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In hills outside Paris, tapping vast oil reserve presents risk but promises profit

A large supply of oil found underground in France's agricultural region could bring the country closer to energy independence – but the 'fracking' process to obtain it could have environmental costs.

By Anita ElashCorrespondent / December 17, 2010



Paris

The rolling hills to the east of Paris are known for their cash crops. Large quantities of vegetables and grain, champagne and brie have been produced here for centuries.

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But as the world's thirst for petroleum sends industry searching for oil in increasingly unlikely locations, this bucolic region could soon become the stage for a fight that pits potentially huge economic benefits against fears of environmental destruction.

Oil industry estimates claim that there are between 50 billion and 200 billion barrels of oil trapped in shale rock more than a mile below the surface, in an 87,000-square-mile geological formation known as the Paris Basin. Now, in a first for Europe, oil companies are bringing technology from the United States, which fueled the natural-gas boom in the US over the past decade, to try to extract it.

If the projects succeed, they could move France one step closer to energy self-sufficiency – the country is also among the most aggressive developers of nuclear energy – and bring billions of dollars in profits for oil companies, thousands of jobs, and increased tax revenues for the French government.

But environmentalists worry they could also transform a largely agricultural region into vast fields of oil derricks that suck up billions of gallons of water normally used for irrigation and by individuals.

The region has produced small amounts of oil since the late 1950s. Production peaked in 1988, but dropped to its current level of about 10,000 barrels a day as oil prices declined. Interest picked up again about two years ago as oil companies adapted new technology, known as horizontal fracturing or hydraulic fracking, which was originally developed to extract gas from shale rock in the US.

How 'fracturing' works

Shale is as dense as hardened clay, and oil does not flow from it easily. Horizontal fracturing breaks up the rock by blasting water under high pressure into horizontally drilled wells, so the oil can be extracted.

The technique is widely used in the US to produce natural gas from shale. The first success with shale oil was in the Bakken formation in the Williston Basin, stretching across North Dakota into southern Saskatchewan. Companies there have used the technique to ramp up oil production from 80 thousand barrels a day in 2004 to 300 thousand barrels a day this year. The rock formations in the Paris Basin have a similar structure and history, so oil companies hope the technology will work in France, as well. Ten companies are competing for permits that would give them the right to explore and eventually develop the fields, in what is the toughest competition for resources France has seen in decades.

"We are seeing an incredible amount of interest. Trying to sort out all the permits is like dealing with kids in the schoolyard," says Charles Lamiraux, head of oil exploration for the French energy ministry. "I think if they are fighting this hard it's because they think there is an important future there."

Vermilion Energy, already the biggest producer of oil from conventional fields in France, was the first to tap into the shale rock. Earlier this year, it used two conventional vertical wells in a farmer's field to conduct tests on the shale layer. Vermilion's vice president of European operations, Peter Sider, says the results were "encouraging."

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