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NAM Groningen earthquakes creating avalanche of damage repair work

And employment in Groningen? ‘At the moment, a lot of extra people are working in the construction and installation sector for the damage repair’, says Luman. ‘This will continue to be the case in the near future.’

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele DagbladRoyal Dutch Shell and ExxonMobil each own a 50% share in NAM, the company responsible for the earthquake blighted Groningen Gas Field and consequential potential bill for untold billions in damages to effected residences.

Gas never became Limburg coal for Groningen

Carel Grol • Entrepreneurship

Natural gas in Groningen is declining. Production is falling, as is employment. At the end of the next decade, the gas crane must be completely closed by order of The Hague. That will be quite noiseless in Groningen.

The Dutch Petroleum Company (NAM) came Thursday with a summary response to the government’s decision. ‘NAM is making preparations in its business operations for lower production in the coming gas years,’ said the company, which is 50% owned by Shell and 50% by Exxon. And yes, NAM realizes that gas extraction has ‘brought a lot of prosperity, but also has a downside’.

Not labor-intensive

The company is already under pressure. Over the past few years hundreds of jobs have disappeared. Yet gas other than coal is not a labor-intensive sector. In 1958, the Dutch mining sector offered employment to more than 60,000 people, according to a thesis by Limburger Serge Langeweg. Southeast Limburg derives part of its identity from coal. Koempels, the mentality of hard work and mutual solidarity: still there with (false) romance to longing back.

Such a sentiment has never reached gas production in Groningen. The only parallel with coal: it was won far from the political center of the country, and angry residents see their region as the ‘cloud zone’ of The Hague. But beyond?

Peat

Peat from the peat colonies, where there is also an element of hard work under harsh conditions, can still be associated with the region with some imagination. According to a saying ‘a good Drent is made from peat, gin and suspicion’. Nevertheless, peat extraction was never a huge industry. The Drenthe historian Michiel Werding calculated that in 1650 in the Netherlands about 3700 peat diggers could have been at work. In 1850, that was almost 5900.

This also meant that peat in terms of employment was greater than gas – although this comparison is flawed because a 19th-century day laborer with a wheelbarrow is hard to compare with an engineer behind an excel sheet. But still: the exploitation of peat literally formed the region, with straight channels and villages whose names referred to the main economic activity.

Not in the DNA

That is not the case with Groningen gas. It is not in the DNA of the people, it has produced few jobs, it is not anchored in the collective pride. ‘When it comes to jobs, you do not even hear that in the political discussion,’ says Rogier Aalders, regional economist at Rabobank. Gas extraction accounts for less than 0.5% of employment in the province.
What is important is the added value of the gas: the market value of the product minus the production costs. But those benefits flowed to the state treasury, more than € 265 billion since the sixties. ‘Some of those benefits came back to Groningen through subsidies,’ says Aalders. “But no more than elsewhere in the Netherlands.”

Nitrogen plant

More than 4000 people work at NAM, Gasunie and Gasterra. “Not all of these jobs will disappear,” says Rico Luman, regional economist at ING. NAM is still extracting gas from small fields, GasTerra may play a role in the purchase of foreign gas, and renewable gas or hydrogen is being used. And a nitrogen plant is being built, so that gas will be used for a long time in the Netherlands. So, says Luman, ‘Groningen remains an energy province’.

According to him, the Groningen economy is shrinking by 8% if gas production in 2020 has been reduced to 12 billion cubic meters. And Minister Eric Wiebes wants to go further down. That would mean a sharp drop in the Groningen economy. Luman nuances that. ‘It’s about the added value of gas production, compared to what the entire province produces’, says Luman. “It’s not in proportion with the number of jobs.”

Compensate

In other words: with very few people in the gas industry, a lot is earned. Moreover, the 8% decrease is purely about gas revenues. ‘New economy, with hydrogen or nitrogen, can compensate for that.’

And because the gas revenues do not fall to the province, the consequences of the shutdown of gas production over the gross domestic product of the Netherlands must also be spread out, says the economist. According to him, the impact on the Dutch economy is ‘good to absorb’.

And employment in Groningen? ‘At the moment, a lot of extra people are working in the construction and installation sector for the damage repair’, says Luman. ‘This will continue to be the case in the near future.’

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