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    Germany’s Shale Gas Potential Threatened by Environmental Opposition



Germany’s wealth of unconventional gas resources could transform the country’s energy mix but political and public opposition are derailing its shale gas potential.

by: Sarah Ward

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Germany, Shale Gas , Environment, Top Stories

Germany’s Shale Gas Potential Threatened by Environmental Opposition

Germany’s wealth of unconventional gas resources could transform the country’s energy mix but political and public opposition are derailing its shale gas potential.  

The US Energy Information Administration (EIA) reckons Germany could have 0.23 trillion cubic metres (cm) of recoverable shale gas reserves, compared to just 0.17 trillion cm of conventional natural gas.  If Germany manages to develop an unconventional gas industry it could increase the country’s energy security and slash its natural gas import bills.

Germany consumes around 81 billion cm of natural gas a year, 90% of which is imported. Domestic gas production in Germany, from conventional and tight gas reservoirs, meets only 14% of the country’s natural gas demand. And output has been decreasing steadily over the past decade, from 16.9 billion cm in 2000 to 10.6 billion cm last year.

A host of international operators have already begun trying to exploit Germany’s shale gas potential. Companies including the US-giant ExxonMobil, BNK Petroleum and Germany’s Wintershall are exploring for shale gas in the states of Lower Saxony, North Rhine-Westphalia and Saxony-Anhalt, where there is thought to be large amounts of shale gas and possibly coal-bed methane gas as well.

ExxonMobil has been carrying out pilot shale gas projects in Lower Saxony and North Rhine-Westphalia since 2008 and is currently evaluating whether the potential resources can be produced economically. The company has so far drilled five shale gas exploration wells in Lower Saxony and one in North Rhine-Westphalia and it says the results of its pilot project will dictate the potential for shale gas exploration on a wider scale.

Publicly Exxon is cautious about Germany’s prospects for shale gas development saying it is “too early to say, if at all and how much” shale gas could be produced there in the future. The company’s decision to invest $100 million into unconventional gas exploration in North Rhine-Westphalia however indicates that Exxon is privately more confident of success.

“Germany will need more natural gas in the future, which today already meets about a quarter of Germany's energy demand,” said Exxon spokesperson, Dr Ritva Westendorf-Lahouse.“With shale gas production we hope to make a significant contribution to a diverse energy mix.”

Environmental Opposition

However Germany’s prospects for shale gas development are being hampered by environmental opposition from the public and the government.

Anti-shale gas campaigners claim that hydraulic fracturing, the process used to extract shale gas, can cause earthquakes and contaminate water supplies. North Rhine-Westphalia’s state government imposed a moratorium on shale gas drilling in March following pressure from environmental activists. The state is one of Europe’s most densely populated areas and has a strong civil environmental movement which local politicians have been paying attention to.

A recently-released European Commission (EC) report, which was written by German political parties, was highly critical of shale gas. It stated that shale gas extraction was not safe for the environment and that strict laws should be put in place to govern and restrict the process. In Poland however, where the government is very keen to get shale gas development off the ground, the report’s findings were rejected on the basis that they were unfounded.   

Worryingly for hopeful shale gas developers the EC’s report seems to be a reflection of wider views on shale gas in Germany’s political arena. Environment Minister Norbert Röttgen has ordered a review into the environmental impact of shale gas production in Germany. Röttgen has also said that the country’s mining laws, which have previously been perceived as favourable for producers and lacking in scope for the public to object, would likely be changed.

Germany’s Federal Environment Agency (FEA) issued draft proposals for new mining laws at the beginning of August. The FEA’s proposals included guidelines to ensure that producers assess the environmental impact of drilling each well and a ban on hydraulic fracturing (fracking) in areas where potable water is collected.

It is likely that the FEA’s proposals will be used as the basis for the country’s new mining regulations. If they are it will make shale gas production unprofitable in Germany which will effectively end any prospects for developing the unconventional fuel within the country.

Germany may also attempt to restrict the use of shale gas production techniques within the EU which could affect countries with high hopes of a US-style shale gas revolution taking off, such as Poland.   

