Denmark to Join Shale Gas Quest in Europe

A town in northern Denmark has given the green light to French energy major Total to drill the first test wells for shale gas in the Nordic country where conventional gas output is dropping, a spokeswoman said on Thursday.

Last year, Denmark consumed more energy than it produced for the first time since 1997. Though the country remains a net oil and gas exporter, output for the two fell by 13 percent and 18 percent respectively over 2013, Danish energy agency data show.

"The city council of Frederikshavn municipality issued a permit to start test-drilling for shale gas reserves in the ground," said municipality spokeswoman Karin Rasmussen.

"A consortium consisting of French energy company Total and state-owned North Sea Fund (Nordsoefonden) are planning to launch an exploration well late summer this year."

Total, which has an 80 percent stake in the consortium, was not immediately available for comment, while a Brussels-based shale gas lobby group applauded the decision.

"Denmark, along with the UK, Spain, Poland and Romania, has made a sensible and balanced decision that shale gas has an important role to play in meeting its future energy requirements," Shale Gas Europe said in a statement.

Member states such as Britain and Poland are pushing hard for the development of shale gas, seen as one way to lessen European dependence on Russian natural gas, as well as to lower energy costs as it has in the United States.

Rasmussen said, however, that Total will initially be permitted only to drill only conventional wells to take test samples in Denmark, without using hydraulic fracturing, in which chemicals, sand and water are blasted deep into the earth to break up shale formations and allow gas to escape.

Environmental groups have protested at shale gas exploration plans in Denmark, fearing that hydraulic fracturing could contaminate groundwater. This method will in any case require a separate environmental impact study and permit, Rasmussen said.

The government issued two licences in 2010 for Total and North Sea Fund to explore for oil and gas in northeast Denmark, where shale formations lie at depths of around 4,000 metres.

Production of shale gas in Denmark was not expected to start earlier than around 2020, Shale Gas Europe said.

Denmark exports gas to Germany, the Netherlands and Sweden. The latter is fully dependent on Danish gas supplies.

(Reporting by Nerijus Adomaitis; Editing by Mark Heinrich)