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Shell/Exxon JV (NAM) has already paid over half a billion euros in compensation for Dutch earthquake damage

Earthquake damage to 80,000 homes in the Groningen Gas Field area of the Netherlands as a result of gas drilling activities by Shell and Exxon

Translated from an article published in Dutch language on 23 Dec 2017 by Het Financieele Dagblad.

Carel Grol • Entrepreneurship: 

How long will NAM still exist? 

“You have to ask that question to the shareholders.”

Gerald Schotman, director of the Dutch Petroleum Company (NAM), the company that pumps gas from the Groningen soil, has just been asked how long NAM can continue to do so. Does the company still have a future? Schotman: ‘I will never make a statement about whether or not gas extraction can take place.’

NAM is a company under oppression. The gas price is low and that is a burden on income. Meanwhile, the NAM has to pay for the earthquake damage in Groningen. So far, that has been slightly more than half a billion euros. That amount can only go one way in the coming years. Up.

‘Quiet waters do not seem to exist in the Groningen file’ • Gerald Schotman, director of NAM

Or, as Schotman says, in a small room in Amsterdam: ‘Quiet waters do not seem to exist in the Groningen file.’

65 + 5

NAM was 70 years old this autumn. That was hardly a reason for celebration. Groningen is trembling. And hundreds of people have been laid off at the company in recent years. So the celebration was subdued. In the words of the director: “For NAM, 70 years old feels like 65 + 5. Because a lot has changed since Huizinge. ‘

Huizinge is synonymous with the earthquake problem in the North. In August 2012 the ground trembled there, with 3.6 on the Richter scale. That put the earthquakes quite literally on the map. Since then there have been 80,000 damage reports.

NAM is owned by Shell and Esso, both of which hold 50%. Marjan van Loon, director Shell Netherlands, once said: Shell is not a charitable institution. So the question about the future viability of NAM is obvious. What if the expenses, ie the costs, are higher than the income? Does not that moment come any closer, if NAM can also win less and less? But Schotman says: ‘That is not me.’

Dingetje

The company no longer handles any damage. The simplification of the handling ‘is a thing,’ says Schotman. ‘As long as I am here, protocols are being put forward. The answer to complexity is even more rules. ‘

No, that people are averse to bureaucracy, he understands that. But well, says the CEO, the earthquake problem is simply complex. ‘Everyone wants it to go faster than it goes.’

And now? In the past gas year, 24 billion cubic meters of gas was produced. This will be 21.6 billion cubic meters in the coming year. The recently appointed Minister of Economic Affairs, Eric Wiebes, has already been in the docking area twice. But not yet with Schotman. Even though the NAM executive does not feel unraveled. “How long does he see? Seven weeks, maybe eight? We have an appointment, early next year. ”

Competition

NAM will issue a competition, NAM will share its knowledge of the subsurface with parties dealing with ultra-deep geothermal energy. According to Wessel de Haas, who is responsible for the production of the Groningen field, 2,800 homes will have to be strengthened or demolished, but the risks are just as high as in 2015.

Because extensive research has been done about that. To things like pressure drop, compaction, and acceleration. Conclusion: except for these 2,800 homes, the chance of major damage such as cracks is less than 1%.

“I do not claim that we have done everything right. Of course things should have gone differently and better, ‘says Schotman, looking back over the past five years. But now he gets questions about the future of the company. And no, he really can not answer that.

ARTICLE ENDS

OR IS IT 100,000 HOMES?

Shell and ExxonMobil apologise for Groningen earthquake problems

Read also

How Hiltje and Leny won from the NAM

Earth­quakes in the Gro­nin­gen Gas Field

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1 Comment on “Shell/Exxon JV (NAM) has already paid over half a billion euros in compensation for Dutch earthquake damage”

  1. #1 TotallyHackedOff
    on Dec 28th, 2017 at 13:01

    The way the NAM tries to get around this is by fast tracking the development of the small gas fields which surround Groningen. The tax rates are more favourable too meaning more free cash flow for the company but in doing so it hoodwinks the residents into thinking it is less impactful than Groningen. But many small fields producing gas have the potential to produce earthquakes too in my opinion- the principles are the same. You can check this out by looking up the small gas fields policy and you’ll get something on wikipedia to explain.

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