Röttgen ordered the review following large-scale protests against ExxonMobil’s shale gas pilot projects in North Rhine-Westphalia and Lower Saxony. Frequent protests in both states from anti-shale gas groups, such as Schoenes Luenne (SL), have caught the attention of the minister, who is the leading member of Germany’s Christian Democratic Union (CDU) party in North Rhine-Westphalia.

SL, a group from the town of Lünne in Lower Saxony, has been protesting against ExxonMobil’s use of fracking in the area and has called for a suspension of drilling activities there too. ExxonMobil has offered to carry out meetings with the group to discuss the issue but SL has reportedly rejected the offer saying it would give fracking “a broader base of legitimacy" in Germany. Lünne’s mayor, Franz Schoppe, has responded to the protests insisting there must be a thorough review of the shale gas extraction process.

Transparency and public acceptance   

ExxonMobil has made considerable efforts to be transparent in the operations with the general public, through offering a comprehensive array of information on its website, and a series of public meetings. Exxon’s website has information on the fluids it uses for hydraulic fracturing and technical information, on the process.

Exxon says the point of this is to offer “transparent criteria for safe and environmentally compatible” shale gas development yet a lack of willingness from opposition groups to debate the issue isn’t helping the company’s campaign.  

ExxonMobil has played down the impact of civil and political opposition to its activities saying 95% of its natural gas production sites are located in Lower Saxony, where “both government and residents are used to natural gas production”. And in the state of North Rhine Westphalia, where the company has shale gas pilot projects, “drilling is nothing new”, Exxon says, however, there hasn't yet been any natural gas production there.

The release of a controversial film about the negative impacts of shale gas drilling in the US hasn’t helped the reputation of unconventional gas on the continent either.

The film Gasland, which depicted shale gas production causing water contamination and misery to US residents, has struck a chord in Lower Saxony and North Rhine-Westphalia, where there are thought to be huge shale gas reserves. 

Exxon blames most of the anti-shale gas feeling in Europe over the past year on Gasland and says that many of the claims made in the film, have since been shown to be “misleading or untrue”.

Exxon says its safety procedures and the environmental sustainability of its drilling process and fracking technology will be examined by independent scientists. The company adds that members of the general public and business in its exploration regions, such as water companies and agricultural associations, will be provided with “comprehensive information” about the findings of the study. The outcome of this assessment will most likely be known at the beginning of 2012, Exxon said.

Brain Horsfield, the director of GASH- an industry-funded shale gas research project- says he has visited some of ExxonMobil's shale gas operations and says the company has “worked very closely” with communities in their lease areas.

GASH runs an initiative called E-SOP (European Sustainable Operating Practices) which monitors operator’s fracking sites and studies the impact of on ecosystems in the area. At the moment GASH is negotiating with companies operating in Poland because, according to Horsfield, knowledge learned in Germany can also be applied to Poland. GASH is also launching a Shale Gas Information Platform in September which aims to “fulfil the role of honest broker", Horsfield said, by presenting the facts around shale gas drilling in a neutral way.

And it is not just Exxon which recognises the importance of operators engaging with the public if their projects are to be a success. Wolf Regener, chief executive of BNK Petroleum, which is exploring for shale gas in two concessions in North Rhine-Westphalia and one in Lower Saxony, says the way to gain public acceptance is to educate them about the shale gas extraction processes.

“It needs to be an education process to demystify it (unconventional gas), Regener said, “and to explain how beneficial it can be for an area.” Regener admitted however that the company was “still working” on a plan for how they would do this.

“I’m hoping it’s (the protests) more of a gut reaction to what people see on the internet,” he said. “Anyone can have agendas. Once the facts are aired I’m hopeful everyone will look at the situation in a rational fashion.”

Green influence

But Germany’s political community is playing its part in the anti-shale gas movement too. Germany has a strong history of environmental activism and in politics the green party has never been more influential. Germany’s government is formed of a multi-party coalition which has been dominated by the Christian Democratic Union and the Social Democratic Party of Germany since the 1950’s. Germany’s green party (Grüne) and left-wing party (Die Linke) now have a higher number of seats in parliament than ever before. This has enabled the greens in particular to push issues, such as concerns over shale gas extraction, to the forefront of the country’s political agenda.

