francois Hollande claims he will not allow shale gas exploration during his presidency. His five-year term ends in 2017 (Oil & Gas Journal). This has sparked debate in France on the issue of shale gas both within society, industry and the government.

Scale of the Opportunity

According to an EIA study of 11 selected European Countries, carried out without exploratory drilling, France has technically recoverable reserves of 3.8 trillion cubic meters (137 trillion cubic feet).

Figure 1: Unproved Wet Shale Gas Technically Recoverable by Selected Countries in Europe Source: EIA

Figure 1: Unproved Wet Shale Gas Technically Recoverable by Selected
Countries in Europe
Source: EIA

As shown in Figure 1, France is second only to Poland in its level of unproven shale gas deposits, and significantly larger than the third in order reserve of 1.4 trillion cubic meters (51 trillion cubic feet) in Romania. With the current ban on hydraulic fracturing operations the true size of resources may not become clear for years to come.

Shale Development in France

Figure 2: Shale Gas Deposits in Europe Source: IEA

Figure 2: Shale Gas Deposits in Europe
Source: IEA

The map in Figure 2 illustrates that there are sufficient reserves of shale deposits in Europe. France’s shale reserves are reportedly located in several regions including the Southwest, the Paris Basin and in certain west central regions.

Nevertheless France, Luxemburg, Czech Republic, Bulgaria and the Netherlands have put a moratorium on fracking, for fear that the chemicals used in the process could contaminate the countries’ water supplies. According to Reuters, Austria has such strict regulations that shale-gas drilling is still uneconomical (Reuters).

Reliance on Imported Natural Gas

France has insufficient domestic natural gas production, and the French government banned the use of hydraulic fracturing to explore unconventional resources such as shale gas in 2011. Instead imports from other EU countries and proximate continents comprise the majority of natural gas consumed in France. For example, 24% of France’s natural gas is from Russia alone (Advanced Resources International).

Some of France’s natural gas is transported via cross-border pipelines from the Netherlands and Norway. Liquefied natural gas (LNG) is also imported into France through a variety of international ports, most notably from ports in Algeria and Qatar.

France began trading natural gas in 2005. The integration of France’s interconnecting ports and pipelines with other gas markets such as those in Germany, the Netherlands, and Belgium has resulted in substantial development in trading volumes since France began trading (IEA).

France has a developed transit market, largely due to its geographic position and diverse infrastructure. For example, France has several pipeline projects which increase LNG transmission with cross-border countries (GRTgaz). Major LNG terminals in France are located “at Fos Cavaou near Marseilles, another nearby at Fos Tonkin, and one at Montoir-de-Bretagne on the Atlantic coast. A fourth LNG terminal was confirmed to be developed at Dunkerque” (IEA). According to the IEA, several other projects are planned that will “boost existing interconnectors with Belgium, Spain and Germany” (IEA). France’s daily import capacity for LNG is 187.5 million cubic meters per day (mcm/d) (IEA).

Conclusion

Unless the French government changes its position on fracking, the country will continue to depend on imports from external resources. In the meantime, France is continuing to develop its natural gas transmission network to meets its natural gas demand, with an eye to reducing natural gas consumption in households and the tertiary sector by 2020. Investments by the French government in major cross-border pipeline projects will undoubtedly increase the number of major suppliers of French natural gas, foster the addition of new infrastructure such as gas power plants and LNG terminals, and promote France’s access to thriving natural gas marketplaces.

The ZEMA Suite helps traders, investors, and industry participants keep up-to-date on movements in the natural gas industry. To learn how ZEMA can help your company stay in the loop, contact us or book a complimentary demo of the ZEMA Suite software.