* U.S. firm Schuepbach Energy had challenged French
* French energy minister says ruling a "political victory"
* French shale oil and gas reserves have not been
(Adds comments by France's energy minister and oil industry
By Emile Picy and Michel Rose
PARIS, Oct 11 France's constitutional council
rejected on Friday a challenge to a law banning hydraulic
fracturing for exploration and production of the country's shale
gas and oil.
The ruling is a boost for President Francois Hollande, who
has opposed the technology alongside ecologist Greens in his
ruling coalition - to the dismay of some allies who believe
France is sacrificing access to a cheap source of energy.
U.S-based firm Schuepbach Energy had challenged on four
counts a ban introduced in 2011 due to potential risks to the
environment, which led to two of its exploration permits being
cancelled in southern France.
"The constitutional council threw out these four complaints
and ruled that the disputed components of the July 13, 2011 law
comply with the constitution," the court said in a statement.
The Constitutional Council, made up of judges and former
French presidents, has the power to annul laws if they are
deemed to be unconstitutional.
France's Energy Minister Philippe Martin said the ruling
meant the law banning fracking, in which pressurised water,
chemicals and sand are pumped underground to release gas trapped
in shale formations, was now safe from other legal challenges.
"It's a legal victory, but also an environmental and
political one," Martin said at a news briefing.
The U.S. Energy Information Administration (EIA) estimates
shale gas reserves worth five trillion cubic meters could lie in
French soil, mainly in the Paris basin and the Rhone valley -
equivalent to 90 years of current French gas consumption.
However, it had not been possible to confirm those estimates
because of the ban on hydro-fracking. Other countries such as
Poland saw its hopes for shale gas fade after three
international firms quit after disappointing drilling results.
So-called fracking was banned in France under former
President Nicolas Sarkozy on concerns it could pollute
groundwater and trigger earthquakes, bringing to a halt the
nascent shale oil and gas industry in France.
Jean-Louis Schilansky, head of France's oil industry lobby
UFIP said it was key for the government to fully implement the
law, which includes an article asking for a commission to assess
the progress of fracking technologies.
After France put the ban in place, Schuepbach Energy said it
had no alternative way to carry out the exploration, which led
to the suspension of its two permits in the south of France.
French oil major Total is still awaiting a ruling
after it separately appealed at the end of 2011 the government's
decision to ban its own exploration permit by the southeastern
town of Montelimar.
Industry Minister Arnaud Montebourg stirred debate earlier
this year when he suggested creating a state-backed company to
examine alternative exploration techniques.
(Additional reporting by Marion Douet; writing by Muriel
Boselli; editing by Mark John and James Jukwey)