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Earthquake Shaker: Groningen Gas Field is on the highest alert level, code red

Minister Eric Wiebes of Economic Affairs and Climate has arrived in the village of Zeerijp in Groningen, where an earthquake occurred on Monday.

On Thursday, the State Supervision of Mines (SSM) stated that Groningen is in the highest alert level, code red, and that therefore a ‘considerable production reduction’ is necessary.

Printed below is an English translation of an article published today by the Dutch equivalent of the Financial Times, Financieele Dagblad.

Accelerated reduction of Groningen gas production is expensive and time-consuming

Gert van der Have Louis Hoeks Economy & Politics

The politicians want to close the gas tap further, but that is not possible. ‘I’m going to do everything I can to reduce the costs’, Minister Eric Wiebes of Economic Affairs and Climate promised this week during his visit to the province of Groningen. He has to make that happen now.

According to the coalition agreement, Groningen gas production in 2021 must be reduced to 20.1 billion cubic meters. Wiebes wants to continue. The Dutch Petroleum Company (NAM) also indicated this week, without mentioning volumes, that the gas production will be substantially reduced again. On Thursday, the State Supervision of Mines (SSM) stated that Groningen is in the highest alert level, code red, and that therefore a ‘considerable production reduction’ is necessary.

Gas Production

GroenLinks thinks that a production of 12 billion cubic meters should be the maximum, but the Cabinet is opposed to it. Member of Parliament Rob Jetten (D66) calls ‘maximum safety for the Groningers the only lower limit’. Yet he does not want to stick a number on the production limitation. CDA MP Agnes Mulder (CDA) is annoyed by the opposition proposal. ‘Just coming up with a lower number I find obligatory and people talk to the mouth. You have to come up with concrete measures to bring down production further. ‘

The question is how quickly a reduction is possible. According to a geologist and energy expert, who wants to remain anonymous, the production from Groningen can be reduced to a kind of pilot light. The problem is with the buyers.

Natural Gas Revenues

More than 14 to 15 million households as well as industries and power plants at home and abroad depend on the gas from Slochteren. Belgium, Germany and Northern France are major customers. This annual demand of 21 billion cubic meters of natural gas laid down in long-term contracts can not be significantly lowered in the short term. Stopping delivery in the short term will undoubtedly trigger a legal circus at home and abroad.

The Groningen gas is also low-calorific and less energy-rich than gas from the Dutch North Sea and imported gas from Russia and Norway. With a switch, installations such as central heating systems and gas appliances have to be adapted and that takes time.

Because it has been clear for some time that gas production will decrease, Belgium and Germany, among others, agreed in 2013 to convert their gas installations. ‘From 2020 on, this must lead to an annual reduction in demand of 2 billion cubic meters to low-calorific gas,’ says a Gasunie spokesperson.

At least as time consuming are proposals to convert Dutch power plants, so that an annual 2 billion cubic meters less Groningen gas is needed. Moreover, the Netherlands could switch to efficient hybrid heat pumps. But replacing 400,000 boilers every year has not happened overnight.

Finally, there is a budgetary bump. Effects of gas price changes do not have to be offset elsewhere by the budget. Volume changes though. A quick calculation shows that a reduction in volume to 12 billion cubic meters of gas (at the same gas prices) compared with 2016 is a gap in the national budget of a small billion euros.

In the coming months Wiebes will sit around the table with SodM, Gasunie, gas dealer GasTerra and NAM to see what is possible. On Tuesday, the minister will debate with the House about the damage treatment of the quakes. A briefing follows a briefing with energy experts.

https://fd.nl/economie-politiek/1235987/versnelde-afbouw-gronings-gas-is-kostbaar-en-tijdrovend

Minister Eric Wiebes of Economic Affairs and Climate has arrived in the village of Zeerijp in Groningen, where an earthquake occurred on Monday. Holland Hoogte / Corné Sparidaens

ARTICLE ENDS

EXTRACT FROM WIKIPEDIA 

The Groningen gas field is operated by the Nederlandse Aardolie Maatschappij BV (NAM), a joint venture between Royal Dutch Shell and ExxonMobil with each company owning a 50% share.[3] The field accounts for 50% of the natural gasproduction in the Netherlands, the other 50% being supplied by around 300 smaller gas fields, most of them located offshore in the North Sea.

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EXTRACTS

Like other residents of the Groningen region near The Netherlands’ North Sea coast, the retired art teacher was used to the subtle tremors caused by decades of extraction at Europe’s largest gas field. But nobody was prepared for the magnitude 3.6 earthquake that struck after dark on Aug. 16, 2012, assured by both state and project officials that there was nothing to fear. Half a decade later, Treffers is still reeling. His claim for damages to his brick home, which he had to gut and retrofit with quake-resistant framing, is one of 80,000 that have been filed with the company tapping the underground riches, a venture between Royal Dutch Shell Plc and Exxon Mobil Corp. known as NAM.

“Groningen gas has always been a source of pride to the Dutch,” Prime Minister Mark Rutte said in the region last month. Those days are gone. What was once a blessing is now an expensive curse. Aside from slashing the amount of gas NAM can pump, the state has set aside 1.2 billion euros to compensate residents, including for emotional damages, and the final bill will almost certainly swell. Officials are also considering criminal charges against NAM executives for posing a threat to human life, which would be a first in the Netherlands, where Shell is triple the size of the next biggest company.

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