* Polymer group SNF controls third of U.S. fracking market
* Domestic fracking ban pushes French players abroad
By Michel Rose
PARIS, Dec 5 France may have banned the
controversial hydro-fracking extraction technology, but the
shale gas revolution in the United States is proving a boon for
small, specialised French players in the oil services sector.
Large French oil services firms such as oil rigs builder
Technip or surveyor CGGVeritas have
benefited from the development of shale oil and gas in the U.S.
in the last few years, but little-known chemical firms have also
carved out profitable niches.
SNF, a privately-owned company founded in 1978 near the
southeastern town of Saint Etienne, is one of them.
It started out as a maker of polymers - complex, minuscule
particles of plastics - for the water industry, which uses their
soluble properties to make liquids more viscous and their
transportation less expensive.
But the water-soluble polymer market, which had been on a
slow but steady growth for decades, was fired up by the sudden
boom in the U.S. in hydraulic fracking, the high-pressure
pumping of liquids into rock cracks to release gas.
"What happened in the last three or four years is a massive
deployment of this application in the United States," the
company's chief executive, Pascal Remy, told Reuters.
"It was very, very quick. Our sales were multiplied by five
in maybe three years."
SNF, which had expanded to the U.S. shortly after its
creation, was one of the few companies able to quickly open a
new production site in Louisiana two years ago to meet the rise
in demand, with its polymers used to facilitate oil extraction
and extend the lifespan of oilfields.
The group, with total revenue of $2.5 billion this year, now
controls a third of the water-soluble polymer market in North
America, which is growing by more than 20 percent a year, Remy
Beating its nearest rival, German chemicals giant BASF
, the French group said the reason for its success is
that it had always focused on polymers and never sought to
diversify, investing heavily on capacity on three continents.
"We are lucky not to have any big Chinese oil group among
our competitors," Remy said. "In our sector, Chinese groups are
small and rarely seen outside China."
Remy said his group was also expanding in China and
Argentina, countries that have not banned the hydro-fracking
technique, which critics say could trigger small earthquakes and
French President Francois Hollande hit a publicly tough tone
against fracking since he took office in May, declaring it too
early to rule out any environmental damage and ordering the
withdrawal of seven exploration permits.
"The debate is a bit sterile today. We don't really
understand why this debate is not being held on more technical
grounds," Remy said.
But Hollande is also grappling with unemployment at a
14-year high and a wider loss of economic competitiveness, which
could make pleas from pro-shale bosses, his high-profile
industry minister and oil services firms harder to resist.
SNF says its polymer-producing sites in France are
competitive and that labour costs - touted by some observers as
a handicap for French firms - only represent 7 percent of its
sales, meaning low-cost Chinese producers cannot offset their
transport and custom costs with cheap labour.
"Developing hydro-fracking in France would help our oil
services industry issue more patents and maintain its standing,"
said Roland Vially, a geologist with public-funded energy
research centre IFP.
"It's the second-largest in the world, which is quite unique
for a country with no oil in its soil," he said.
SNF now employs about 3,500 people around the world and
hires 50 to 60 mostly skilled workers every year in France, Remy
Brittany-based Saltel Industries, which makes inflatable
patches for perforated oil and gas wells, and drilling
specialist Dietswell based near Paris have also banked on the
"The good news is that the gas remains locked in the ground,
it won't go away, so you can imagine that at one point reason
will win over passion," SNF's Remy said.
(Additional reporting by Marion Douet; editing by James Jukwey)