BERLIN, Jan 20 (Reuters) - A 6-percent fall in Germany’s gas production last year is due partly to legal uncertainty over fracking technology, leading producer Wintershall said, pinning its hopes on policy progress this year.
“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 public debate over fracking in Germany has effectively led to all gas production being affected because cautious authorities have been reluctant to award exploration permits.
“We hope that the new law will materialise in 2015,” he said, adding that producers’ revenue, domestic jobs and mining royalties were at stake.
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.
But gas demand has been tepid and the weather mild, also taking some urgency out of production aside from the legal uncertainty.
The environment ministry is preparing a law to create a framework for the future of drilling, having promised its citizens strict environmental audits, which include a ban on drilling in water conservation areas.
Fracking or hydraulic fracturing to extract shale gas and oil in tight geological formations has transformed the U.S. energy market, boosting domestic supply and U.S. industries’ competitiveness worldwide.
It involves pumping water and chemicals at high pressure through drill holes to prise open rocks holding gas.
Germany has not started exploring its own shale potential but wants to lower its reliance on imported Russian gas for 40 percent of its consumption, as ties with the country deteriorate over the Ukraine crisis.
Exploration companies are worried that in the three years the issue has hung in the balance, there has been a de facto moratorium on new permits for existing gas fracking. A continuous stream of permissioning is needed to hold up production.
Due to the association with the shale gas debate, this hold-up is applied to deep-lying or “tight” gas that has been produced in Germany for decades.
Tight sandstone reservoirs in Germany are typically 4,000 to 5,000 metres deep, while shale formations are between 1,000 and 2,500 metres deep. Opponents say the shallower shale gas deposits open up the potential for contamination of drinking water.
Opposition to shale fracking is strong in densely populated Germany, which is also committed to renewable energy.
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 Wintershall has foregone 100 million euros ($116 million) of planned investment, according to Scheck. ($1 = 0.8633 euros)