Germany's chemical industry association Verband der Chemischen Industrie (VCI) has called on the federal government to swiftly allow exploration of shale gas deposits as a signal to potential investors that the country is an attractive location for industry.

The association's remarks came in response to guidelines for future regulation of natural gas exploitation proposed by the cabinet of Chancellor Angela Merkel on Nov. 20. Although the rules differ only minimally from a proposal made in July of this year, the chemicals and gas industries believe they could kick open the door for hydraulic fracturing, or fracking, at least a crack.

In the form of a draft bill, the proposals are to be presented to the other federal ministries for comment or revision in the coming days, and plans call for the cabinet to vote on the legislation before the end of the year.

Like their rivals throughout Europe, German chemical producers are concerned that their competitiveness is being increasingly threatened by rising energy costs at home, while US producers benefit from access to cheaper shale gas-fed resources. German companies with interests in oil and gas, in particular BASF, have been eager to begin test drilling.

The principal difference in the draft legislation now broached by minister Barbara Hendricks compared to the proposal presented by in July is that it would allow commercial exploitation to go ahead from 2019, provided successful test drills have been completed and state authorities have approved.

Previous plans called for a ban on test drilling, except for scientific purposes until 2021 and a vote in the federal parliament, Bundestag.
Permission to drill now would be subject to approval by a government-appointed committee of experts, and exploration would be allowed only at depths below 3,000 meters to avoid endangering drinking water supplies. An environmental impact assessment also would be required.

When presenting the latest proposal, the environment minister stressed that the committee, which will review the results of the test drilling, would represent "a wide spectrum of Germany's scientific community. Even if it declared a geological formation to be suitable for fracking, the water and mining authorities of the states would still have to approve the drill, she added.

While the minister acknowledged that the restrictions could be loosened at some point if test drilling showed that fracking is not as dangerous as many fear, sources inside the ministry told German media that fracking would never play a significant role in the country's energy supply as reserves are not vast.

Two years ago, the Federal Institute for Geosciences (BGR) estimated the country's shale gas potential at 0.7 to 2.3 trillion cubic meters.

About 10% of Germany's gas currently comes from domestic sources, with most of the reserves lying beneath the state of Lower Saxony. The energy sector is largely dependent on a pipeline from Russia.

Exploration for conventional gas exploitation has been carried out in the country since the 1960s. For the conventional procedure, too, the government's latest plan will require an environmental impact assessment going forward.

Up to now, fracking has been permitted for tight gas in deep deposits, but due to environmental considerations, no new permits have been issued in recent years.