Germany’s government is keen to be perceived as endorsing environmentally-friendly policies. The government announced in June that it will phase out nuclear power entirely from the country’s energy mix by 2022. The decision followed wide spread public protests against the use of nuclear power after Japan’s devastating earthquake and tsunami which caused devastation at the Fukushima nuclear power plant in March.

Environment Minister Norbert Röttgen shut down eight of Germany’s nuclear reactors immediately after the Fukushima disaster, not to be opened again. Röttgen said six others would go offline by 2021 at the latest and the three newest facilities would be shut down by 2022.

Local governments will also be wary of trying to push through environmentally sensitive laws after protests last year against the proposed Stuttgart 21 project. The project is to revamp Stuttgart's main train station and to lay new train tracks underground. The aim is to transform Stuttgart into a new international transport hub with improved links to Paris, Vienna and Budapest. But opponents of the project say Stuttgart’s ground water and mineral springs could be affected by the underground work. A variety of trees in a nearby park will also have to be moved during the construction work which protestors say adversely affect the city’s ability to assimilate act carbon dioxide emissions from nearby road transport.   

There are financial reasons for opposition too. The project, which could cost as much as €10 billion, will largely be funded by German taxpayers. Opponents say Stuttgart 21 is being prioritised over more urgently needed projects, such as new schools, as a prestige project for the government.

The government was stringently criticised last year for taking a heavy-handed policing approach to quell opposition. German police used water cannons, pepper spray and batons to break up a largely peaceful protest in September 2010. And the dispute is still ongoing.

Russia and energy politics

Support for shale gas development from the German government could seriously undermine Germany’s energy-supply relationship with Russia and Gazprom’s prominence at Europe’s main gas supplier. Russia is Germany’s largest supplier of natural gas, as is the case with most nations in Europe, providing around 40% of the country’s gas needs.

If a shale gas industry were to develop in Germany it would undermine the country’s substantial investment in the Nord Stream pipelines, which have been backed by Russia. Nord Stream is a €7.4 billion project to build two parallel underwater pipelines, which will carry 55 billion cm of natural gas a year from Vyborg in Russia to Lubmin in Germany.

The project aims to avoid Russian gas having to transit through central Europe, where there has been a series of gas price disputes in recent years, and will provide the first direct link for Russian gas supplies to the EU.

German energy companies, Wintershall and Ruhrgas, both have 15.5% stakes in the project and Wingas, a joint venture between Wintershall and Russia’s Gazprom, has committed to buying 9 billion cm of gas a year from Nord Stream. Ruhrgas has also pledged to buy 4 billion cm a year.

And Gazprom’s ongoing talks with German utility company, RWE, on forming a possible joint venture to build gas and coal-fired power plants would also be in jeopardy. In July the two companies announced that they had begun three month-long talks on a possible deal, following Germany’s decision to phase out nuclear power.

It would also act as a disincentive to develop renewable energy sources in Germany as shale gas could potentially be much cheaper. Renewable power made up around 12% of Germany’s energy mix last year and the government wants to ramp this up considerably in the next few years. Renewable energy sources are however costly to develop and require huge government subsidies whereas shale gas operations would be funded by producers.

Future prospects

Despite the gloomy outlook for shale gas development in Germany there may yet be hope for operators that production could begin.

A review commissioned by Angela Merkel after the Fukushima disaster, emphasises that low carbon fossil fuels remain an important part of Germany’s energy mix. This suggests that with the right regulation shale gas could have a future in Germany.

BNK Petroleum’s Wolf Regener remains optimistic about the prospects for development saying he’s “more convinced than ever” that it’s going to work. And with Germany’s plans to phase out nuclear power and hard coal production in the next few years, it is questionable whether the country can afford to turn its back on potentially vast shale gas resources.

Jack Williams, the president of XTO Energy, which ExxonMobil bought in 2009, said in June that the industry had “not done a very good job” in explaining how the process of hydraulic fracturing works and that this must be corrected.  

“We must do all we can to restore the public’s trust and prove to our neighbours that we can develop these resources in a safe and responsible manner,” he said. “Our industry depends on it.”

By Sarah Ward