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Bloomberg: Shell, Exxon Give Final Arguments in Dutch Natural Gas Dispute

By Fred Pals

June 18 (Bloomberg) — Royal Dutch Shell Plc and Exxon Mobil Corp. will tell a court tomorrow why they should be allowed to keep pumping natural gas from a Dutch wetlands area, a plan opposed by some residents and environment groups.

Final arguments in the case start at 10:30 a.m. at the Council of State in The Hague, said Council spokesman Pieter-Bas Beekman. The four groups opposing the project say they are seeking to halt production, or at the least, place new controls on pumping.

At stake is 20 years of gas supplies, which may generate as much as 15 billion euros ($20 billion) for the Dutch government. Wildlife advocates and environmentalists say it would harm a 3,800 square-mile expanse of wetland tidal flats off the northern Dutch coast that is home to seals, a transit stop for 10 million migratory birds and a breeding area for 30 avian species.

“It is a very complicated case and the outcome is hard to predict,” Jonathan Verschuuren, a professor of European and International Environment Law at Tilburg University, said in a June 14 interview. Verschuuren is a member of the external audit committee set up to monitor the environmental effects of the project.

The Council is expected to rule within six weeks, and no further appeal is possible.

The Wadden Sea wetland area may hold enough gas to supply the four biggest Dutch cities for at least 20 years, the Shell-Exxon venture estimates. It would supplement the aging Slochteren field near the country’s eastern border, Europe’s biggest deposit of the fuel.

`Fear the Effect’

The environmental groups want the court to revoke permits that were awarded last year to the venture, which allow the companies to expand production as they seek a return on an investment of more than 300 million euros to date.

“We fear for the effect this will have on birds and the environment,” Marieke Dijksman, a spokeswoman for Vogelbescherming Nederland, a bird-protection association based in Zeist, Netherlands, said in a June 14 interview. The group is leading the opposition to the project.

Shell and Exxon’s Dutch venture, Nederlandse Aardolie Maatschappij BV, or NAM, says it will keep “a hand on the tap” as it extracts gas from the Wadden Sea to avoid “significant” environmental damage and limit seabed sinkage. As soon as monitoring shows evidence of major damage, production will be halted to assess what can be done, NAM said.

Slochteren Field

NAM said it has already discovered 20 billion cubic meters of gas in the Wadden Sea, enough to supply households in the Dutch cities of Amsterdam, Rotterdam, The Hague and Utrecht for the next 10 years. It could add another 20 billion cubic meters through additional investment, NAM said.

Another 170 billion cubic meters may be present, according to estimates based on seismic surveys by Delft, Netherlands- based TNO, an independent research and technology institute.

The Wadden Sea project is part of a government-backed plan introduced in the mid-1970s to produce from small fields so as not to exhaust the Slochteren deposit in the northeastern Dutch province of Groningen. Discovered in 1959, Slochteren still has enough gas to supply the country for 25 years, according to NAM.

The Shell-Exxon venture has already extracted gas from three small fields in the wetland area using permits it received in the 1980s. It started production from the new, disputed areas in February.

The environmentalists’ claims are supported by Adriaan Houtenbos, a former NAM engineer who says the seabed may subside faster than forecast. The “hand-on-the-tap” principle won’t be enough to keep the seabed from sinking further, Houtenbos said in a June 16 television interview.

Wadden Support

NAM spokesman Reinier Treur, who said he speaks on behalf of venture partners Shell and Exxon on the matter, said Houtenbos’s claims aren’t necessarily wrong.

“We ourselves estimate the seabed will sink faster than Houtenbos does,” said Treur. He said the measures put in place are sufficient. “We feel confident about the court case.”

The Wadden Association, an environmental lobby group with 45,000 members, got involved in the licensing process in 2005. Their involvement has resulted in NAM’s license requirements becoming stricter, Hidde van Kersen, director of the Association, said in a telephone interview. The group doesn’t oppose the venture and will not present arguments at court.

“I think the project, as it stands now, is the most that environment groups can get,” said Tilburg University’s Verschuuren.

The other groups appearing before the council Tuesday are the Environment Federation of Groningen Province, International Bird Protection and the Nature and Environment Foundation.

“I don’t think the other environment groups stand a chance” of more restrictions being imposed on NAM, Van Kersen said. The constant monitoring of the project by the audit committee will provide sufficient guarantees against major damage, he said.

Economic Affairs Minister Maria van der Hoeven, who is responsible for the licensing, has declined to comment pending the Council of State’s ruling.

To contact the reporter on this story: Fred Pals in Amsterdam at [email protected]

Last Updated: June 18, 2007 04:05 EDT

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