A discussion of France’s shale gas future

The boom of shale gas and other unconventional sources of natural gas and oil in the US have spurred a debate on the future role of these energy sources in France and other EU countries. Developing these unconventional sources of energy is expected to lower gas prices and to reduce import dependency. Results from Grenoble Ecole de Management (GEM)’s first Energy Market Barometer showed that 31% of the experts questioned think that the exploitation of shale gas in France will be authorised within the next 5 years, whereas 40% believe that it will take longer than 5 years for its exploitation to be legalised.

France and Poland: highest shale gas potential

Within the European Union, France and Poland are believed to have the highest shale gas potentials. The main technology to exploit these sources, hydraulic fracturing (“fracking”), involves injecting a complex mix of water and chemicals under high pressure into wells to create cracks and fissures in rock formations that improve the rates of production.

“Fracking” is feared to harm the environment by contaminating groundwater, polluting the air, or provoking earthquakes. As a consequence, social acceptance of the shale gas industry is low in many countries. In France, exploring and extracting shale gas and shale oil via hydraulic fracturing is forbidden by the law since 2011. The same law also enables the government to revoke research permits for projects using hydraulic fracturing. However, a special commission may allow hydraulic fracturing for scientific purposes. This may be interpreted as an opportunity to change this regulation in the future. However, the members of this commission have not yet been appointed.

Reversing France’s ban on hydraulic fracturing

This therefore raises the question of whether the current ban on shale gas will remain in place or not. To answer this question, GEM asked the energy experts if they expected the exploration of shale gas in France to be authorised in the future.

Over two out of three experts consulted believe that exploring shale gas will be authorised sometime in the future. Almost one third of the experts expect the exploration of shale gas to become legal within the next five years. Hence, exploring and extracting shale gas in France is currently associated with high regulatory uncertainty.

Source GEM LAB Studies, Energy Market Barometer Report 2014.

Break-even point

Considering the geological characteristics and the infrastructures of Europe, will shale gas exploitation be as profitable as in the United States? 50% of the experts on the panel situate the break-even point at between €20 and €40/MWh. The average equilibrium price is fixed at €31/MWh (currently €27/MWh on the wholesale market in France).

More than 70% of the experts questioned expect a growth in the production of natural gas in the European Union over the next 5 years. In their view, this growth would be attributed exclusively to shale gas.

The report also looked at France’s nuclear energy future, as well as energy sales prices, and CO₂ emission prices.

About the energy market Barometer

The GEM energy market Barometer is a half-yearly study carried out with around 200 French energy market experts from the fields of industry, research or public administration. The experts are asked to evaluate short, medium and long-term developments in energy markets both nationally and internationally. The study upon which this report is based was carried out in November/December 2013.

The Energy Market Barometer report can be found here. 

Edited by Cecilia Rehn.

Read the article online at: https://www.worldpipelines.com/business-news/30042014/a_discussion_of_france_and_poland_shale_gas_future/