Unconventional natural gas – A revolution on the European gas market?
Natural gas from shale and coal beds is the great new hope of the natural gas industry. This so-called “unconventional” natural gas is extracted from deep strata of sedimentary rocks such as mudstone, sandstone, limestone, coal seams and geological formations such as aquifers and gas hydrate deposits. It is just like “conventional” natural gas except that it is bonded to or stored within tiny pore spaces in the rock where it is found – so it is really the methods used to extract it that are unconventional, not the gas itself. International Energy Agency estimates put the worldwide reserves of unconventional natural gas at 921 trillion cubic metres, around five times higher than conventional gas reserves. No wonder energy companies are racing to begin exploratory drilling in geologically promising regions all over the world, including in Europe.
Extracting these reserves was long thought to be uneconomical, but rising energy prices have made exploration worthwhile. Most of the gas produced in the US today is already extracted from unconventional sources, primarily coal seams. This has transformed the American energy market so thoroughly that some experts are talking about a “gas revolution” and claim that the balance of power in the sector has undergone a major shift.
However, criticism is growing louder, too. Natural gas is generally extracted from unconventional sources with a method called “fracking”, which involves fracturing deep layers of rock to recover the gas they contain. This frequently involves the use of chemical “proppants” to prevent the fractures from closing, which has led to the contamination of drinking water in a number of cases in the US. The alarming reports from the US are reason enough to take a closer look at the issue before energy companies start extraction in Germany and other countries of Europe – which they are already planning to do in Lower Saxony and North Rhine-Westphalia, for example.
How does the extraction of unconventional natural gas work?
To extract oil and natural gas from conventional sources, the underground reservoirs are tapped with vertical drilling. These deposits have formed over millions of years in pockets trapped under impermeable layers of rock. The natural gas is released automatically when drilling reduces the inherent pressure in the deposits.
The fracking required to extract unconventional natural gas, on the other hand, is technically more complicated and thus more expensive. Initially, a vertical hole is drilled – as in conventional drilling – until the gas-bearing stratum is reached. The drill is then rotated by 90 degrees and drilling continues horizontally, often over several hundred metres. Afterwards holes are blasted into the pipe lining the borehole, and huge amounts of water mixed with sand, clay and chemicals (gels to keep the fractures produced in the rock open longer) are injected under very high pressure. This causes fractures to form in the rock through which the gas can then flow into the pipe and be conducted to the surface. According to Exxon-Mobil, which is prospecting for unconventional natural gas in Lower Saxony and North Rhine-Westphalia, depending on the type of rock, the percentage of chemicals in the water used for fracking in Germany ranges from 0.2 (shale gas) to 1 percent (tight gas). Frack drilling costs about one-and-a-half to twice as much as conventional drilling.
As the volume of gas such frack wells deliver is fairly low and usually drops rapidly, fracking is frequently conducted again in the same location. The yield of unconventional deposits does not compare to that of conventional wells. In the US, this has led to many wells being drilled very close together so that the requisite infrastructure can be used as extensively as possible in order to make exploration more profitable. As a result, vast swathes of the countryside in the US are covered with drilling sites and connecting roads, as satellite images reveal clearly. The dense network of roads is needed primarily for trucks transporting the enormous amounts of water required for fracking and removing the wastewater afterwards. Several hundred trips are needed for each drilling site. Moreover, few wastewater treatment plants are equipped to handle the huge quantities of water involved, so that frack water is frequently simply dumped on the surface until it evaporates or discharged into nearby bodies of water.
This has been made possible by exceptions under US environmental legislation. In the so-called Clean Energy Act passed in 2005, oil and gas drilling were largely excused from observing water pollution control regulations, in effect exempting the oil and gas sector from compliance with the Safe Drinking Water Act that has been in effect since 1974. The film Gasland, which takes a closer look at these questionable developments, was awarded the prize for best documentary at the Sundance Festival in July 2010.
While a similar exemption from environmental regulations for gas drilling is inconceivable in Germany, it is far from certain that German Mining Law (Bergrecht) according to which drilling for gas is approved is sufficient to guarantee that unconventional natural gas is extracted using safe and environmentally compatible methods. The lack of transparency and civic participation, failure to balance conflicting interests and the separation of ownership rights to land and the right to resources below the ground are just some of the problems of Germany’s outdated Mining Law. For example, an environmental impact assessment is only required when output exceeds 500,000 cubic metres a day, a volume unconventional wells never reach.
What is happening in Germany?
On the quiet, a number of energy companies have meanwhile secured licenses to prospect for unconventional natural gas in Germany. They have evidently set their sights on Lower Saxony and North Rhine-Westphalia, in particular, as these are the states in Germany where geological layers potentially bearing unconventional natural gas are most readily found. German Mining Law does not provide for any civic participation for exploratory drilling for natural gas. Thus the Green parliamentary group in the North Rhine-Westphalian parliament only received the information that eleven energy companies have meanwhile secured licenses for prospective drilling in 18 different areas – which together cover about half of the state’s total surface area – after submitting a special enquiry to the North Rhine-Westphalian Ministry of Economics.
