* New estimate is optimistic, exceeds earlier figures
* Says if rules are in place, drilling risks can be curbed
By Vera Eckert
FRANKFURT, June 25 (Reuters) - Unconventional gas reserves in Germany amount to trillions of cubic metres (cbm) and can be safely exploited if the right rules are in place, federal authorities said on Monday with the release of the first findings of an ongoing long-term study.
The Federal Institute for Geosciences and Natural Resources (BGR) said between 0.7 trillion and 2.3 trillion cbm of the gas could be technically extracted.
This is calculated as a 10 percent extraction rate they believe is achievable from the 6.8 trillion-22.6 trillion cbm of shale gas they have located in the country.
"Germany has a significant shale gas potential," the Hanover-based authority said in a press statement.
It said modern drilling techniques called fracking for the exploitation of shale gas reserves could be reconciled with the need to safeguard drinking water and prevent seismic risks.
"From a geoscientific perspective, an environmentally acceptable use of these (fracking) technologies is possible, provided legally mandated rules are adhered to, necessary technical measures are taken and preliminary explorations at each site are made," it added.
Most of the so-called unconventional deposits are located in northern Germany and some on the Upper Rhine in the south-west.
Shale gas could help to mitigate the effects of dwindling conventional gas resources, BGR said.
Indigenous gas production has dropped to 14 percent of total annual German gas consumption, which amounted to 842 billion kilowatt hours last year, according to industry figures.
Companies like ExxonMobil are among big players pushing for Germany to develop its unconventional gas despite scepticism over the novel drilling methods.
The findings by the Hanover scientists are nearly three times what ExxonMobil earlier this year estimated as German unconventional gas potential, when it pegged it at 827 billion cubic metres.
Hydraulic fracturing, or fracking, involves pumping vast quantities of water and chemicals at high pressure through drill holes to prop open shale rocks and release gas trapped underground.
A parliamentary committee is dealing with the shale gas potential of six of Germany's 15 states and has not yet come a conclusion regarding recommendations or warnings. The findings are likely to be published in the autumn.
North-Rhine Westphalia, home to mining and utilities, in 2010 awarded exploration licences to 10 international firms.
In the United States, vertical drilling processes have brought about a shale gas boom in recent years, as so far untapped resources have become available, freeing the country of importing needs and changing gas flows in the world market.
Germany relies mainly on imported pipeline gas for heating, transport and industrial applications where it would like to reduce its dependency on Russia's 40 percent market share.
But aversion to environmentally unproven energy technology runs high.
Critics of shale gas worry that fracking fluids might get into groundwater-holding aquifers and that the method uses too much water and risks causing earthquakes.
France has banned fracking but coal-reliant Poland has granted 112 shale exploration licences in the hope of a shale gas boom of its own, although it recently had to reduce estimates for its reserves.
The BGR is to continue exploring the sector in a project stretching to 2015, called NiKo, in order to capture all potential rock formations and risks where it partners with the United States Geological survey (USGS). (Editing by James Jukwey)