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Saying goodbye to Groningen gas much faster than expected

The anger among Groningers was great after two earthquakes last spring. It fueled the fear of new cracks and subsidence, while in some cases the old damage was not even repaired by the syrupy claim settlement and reinforcement operation.

Printed below is an English translation of an article published 10 Sept 2019 by the Dutch FT, Financieele Dagblad. NAM is the Shell/Exxon Joint Venture company responsible for the earthquake blighted Groningen Gas Field and consequential potential bill for untold billions to deal with damaged residences.

Saying goodbye to Groningen gas much faster than expected

Bas Knoop In short

The cabinet wants to stop gas extraction in Groningen much faster than planned. Not in 2030, but already in 2022.

Next year gas extraction will fall to 11.8 billion cubic meters, just below the ‘safe’ level of 12 billion cubic meters.

In order to accelerate the gas extraction, nitrogen is added to imported high-calorific gas. Nine large industrial users are no longer allowed to use Groningen gas from October 2022.

Due to the lower gas extraction, the natural gas revenues for the cabinet will fall by €400 million next year. A new gas deal with Shell and ExxonMobil is being prepared.

In jubilation mood? Hans Engels chuckles. The acting mayor of the Groningen Loppersum, in the heart of the earthquake area, knows better. ‘The people from Groningen are seeing more and believing first. They have heard good promises from The Hague in the past, “says the former member of parliament of D66.

But he emphasizes that the cabinet decision announced on Tuesday to close the gas tap in Groningen much earlier than planned is ‘an important contribution’ to help the region bumped by earthquakes. ‘Wiebes can get the credits for that. Now continue with damage repair and the reinforcement operation. ”

Cold winters

Climate minister Eric Wiebes wants Groningen gas production not to be reduced to ‘zero’ by 2030, but as early as 2022. Only in very cold winters would Groningen gas still be needed after 2022. The field will be closed by 2026 at the latest, the VVD expects.

At the same time, gas extraction in 2020 will fall to 11.8 billion cubic meters. Just below the level of 12 billion cubic meters that the State Supervision of Mines says the risk of earthquakes is ‘acceptable’. In fact, 15.9 billion cubic meters of Groningen gas would be extracted next year.

Just before the summer, local administrators, action groups and members of the Lower House of the Dutch Parliament were putting a lot of pressure on the cabinet to close the gas tap faster. The anger among Groningers was great after two earthquakes last spring. It fueled the fear of new cracks and subsidence, while in some cases the old damage was not even repaired by the syrupy claim settlement and reinforcement operation.

Pseudo-Groningen gas

At the time, Wiebes could only promise that he would investigate whether an accelerated reduction would be possible. That now appears to be the case. And it is precisely a term that is at the moment giving the coalition headaches that it plays a key role: nitrogen.

The Netherlands will import more gas to compensate for the lost gas from Groningen. This is, just like gas from the 240 small Dutch fields, often high-calorific gas. This is unsuitable for use in Dutch households and businesses. Groningen gas is low calorific. Adding nitrogen still produces low-calorific gas.

Mixing with nitrogen has been happening more and more in recent years. Last year, 28.9 billion cubic meters of gas from abroad and the small fields were made suitable for domestic use. In 2022, a new nitrogen plant must also be erected in Zuidbroek. Furthermore, the gas storage in Norg in Drenthe is filled with this pseudo-Groningen gas.

Angry large users

It was already clear earlier that the largest nine industrial consumers must stop using low-calorific gas by October 2022 and switch to an alternative. They must largely pay the costs for this themselves. At the end of 2018, this decision elicited angry reactions from a number of these companies, including Uniper and Eneco. An overpriced and impracticable plan was the criticism.

The accelerated reduction of gas extraction is not without financial consequences for the treasury. Natural gas revenues will fall by € 400 million next year. In addition, the government will make new agreements with Shell and ExxonMobil. The owners of the NAM also see gas revenues falling.

In an ‘interim agreement’ on the changed use of gas storage in Norg, owned by NAM, it was agreed that the Shell and Exxon cabinet will pay an advance of € 90 million for the coming gas year. By the end of March 2020 there must be a new gas deal with both oil companies.

SOURCE

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