If exploratory drilling locates a gas deposit large enough to make exploiting it seem lucrative, the respective company has to apply to the mining authorities for a mining licence. Then a so-called “operating plan” is drawn up in which questions of environmental impact etc. are examined and conditions are then imposed if deemed necessary. However, this does not mean that the producing well is necessarily located at the same site as the previous prospective drilling. The conditions for the controversial practice of fracking are also set out during this procedure, such as which substances can be added to the frack water, for example. Unlike in the US, mining authorities here must be informed of and approve the composition of the mixture.
Exxon-Mobil has been particularly active in looking for potential sources of unconventional natural gas; it is the only corporation to have carried out exploratory drilling using the fracking method in Germany – 137 times so far, according to information provided by Exxon-Mobil itself. Other companies have employed fracking here, as well, so use of the method is not new in Germany. But does that mean that it is harmless under German regulations?
There are still many questions in regard to the production of unconventional natural gas that have not been answered. Can the possibility that drinking water might be contaminated due to fracking really be completely ruled out by sheathing the borehole in cement? Is the cap rock between argillaceous rock and shale layers and aquifers really impermeable? How does unconventional production negatively affect the carbon balance of natural gas? What are the long-term effects of the proportion of frack water that remains in the ground and cannot be channelled back up to the surface (approx. 30 percent)? How do energy companies intend to dispose of the frack water that is pumped back up to the surface? How strong are the seismic tremors that can occur during fracking?
These and other questions need to be answered before a decision is made on the production of unconventional natural gas. Until such hard data is available, municipalities and mining authorities should keep a very close eye on what happens during exploratory drilling. The European Commission is currently considering subjecting the legal framework for the production of unconventional natural gas in several European countries to review. This is a prudent and necessary step, and an example the German Federal Government would be well advised to follow; so far it has refused to provide almost any kind of information at all, either out of a simple lack of knowledge or out of wilful ignorance. This is evident from the replies to three interpellations submitted by the Bündnis 90/The Greens parliamentary group in the last several months, in which the government in effect states that it has no interest in the topic of unconventional natural gas. How does that tie in with the natural resources strategy for Germany it announced with such fanfare?
Does Germany need new sources of natural gas?
Of the total energy consumed in Germany in 2009, 21.8 percent was provided by natural gas. Natural gas will assume the role of a transitional technology until all Germany’s energy needs can be met with renewables. Generating electricity from natural gas produces only one third to one half the amount of CO2 emitted when coal is used. Gas-fired power plants in an inactive state can be connected to the power grid within minutes and are thus a necessary supplement to compensate for the considerable fluctuations in the amount of wind and solar energy fed into the grid. Combined heat and power plants allow natural gas to used very efficiently and contribute to stabilising the national grid. This infrastructure can be used with biogas in the future.
Germany currently imports around 85 percent of the natural gas it uses. However, supplier countries like Norway and the Netherlands are becoming less and less important due to decreasing production volumes. Instead, natural gas is increasingly being imported from regions where production is not up to European democratic and environmental standards (e.g. Russia). Ruling out production of natural gas in Germany altogether and relying purely on imports of natural gas instead would merely mean shifting production of natural gas to parts of the world where it is conducted under lower environmental standards. Thus tapping unconventional sources of natural gas should be possible in Germany, but not at any price.
Does unconventional natural gas have a role to play in Germany’s energy mix?
Notwithstanding the prospecting activities of a number of energy companies such as ExxonMobil, Wintershall and others, the question remains open whether the production of unconventional natural gas in Germany and Europe will ever play a significant role. The issue is only just emerging in Germany and in Europe as a whole – unlike in the US. Therefore it is vital to create the right framework conditions now to make sure from the outset that production does not have the negative impact it has in the US.
However, it is also certain that those natural gas deposits in Germany whose exploitation is technically and economically feasible are limited. Companies must not be allowed to prospect for fossil fuels at the expense of the population and the environment. In view of the alternative renewable energy sources that are available, this would neither be wise, nor will the population accept it. Instead, it is vital that we examine very carefully whether production of unconventional natural gas under acceptable environmental standards is possible, whether the fracking method is safe, and whether the legal framework in Germany is sufficient to allow it to be monitored effectively.
We must demand the greatest possible transparency on the part of companies and authorities. The secretiveness we have so frequently seen from companies and authorities in this area will not create acceptance for natural gas production – the reports from the US alone are simply too alarming for that. Thus in North Rhine-Westphalia it is currently under investigation whether there are any legal concerns standing in the way of informing the public more comprehensively and at an earlier stage in the future.
In its disregard of the interests of the affected population, Germany’s outmoded Mining Law is actually rather legislation designed to promote the exploitation of natural resources. A fundamental reform of German Mining Law, which in its present form largely goes back to legislation passed during the Nazi era to ensure free access to resources for the wartime economy, is long overdue. The safest way to secure a clean energy supply is to continue developing renewable energy sources persistently and with environmentally sustainable methods. If energy from renewable sources is available in sufficient supply, the question of natural gas production will be irrelevant in a few years. Policymakers would be well advised to put things on the right track now. It would be tragic to risk placing the health of the people and the environment at lasting risk to allow the production of a fossil fuel that will be phased out over the medium term anyway.