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U.K. Explorer Shows French Fracking Ban Stalls Conventional Oil

Celtique Energie Ltd. is among oil and gas explorers suffering months of delays in getting permits in France as a ban on unconventional shale-fuel technology has led to a logjam even for traditional operations.

Celtique has been waiting for two years for its application to alter an exploration permit to be approved, according to the U.K. company’s Chief Operating Officer Stuart Catterall. The request in December 2010 to allow a partner to share expenses should have been a formality granted within 15 months, he said.

“We have been ready to drill for at least six months,” said Catterall, whose company operates in six European countries including the U.K., Germany and Poland. “It’s very frustrating. We are ready and we want to invest,” he said in an interview.

Closely held Celtique hasn’t any plans for hydraulic fracturing, or fracking, used to access shale oil and gas, as it seeks a permit for its first well in the Pyrenees foothills.

France outlawed fracking amid public protests against the technology that energy companies such as Total SA (FP) planned to use to explore in areas where they had previously obtained permits. President Francois Hollande, elected in May, upheld the ban and his government pushed ahead with changes to the mining code that also governs the exploration and production of oil and gas.

Celtique, granted an exploration permit for the Claracq license in Aquitaine in 2006, isn’t alone in suffering delays.

120 Permits

France is blocking 120 oil exploration permits, threatening future investment, Jean-Louis Schilansky, head of the country’s oil industry lobby Union Francaise des Industries Petrolieres, told a parliamentary hearing on Jan. 23. The government has effectively halted the granting of permits, as well as many authorizations for works related to projects, he said.

While UFIP hasn’t named any of the companies affected, Hess Corp. (HES) and Zaza Energy Corp. (ZAZA) officials have described delays.

“The country risk has increased for France because of regulatory instability and the inability of companies to move ahead with plans,” Guillaume Defaux, adviser to the president at Hess Oil France, told a conference in Paris in October. “Before investing we look at risks and if they are too high, we don’t. This doesn’t auger well for investment in France.”

The government has set up a commission headed by advisor Thierry Tuot to revise the mining code before the passage of a new law, French Environment Minister Delphine Batho says. The changes will increase public consultations for oil and gas projects and may modify state royalties paid by operators.

“Our industry isn’t functioning in a normal way,” Schilansky told lawmakers. “We are in a sort of vacuum.”

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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