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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.

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"We now know we can produce oil from the shales because we are doing it every day," he says.

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First, five years of exploration

Mr. Sider says Vermilion plans to spend $160 million on research and development over the next five years. Another company, Toreador Resources, plans to invest up to $120 million next year to drill six wells and assess their potential.

The projects are in their infancy, and Craig McKenzie, president and chief executive officer of Toreador, says his company expects to spend up to five years exploring the area and figuring out if the technology that has worked in the US will succeed in France. He says he can't say how much oil might be recovered from the Paris region because even identical rocks in similar formations do not always react in the same way. The Institut Français du Petrol estimates that 5 to 10 percent at most may be recovered. Vermilion and Toreador say it could be just a half to 1 percent.

Mr. Lamiraux, the energy ministry official, says that in the most optimistic case, France would go from producing just 1 percent of its petroleum needs to 5 percent.

"That would be very important for us. It would be oil that is made in France, that we don't have to buy from a developing country and it would improve our trade balance. And the fact it doesn't have to be transported from a long distance would also benefit the environment," he says.

Revenue, but environmental costs?

Tax revenues for municipalities and the French government, as well as income generated from oil industry-related services would "at least double," Lamiraux added. But he says possible environmental damage to some of France's richest agricultural land is also an "essential concern."

Horizontal fracturing involves pumping large amounts of water into the ground at high pressure to break up shale and release oil. On average, each well uses as much water as 100,000 people in France use in a day. The process requires from 10 to 20 times as many wells to extract the same amount of oil as from a conventionally drilled well. Often, the wells are closely spaced – as little as 300 feet apart.

Mr. McKenzie says most of the water could be reused for subsequent wells and that oil companies are working to limit the effect on the environment.

But Marie-Paul Duflot, president of one of the largest environmental groups in the Seine and Marne region, which covers the Paris Basin, says she is concerned large-scale shale oil development in the area would "transform our countryside into a field of derricks. We don't want that."

Ms. Duflot, who says she was shocked to learn that oil companies have such ambitious plans for the region, says she is also worried about possible pollution and water shortages.

Lamiraux says environmental concerns may mean that shale oil development proceeds at a slower pace than it has in North America and may even reduce the amount of oil that can be extracted. But as long as oil prices continue to rise, companies say they expect the project to pay off.

"This is a big pie," says Paul Beique, Vermilion's vice president of capital markets. "If the pie is big enough, even one piece is OK."

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