Paris region oil wells pumping on borrowed time

Standing alongside a field of beets in the Brie region outside Paris, the horse head of the oil derrick bobs day and night, drawing crude that helps satisfy the French capital's thirst for petrol.

But perhaps for not much longer as the government plans a new law that would prohibit exploiting fossil fuels in France, which would quickly turn the nation's small but still profitable oil sector into a fossil.

The derrick located in the town of Andrezel, just one hour southeast of Paris, stands several metres above the ground. Several others nearby operate completely underground.

Owned by the Canadian company Vermilion, the wells go down 2,000 metres (more than 6,550 feet) where there is a mix of crude oil, water and gas.

The mixture is sent by underground pipelines to the nearby village of Saint-Mery, where the output of more wells is grouped together and the crude is separated out. Another pipeline carries it to a Total refinery located in the town of Grandpuits a dozen kilometres (several miles) away.

There, the crude is transformed into fuel for Parisians' cars, as well as jet fuel, lubricants, and products that end up in cosmetics and pharmacies.

- 'Unacceptable' -

"We still have a good dozen, fifteen, maybe even twenty years that we could operate here, depending on what extraction methods are used," said Thierry Oger, who heads up oil extraction in the Seine-et-Marne region outside Paris for Vermilion.

Some wells could continue operating until 2050, or even beyond.

The Canadian company, which has operated in France since 1997, is now the nation's top oil producer, having bought mature fields from Esso and Total.

Its fields in the Paris region and the Aquitaine basin in southwestern France produce just 12,600 barrels per day. But they generate cash: they need crude prices of just $30 per barrel to break even and the current price is around $50.

Other producers like the French company Geopetrol and the International Petroleum Corporation, which is listed both in Toronto and Stockholm, also own run small fields in France that don't interest the major oil firms.

France's ecology and sustainable development minister, Nicolas Hulot, plans to present at a government meeting on Wednesday a bill that would ban the exploitation of hydrocarbon resources.

Having hosted the talks which led to the 2015 Paris Agreement that aims to limit global warming to two degrees Celsius, France has already adopted targets to drastically reduce its use of fossil fuels and boost use of renewables.

The plan also calls for more recycling to cut waste and improve the environment.

The new government of President Emmanuel Macron has also announced France will end the sale of cars with petrol and diesel engines by 2040 to meet its commitments under the Paris Agreement.

The new law would grant no new exploration permits and concessions already granted would not be renewed. The goal is to end production by 2040.

"For us, as investors in France for 20 years, it is really unacceptable that a government, from one day to the next, says 'Sorry, you're activities have to end, the concessions won't be renewed," said Jean-Pascal Simard, who handles government and public relations for Vermilion in France.

Concessions are provided for a limited number of years. Vermilion has 26 in France, with some expiring as soon as in 2019.

"When you see the time it takes to explore, discover, invest, amortise ... you have to give us a reasonable amount of time to prepare our transition.

- 'Financial impact' -

Other than the 1,500 people employed in the sector in France, several small towns dependent on oil production are at risk of disruption.

Vermilion estimates it paid 7.3 million euros to towns in the Paris region in 2015.

"It has had a financial impact on our small towns," said Bruno Remond, the mayor of Andrezel.

"In my view, the cohabitation worked out very well, there weren't any problems... and they employed quite a few people," said Remond.

However local environmental groups are happy about the signal the proposed law is sending.

"As part of our energy transition we're going to have to eliminate, or at last drastically cut back our consumption of fossil fuels," said Jane Buisson, one of the leaders of France Nature Environnement Seine-et-Marne, an umbrella organisation of environmental groups in the region.

Some of the concessions in the Seine-et-Marne run until 2038, she said, "which still leaves them some time to react".

source:AFP