France May Face Legal Action Following Shale Gas, Oil Ban

France risks legal action by energy companies over a planned ban on a method of extracting oil and natural gas from shale rock, according to Environment Minister Nathalie Kosciusko-Morizet.

“There could be court cases,” she said on LCI television today, adding that a law approved last night by deputies in the National Assembly was designed to “minimize legal risks” although it could “open the way” to compensation claims.

The bill would allow the cancellation of exploration permits if companies plan to use hydraulic fracturing, which government ministers and industry representatives say is the only method available to get hydrocarbons from the rock. The Senate is scheduled to vote on the ban June 30 and if approved it would become law.

Fracking, widely used in North America, uses a mixture of water, sand and chemicals injected under high pressure to break dense rock to release oil and gas trapped within. Green groups and politicians led protests across France, saying the method could cause environmental damage.

France has already granted permits to companies including Total SA (FP), 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, have dropped about 76 percent since the start of the year.

Hydraulic fracturing requires large quantities of water abd risks water pollution, Kosciusko-Morizet said during a parliamentary debate yesterday. She also said exploration for the energy leads to more truck traffic, which could disturb local residents.

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

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