Fracking ban hinders Germany’s conventional gas production – Wintershall says

German flag over Reichstag
Source: DollarPhotoClub

With Germany dependent on Russia for 40 per cent of its gas consumption, a 6-percent fall in domestic gas production last year is not good news. According to Wintershall, the largest crude oil and natural gas producer in Germany, this decline is, at least in part, due to legal uncertainty over fracking technology.

“The shale gas discussion continues to block conventional gas production in Germany,” Wintershall’s head of German operations, Andreas Scheck, told reporters in Berlin.

The current fracking ban, which according to the German government will not be reviewed before 2021, applies at a depth shallower than 3000 meters and the testing of technology is permitted if the fracking liquid won’t endanger the groundwater. Yet, early in 2014 the gas-rich state of Lower Saxony lost mining royalties from a two-year long suspension of new permits for hydraulic fracking, which it had quietly been using for decades to get at “tight” gas typically situated at 3,000 to 5,000 metres underground.

Clearly, the association with the heavily-opposed shale exploration has stalled the tight gas projects not covered by the anti-fracking moratorium.

Industry figures show that Germany produced 8.4 billion cubic metres (bcm) of gas at home in January-November, down from the 8.9 bcm a year earlier. This is about one tenth of domestic consumption, down from one fifth a decade ago.

Wintershall and ExxonMobil want to get back to normal operations in conventional production, especially in Lower Saxony state, where 95 percent of domestic gas lies and where – according to Reuters – Wintershall has foregone 100 million euros ($116 million) of planned investment, according to Scheck. ($1 = 0.8633 euros)

The German Government is currently progressing draft legislation which outlines a proposed regulatory framework on hydraulic fracturing. It sets out new guidelines as to how the exploration and production of shale gas could be carried out in Germany. It is currently under review and internal consultation and is not expected to be formally published until later in 2015.

“We hope that the new law will materialise in 2015,” Andreas Scheck said, adding that producers’ revenue, domestic jobs and mining royalties were at stake.

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