German oil firm looks for new deposits at home

By Kyle James

While oil exploration company RWE Dea often drills in the sands of Libya or under the waters of the Caspian Sea, a new project has the company looking for the black gold in a pine forest in Northern Germany.

The area in the state of Lower Saxony might not feature of the oil derricks of Texas, or oil families as famous as the fictional Ewings from Dallas, but oil company Dea thinks there might be Texas Tea under the rolling landscape and has begun the first of three exploratory projects looking for rock formations that might contain the coveted stuff.

Observers won't be seeing any gushers of oil exploding from the ground, but the company suspects the layer of sandstone some 1,500 meters under the surface, could be soaked with crude, which could be extracted.

Geologists call the underground formation the "Gifhorn Trough," named after the town of Gifhorn nearby.

These exploratory wells will test whether there is enough high-quality oil present in the "trough" for extraction to be commercially viable.

According to Dea, a fully owned subsidiary of German energy giant RWE, the company is investing tens of millions of euros in the project.
New technologies

New-technolgies-have-made-oil-exploration-in-Germany-more-attractive Oil production in this region ended in the 1990s when the fields were deemed exhausted. But new technological developments enable researchers to find oil in fields that were formerly considered depleted.

Today, improved seismic investigation techniques allow geologists to create three-dimensional pictures of underground structures using measurements made from sound waves.

"We can explore areas now better than we used to, which makes it possible to find new oil in those older fields," Hartmut Pick of the WEG gas and oil production association told Deutsche Welle. "The technology helps make it economically viable to extract the oil."

Cost for oil production can be higher in Germany than in other countries such as Saudi Arabia, Pick said, but German operations do not always carry a higher price tag.

"Whether production in Germany makes economic sense really has to be determined on a case-by-case basis – how much oil is there, what the quality is, how easy it is to reach, and other factors," he said.
Long history

The-Mittelplate-in-the-North-Sea-is-Germany-biggest-oil-field The new drilling projects by Dea represent something of a return to the birthplace of German oil production history. It was 150 years ago that the world's first successful oil drilling operation took place some 40 kilometers away from Gifhorn.

It was in the 1880s that the oil boom really began in Germany. Production reached its climax in the late 1960s and early 1970s, when some eight million tons were produced annually.
The sector entered a decline after that, although according to Pick, production is picking up again. In 2008, 3.1 million tons of crude were produced domestically.

Germany's biggest oil field is the Mittelplate, some 8 kilometers off the North Sea coast. The size of the oil deposit, which was first tapped in 1987, is estimated at 100 million tons. As of 2007, some 20 million tons of crude had been produced.

Germans use about 100 million tons of oil per year, so the three tons produced domestically are but a drop in the bucket.

"Still, we are happy that we can produce it all since everything that we produce ourselves is oil that we don't have to import," Pick said.

The German oil and gas industry employs some 8,000 people directly, according the WEG. Including suppliers and related businesses, the sector provides some 20,000 people with jobs.

Whether the liquid down in the Gifhorn trough is black gold or just clear water, Dea will only know after the drilling is complete. And despite the millions invested, the company may well walk away empty handed.

"We always only know after the fact," said Pick. "That's the inherent risk in our business."