EARTHQUAKES LIMIT DUTCH GAS PRODUCTION

NETHERLANDS Frequent earthquakes have caused the Dutch government to temporarily limit maximum allowed extraction of gas from the Groningen natural gas field for the first half of 2015. In July, a possible further reduction of gas extraction will be decided which could lead to the Netherlands becoming more dependent on gas imports.

The Groningen gas field in the northern part of the Netherlands is Europe’s largest and one of the biggest in the world. It was discovered in 1959 and production started in 1961. The Dutch state has a 50 per cent share in the gas field, with the remainder in the hands of Shell and ExxonMobil. The gas field is operated by the Nederlandse Aardolie Maatschappij (NAM), a joint venture between Royal Dutch Shell and ExxonMobil.

Gas extraction in Groningen amounted to 47.8 billion cubic metres (bcm) in 2012, 53.9 bcm in 2013 and 42.5 bcm last year.

Revenues from the Groningen gas operations during 2014 contributed EUR 9.1 billion to the Dutch treasury.

Compensation for damages
Frequent earthquakes caused by the gas extraction have led to damage to houses and buildings in the Groningen region. Residents have in contacts with the government demanded answers to why gas extraction hasn’t been limited or halted altogether. They have also demanded compensation for damage to their property.

Research on the safety and quality of life in the Groningen province already led to the reduction of the 2015 production ceiling in 2014 and additional research is now underway.

Safety concerns
Following the discussions with the residents, the Dutch cabinet decided to put a cap on gas production for the first half of 2015 at 16.5 bcm. A previously decided cap on production for the entire 2015 remains at the previously decreased 39.4 bcm (down from 42.5 bcm).
Henk Kamp, Minister of Economic Affairs, said at a press conference:
“In July the government will decide, on the basis of the research findings, if a further reduction is needed to address safety concerns.”

Rely on imports
If the cabinet decides to further limit gas extraction in Groningen, the Netherlands will have to rely on gas imports to a higher degree according to Helga Norrby, Senior Regulatory Advisor and expert on gas-related issues at Vattenfall. 
“The Groningen gas is low calorific but the Dutch market has conversion capacity to enable the use of high calorific gas from Norway or Russia for low calorific customers,” Helga Norrby says and states that she believes the 16.5 bcm cap to be “a highly political decision”.

“It is going to be very interesting to see what the decision for the second half of 2015 will be. It could include not only a further decreased yearly amount, but could also include limitations on the hourly production, changing the use of the gas field altogether.”

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