Germany's Wintershall: New Law on Fracking is in Reach

New rules that govern the technique of fracking for gas are within reach in Germany after a 4-year debate, the country's top oil and gas producer Wintershall said, and may release at least 100 million euros of pent-up investment.

Chancellor Angela Merkel's coalition government will discuss a finalised draft law on hydraulic fracturing to extract gas and oil this month, and party leaders have signalled that an agreement is possible.

Germany has promised strict environmental audits and a ban on drilling in areas where water is protected due to possible environmental damage.

If the legislation comes into force Wintershall could spend up to 100 million euros ($111 million) over the next five years on delayed fracking projects, said its head of German operations, Andreas Scheck.

"It is important that Berlin moves ahead with the law, giving us a framework to plan and invest again," he told a conference on Wednesday.

Fracking to extract shale gas and oil has transformed the U.S. energy market, boosting supply and the competitiveness of its manufacturers.

It involves pumping water and chemicals at high pressure through drill holes to prise open rocks holding gas.

In Germany, fracking in "tight" sandstone reservoirs typically 4,000 to 5,000 metres deep and described as conventional by the industry has been used for more than 30 years, but those tight reserves will start to run out in 50 or so years.

Shale formations, which the industry says could replace this domestic resource, lie between 1,000 and 2,500 metres deep, but have not been tested because opponents say extraction could contaminate drinking water.

The public debate over shale led to an effective ban on any new permits, because cautious authorities declined to award them.

"For the last four years we have not been able to proceed with new conventional gas production, which lost us 10 percent of output each year," Scheck added.

Wintershall only derived 6.8 percent of its gas output from domestic sources. Bigger players operating in Germany are ExxonMobil and formerly RWE-owned DEA.

(Reporting by Vera Eckert)