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Earthquake damage: Groningen Gas production goes to zero

Printed below is an English translation of an article published on 29 March 2018 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.

‘A continuous gas extraction, flanked by a massive compensation, repair and reinforcement operation, is therefore not a sustainable situation’

Groningen Gas production goes to zero

Louis Hoeks Carel Grol • Economics & Politics: 29 March

The Netherlands is going to phase out gas production in Groningen, with a ceiling of 12 billion cubic meters per year as an intermediate step. The goal must be achieved by 2030 at the latest. That is what Prime Minister Rutte said on Thursday after the Council of Ministers.

Minister Eric Wiebes of Economic Affairs and Climate spoke in an explanation of ‘a turning point’. ‘It is technically possible to exhaust the gas bubble, but not socially acceptable. I fought for the Groningers. “

Uncertainty among residents

Groninger gas remains in the ground, says Wiebes. He estimates that 85 to 90% has been won by the time the extraction has stopped. The minister does not want to discuss the costs. According to him, this is due to minister Hoekstra van Financiën, who will report more about it in the Spring Memorandum. “This is not a day to talk about money,” says Wiebes. ‘The decision is not based on financial considerations, but on safety and security of supply.’

He did not want to talk about the reaction of the Nederlandse Aardolie Maatschappij and its owners Shell and ExxonMobil, with whom Wiebes is talking to. ‘The flags do not go to NAM’, the minister acknowledged. His commitment is that there is no claim for damages.
According to the government, the earthquakes cause damage to homes and buildings and create uncertainty among residents. Moreover, the reinforcement operation has major consequences for the province. ‘A continuous gas extraction, flanked by a massive compensation, repair and reinforcement operation, is therefore not a sustainable situation’, according to the Cabinet. Wiebes: ‘Groningen must remain Groningen.’

Safety first

With this, the Cabinet goes beyond the advice of the State Supervision of Mines (SSM) to reduce gas production from the Groningen field to 12 billion cubic meters per year. Even with annual gas extraction at the level of 12 billion cubic meters, according to the government, the risk of a serious earthquake remains. ‘For the cabinet, safety comes first and that is why gas extraction from the Groningen field is completely finished.’

In the coalition agreement, funds are reserved for the value of 2.5% of the natural gas revenues for a future vision for the area. ‘According to the government, the success of this approach can not depend on the level of gas production in Groningen. That is why the government is looking at a substantial, multi-year contribution to Groningen that is independent of the gas revenues and the scope of the reinforcement operation. ‘

Nitrogen plants

The decision is accompanied by a series of drastic measures. For example, a new nitrogen plant in Zuidbroek is being built for € 500 million, with which high-calorific gas can be converted into low-calorific gas. From October 2022, this installation will deliver an annual saving of 7 billion cubic meters of gas from the Groningen field.

We are also looking into the possibility of purchasing more nitrogen for existing plants. By 2022 at the latest, all large industrial users of Gronings gas must have switched to high-calorific gas or other sustainable sources. In total, 170 companies together collect approximately 4.4 billion cubic meters of low-calorific gas annually.

In addition, Dutch homes must be made gas-free. Wiebes: ‘That happens step by step. Nobody is left in the cold. ” As long as the measures have not been implemented, gas must be purchased elsewhere, Wiebes acknowledges. He does not exclude that extra gas must also be purchased in Russia. 

Ten reactions to the decision:

Liesbeth van Tongeren, MP GroenLinks: ‘The direction that this cabinet takes is the right one.’

Henk Nijboer, PvdA Member of Parliament and from Groningen: ‘Completely reducing to zero is a historic step. Now it’s up to Groningers to do justice, to compensate damages without any hassle and to offer perspective for the area. ‘

VEMW, the advocate for large users of energy: ‘The Netherlands will become a net importer of natural gas in two to three years’ time.

Faiza Oulahsen: campaigner Climate & Energy, Greenpeace: ‘We are pleased that the government recognizes that the Groningen population and the climate are more important than the interests of NAM. We will see to it that this promise is fulfilled. ‘

Jan Roos, columnist: ‘There will be gas in the ground for tens of billions of euros in Groningen. I think that’s a shame. But yes, I have dicks easily. I do not live there. “

Gasunie, who advised the minister: ‘If we look at all the measures that have now been mapped out, we expect that gas production can not only be reduced to 12 billion cubic meters per year from 2022, but that it is possible within 10 years to complete completely.

Eelco Eikenaar, SP member of the provincial states of Groningen: ‘I am pleased with this step. This is very good news. I also hope that this will mean a reduction in the reinforcement operation, even if it continues to speculate. In Groningen literally much has been destroyed, also in the trust, and you will not get that easily. But I did speak to a number of people who were slightly emotional. Let me put it this way: they were positively upset. ‘

Hans van Cleef, economist ABN Amro: ‘Are we going to import more gas now? Or will the coal-fired power stations possibly remain open longer? Yes, I know that more sustainable energy is being built. It is therefore a residual need for electricity for the Netherlands. ‘

Groninger Gasberaad, a collection of civil society organizations: ‘This news overtakes us. It is still hard to see what this means.Something that was impossible turns out to be possible .. But, Groningen can stay Groningen, it seems. And that’s beautiful! “

Manuel Sintubin, geologist at the Katholieke Universiteit Leuven: ‘Barely two months after the Red Code of State Supervision of Mines, the gas extraction plan for Groningen is on the table. A small daring piece? “



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