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Merkel Leaves Door Open to Fracking as Shale Gains Appeal

Chancellor Angela Merkel left the door open to tapping shale gas in Germany, saying her government will consult with companies and the public to build consensus on exploiting the potential energy source.

“There are a variety of environmental impacts to be observed and Germany is a very densely populated country, so these things weigh even more heavily,” Merkel told reporters in Oslo yesterday after talks with Prime Minister Jens Stoltenberg. “We’re now in the middle of a discussion process. I believe nothing will become law which is not accepted across parties.”

Hydraulic fracturing, known as fracking, is politically and environmentally contentious in Germany as federal elections loom on Sept. 22. The main opposition Social Democrats have called for a temporary ban on the practice while their Green Party allies want to outlaw it altogether. Merkel’s coalition wants to set rules for fracking that assuage environmental concerns.

Merkel’s environment minister, Peter Altmaier, “wants to allow fracking in Germany on a large scale,” Oliver Krischer, the Green Party’s energy policy spokesman, said in an e-mailed statement. Germany has “limited” shale gas resources, should drop the “risky” practice of fracking and instead push renewable energies such as solar and wind, Krischer said.

Speaking in Oslo, the chancellor declined to echo opposition calls for a ban. She instead said that there is “a great consensus that fracking will not be our preferred type of energy exploitation.”

Public Opposition

Merkel’s government is keen to develop domestic energy sources as it closes nuclear plants by 2022 and shifts to renewable power. While a successful drilling campaign would redraw the energy map across Europe -- a continent reliant on Russia for about a quarter of its gas -- little headway has been made on fracking in Germany largely due to public opposition on environmental grounds.

“With this technology it’s very likely that we could develop a new source of gas in Germany,” Merkel said in an interview published in the German newspapers Straubinger Tagblatt and Landshuter Zeitung yesterday. “What’s most important for me is that it cannot present a danger to people or to the environment.”

Peter Altmaier “wants upfront legislation to prevent this form of gas extraction in water conservancy areas,” Merkel said. “As with the energy overhaul as a whole, we aim to approach the topic in a dialogue between politicians, companies and those citizens who may be affected.”

High-Pressure Mix

Fracking involves drilling hundreds of wells and cracking shale rocks with a high-pressure mixture of water, sand and chemicals, to unlock gas or oil from impermeable stone, and has been used on conventional reserves in Germany since the 1960s.

The practice has risen up the agenda as industry is forced to pay rising energy costs as a result of Merkel’s nuclear exit. Gas prices in Germany are now four times those of the U.S. because of the latter’s support for shale gas, Ulrich Grillo, president of Germany’s BDI industry association, was cited as saying in the Frankfurter Allgemeine Zeitung on Jan. 28.

“Affordable energy is a must for Germany as an industrial hub,” the chancellor said in a speech on Feb. 18. “If I look at what the gas prices in the U.S. are, the oil prices are, due to the new discoveries in the shale area, then this changes the situation on global markets and makes the question of how we get affordable energy a central question.”

Potential Reserves

Germany sits on as much as 2.3 billion cubic meters of shale gas, enough to boost the current output of natural gas 100-fold, according to Volker Steinbach, head of the natural resources department of the Federal Institute for Geosciences and Natural Resources.

Companies including Exxon Mobil Corp. (XOM) have drilled test wells into unconventional natural gas reservoirs in Germany in an attempt to emulate the U.S. shale-gas boom. Fracking has been used at least 275 times at conventional gas and oil wells in Lower Saxony state, according to a study presented by the Environment Ministry in September.

Merkel’s Christian Democratic Union lost control of Lower Saxony to the opposition SPD and Greens at a state election on Jan. 20.

To contact the reporters on this story: Tony Czuczka in Oslo via aczuczka@bloomberg.net; Brian Parkin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net;

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