Exxon Mobil looks for shale gas in Germany

Jan. 25, 2011 at 3:02 PM
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BERLIN, Jan. 25 (UPI) -- Exxon Mobil Corp., the largest U.S. oil company, is looking for unconventional natural gas pockets in western Germany, where giant volumes are believed to be locked underground.

Over the next five years, Exxon Mobil will spend several hundred million dollars and up to more than $1 billion on exploring shale gas in North Rhine-Westphalia, Gernot Kalkoffen, head of Exxon Mobil Central Europe, told German business daily Handelsblatt.

The company has drilled six exploratory wells, two in coal and four in shale sediments.

"We're in the early phase of the exploration but the theoretical potential is relatively large," Kalkoffen said. "If one of the test wells hits the target" and the gas can be extracted in an economically viable manner, he added, "then we will quickly try to start producing."

Full-scale production would mean investments of "several billions (of dollars)," Kalkoffen said.

To make a difference for Exxon Mobil on the market, the German unconventional gas would have to be able to compete with liquefied natural gas and pipeline gas from Russia.

"Natural gas, in our opinion, can add to a responsible energy mix and will remain in demand in the long term," Kalkoffen said.

Developing the gas would hand local communities vast tax payments and create thousands of jobs, the company executive said.

He noted the example of neighboring Lower Saxony, where a decades-old conventional gas industry sustained around 27,000 jobs.

"In Lower Saxony, up to $1.3 billion have been paid per year in exploration feeds to the state and that's on top of the usual taxes paid by firms," such as company taxes paid to the local communities, he said.

Kalkoffen knows that he has to sweeten the decision to drill for gas in western Germany.

The region is densely populated and its people are wary about the environmental impact of drilling for gas in their backyard.

Extracting unconventional gas is demanding for companies and the environment; a significant amount of energy and funds has to be invested to get the gas out of the rock. Critics complain that the chemicals used to crack open rock formations to get at the gas, dubbed fracking, could contaminate water supplies.

Unconventional gas is nevertheless popular. Massive new shale gas finds in the United States and Australia have boosted overall reserves. As more companies are pushing toward unconventional gas in countries such as China, India and Indonesia, global supplies of gas could last 250 more years, or nearly double as long as recently believed, the International Energy Agency said recently.

Exxon Mobile is looking for gas all over Europe, including in western Poland. The German fields are especially attractive because they're located in the middle of one of Europe's biggest energy markets. Germany imports most of its gas from the Netherlands, Norway and Russia.

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