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Shale Development in Germany
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According to the U.S. Energy Information Administration, Germany has 8 trillion cubic feet (tcf) of technically recoverable shale gas reserves.1 Limited geological surveys on shale gas have been conducted in Germany, however, leading the German government to question the full extent of deposits in the country. That said, despite the state government of North Rhine-Westphalia (Nordrhein-Westfahlen) imposing a moratorium on shale gas drilling in late March of 2011, there are certain promising regions for shale gas development. These are located primarily in the Lower Saxony Basin, which stretches across the states of Lower Saxony, North Rhine-Westphalia and Saxony-Anhalt.
Germany has ambitious plans to increase the share of renewables in its energy mix. Under its long-term plan, the goal is to increase the gross electricity consumption from renewable sources to 80%, thereby reducing dependence on hydrocarbons.2 Although this suggests a limited place for shale gas in Germany’s long term energy future, there is nonetheless interest in developing domestic shale gas resources in the medium term.
Following the tragic events at Fukushima in 2011, the German government made a major decision to phase out nuclear energy by 2022 rather than increase the use of it as previously planned, which would have provided a bridge between hydrocarbons and green energy.3 In 2011, nuclear provided nearly 20% of Germany’s energy needs.4 Germany is already the largest importer of natural gas in the European continent and the third largest gas importer in the world by volume, behind the United States and Japan.5 It only has the capacity to meet 14% of its annual gas demands (approximately 950 billion kilowatt-hours in 2010) via domestic production.6 Gas imports are brought to Germany exclusively via pipelines (with gas originating mainly in Russia, Norway and the Netherlands7) because there are as yet no LNG re-gasification terminals in Germany.8
In October 2010, the German Mineral Resources Agency (the “Agency”) was established with a mandate, among other things, to provide advisory services to companies and support for the federal government in establishing programs to explore and develop domestic hydrocarbons.9 As part of this mandate, and at the request of the Federal Ministry of Economics and Technology, in February 2011, the Agency launched “Project Niko,” the goal of which is to determine the extent of available shale gas resources in Germany by carrying out an in-depth investigation of geological formations.10 The results of Project Niko are not expected until 2015. Other geological surveys are currently underway.11
Germany already possesses some of the infrastructure that could assist the development of a local shale gas industry. Its gas pipeline network is well-developed with 438,000 kilometers of pipelines that extend across Europe.12
Principal Shale Gas Basins
Source: U.S. Energy Information Administration: World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States (April 2011)
The prime location for shale gas projects in Germany is not yet known. The key areas are most likely to be found in the North German basin (the Posidonia shales) which straddles the Germany-Netherlands border and is located in the southwest of Germany.
There is widespread opposition to shale gas development in Germany, which is already known for its strong history of environmental activism. The main concerns focus on the effects of hydraulic fracturing (or “fracking”) on the environment, in particular on local groundwater. There is limited information in the public sphere to reassure members of the German public, many of whom live close to drilling sites.
Several environmental groups have been formed to mobilize support for banning fracking in local areas. There is also a strong anti-shale gas lobby operating at both the state and federal levels. Included in this grouping are key players in Germany’s renewable energy industry, which fear the rise of large-scale domestic gas production, as well as think-tanks, trade organizations and politicians.
German state governments, which are responsible for issuing permits for the exploration and extraction of hydrocarbons, were initially receptive to shale gas investments and a number of permits were issued. Owing to protests and ongoing concern about the environmental effects of fracking, state authorities have since suspended the issuance of concessions.
There has been considerable debate at the federal level on how to regulate the shale gas industry and on whether fracking should be permitted in Germany at all. In May 2011, the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety raised concerns of possible threats to the natural environment stemming from shale gas extraction.
The federal government has, as yet, not made any definitive policy pronouncements on shale gas development across Germany. According to unidentified government officials who were cited in the German newspaper Der Spiegel in May 2012, Germany’s Economy Minister and Environment Minister have agreed to currently oppose shale gas production in the country.15 This agreement is not on the record, however, although there is a chance that the government will announce its position to the public once several important studies on fracking have taken place. The most important of these is a report commissioned by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety on the risks of hydraulic fracturing in Germany, which is expected to be published in Autumn 2012.16
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1 U.S. Energy Information Administration, Table of shale gas technically recoverable resources
2 Ministry for the Environment, Nature Conservation and Nuclear Safety, Energy Concept for an Environmentally Sound, Reliable and Affordable Energy Supply, 28 September 2010
3 Merkel Defends Germany’s Nuclear Power Deadline, The New York Times, March 2012
4 One year after Fukushima – Germany’s path to a new energy policy, Siemens
5 Mongabay, Biggest Gas Importers, last updated January 25, 2010
6 37.8% of Germany’s gas imports come from Russia, 34.3% from Norway, 23% from the Netherlands, and 4.9% from other countries. Global Legal Group, The International Comparative Legal Guide to Gas Regulation 2010; Energy Delta Institute, Germany Profile, last updated 2011.
7 Energy Delta Institute, Country Report on Germany
8 Global Legal Group, The International Comparative Legal Guide to: Gas Regulation 2010 (2010)
9 Polish Institute of International Affairs, Report on shale gas in Europe
13 Global Legal Group, The International Comparative Legal Guide to Gas Regulation 2010 (2010
14 Polish Institute of International Affairs, Report on shale gas in Europe
15 German Government Opposes Shale Gas Production, Der Speigel Says, Bloomberg
16 Scientists Public Recommendations for Hydraulic Fracturing in Germany, Natural Gas Europe