(Repeats Feb 18 story, no change to text)
* France depends on expensive gas imports
* Coalbed methane does not always require fracking
* Energy ministry source says admin only reason behind
By Muriel Boselli
FREYMING-MERLEBACH, France, Feb 18 After
slamming the door on developing shale gas over environmental
concerns, France has discovered there could be at least five
years worth of another cheap-to-produce gas in the former coal
mining region of Lorraine.
But divisions in Francois Hollande's government, as with
shale gas, are hampering efforts to develop so-called coalbed
methane, a gas extracted from layers of coal too deep
underground to be mined.
While environmentally oriented members of the government aim
to boost renewable energy and cut reliance on oil and gas,
traditional Socialists keen to create jobs are pushing for cost
effective energy sources.
"This is 'Made in France' gas," Industry Minister Arnaud
Montebourg told journalists last month, using a slogan from his
campaign to encourage consumers to buy French goods.
Known to wary coal miners as "firedamp", coalbed methane was
the flammable gas that got trapped in pockets between the coal
and often triggered lethal underground explosions.
Montebourg sees coalbed methane as a cheap energy source
that could help prevent French businesses from offshoring in
search of lower costs and believes France could be a producer in
just a few years.
But in his office in Freyming-Merlebach, in the heart of the
Lorraine coal basin some 400 kilometres (250 miles) east of
Paris, the head of the British company that holds the region's
research permits is worried.
Frederic Briens, chief executive of European Gas Limited
(EGL), is concerned that the energy source will not see the
light of day in France.
Mired in governmental red tape, EGL has been waiting on one
required permit since 2008, had another expire in 2011 and faces
expiry of a third at the end of this year.
"The situation is quite dramatic," said the 53-year-old
Briens, who returned to Lorraine in 2011 after a failed attempt
to develop coalbed methane in the region in the 1990s.
"It's going to be a very difficult period because it is very
hard to commit financially when you have no guarantee... We need
Despite repeated requests, Briens has not been able to
present his project to Energy and Ecology Minister Delphine
Batho, who like Montebourg is required to stamp all oil and gas
research production permits.
EGL believes sites in Lorraine and Nord Pas de Calais
(Northern France) hold accessible gas resources of at least 200
billion cubic metres, or five times the amount France uses on
average per year.
The company's frustration is that the process has been
caught up in the fallout over fracking, despite the fact the
drilling involved is quite different.
Unlike shale gas, coalbed methane does not always require
fracking, which was banned in France in 2011 on concerns the
drilling technique could pollute groundwater and trigger
"We have to be clear that we don't need hydro-fracking to
extract that gas," Briens said.
A source at the Energy Ministry said the reason why ELG had
not had its permits renewed was bureaucracy.
"Those reviews are carried out without a preconceived idea
and they are following their course," the source said.
"Bureaucracy is sluggish and this is unfortunate. It's something
we will review when we reform the mining code."
Reform of France's Napoleonic-era code is due to take place
at the end this year.
EGL has raised funds from private investors, mainly wealthy
industrialists, but while they showed initial interest in the
project they were wary of investing in a country whose
government had already turned its back on shale gas.
"Our response was to say that the region and the state want
the project to advance and they will themselves help
financially," Briens said.
Coalbed methane already contributes some 10 percent of U.S.
gas output and is set to make up a growing share of
unconventional gas in Australia, China and Canada in the next 25
years, according to the International Energy Agency (IEA).
Standing by the company's small gas exploration drill hole
near the village of Folschviller, Briens said there was no local
opposition to the project, quite the contrary.
"They have only bad news here so the project does give back
a bit of hope," he said.
Batho, who requested an ecological enquiry on the issue,
says she is yet to be convinced by coalbed methane.
"It has not yet been proved that it is possible to produce
it profitably," she told journalists on the sidelines of a news
Yet according to several industry sources, Batho's
resistance might reflect concern that Montebourg's support for
coalbed methane is part of an effort to later back the
exploration for shale gas.
"Even if it appears easier for the (energy minister) to
accept coal gas, she may fear getting caught in a trap that
would lead back to shale gas," one industry expert said.
'MAKES GOOD SENSE'
Since the coal at some 1,000 metres below ground is
permeable and crumbly, experts say the gas in Lorraine will be
cheap to extract with no need for expensive hydro-fracking used
in most parts of the world.
"In Lorraine operators are hoping that the gas will escape
naturally and since the coal is supposedly very permeable, it
should be easy for a lot of gas to migrate towards the well,"
said Karim Ben Slimane, head of mining security at France's BRGM
geological research office.
"But the potential described (by EGL) has to be confirmed by
three or four drills," he said.
While France's 58 nuclear reactors meet 75 percent of its
electricity demand, it imports all of its gas, mainly from
Norway, the Netherlands, Russia and Algeria under expensive
oil-indexed long-term supply deals.
As a result, French state-controlled gas tariffs for
households have jumped by around a third since 2008.
European gas prices are three times those in the United
States, where the shale gas boom has cut gas prices in half in
This has helped nurture a kind of "re-industrialisation"
which Hollande has put at the centre of his own economic policy.
Laszlo Varro, head of gas at the IEA, said that while
prospects for gas locked in rock were uncertain in Western
Europe, such projects could make economic sense in a region so
heavily dependent on costly imports.
"Even a non-conventional gas project which would be
hopelessly uneconomical in the U.S. would still make good sense
in Europe," he said.
($1 = 0.7474 euros)
(Additional reporting by Marion Douet; editing by Mark John and