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Netherlands gas regulator says Groningen field production falling faster than planned

28 June 2018

Dutch gas regulator SodM said on June 28 that natural gas production in the Netherlands will have fallen to between 19 and 20 billion cubic metres (bcm) in the year ending October 2018, lower than the original cap of 21.6 bcm set for the year and down from 24 bcm last year.

Groningen field - Image: NAM
Groningen field - Image: NAM

This fall is principally due to a faster than expected fall in output at the onshore Groningen field, operated by the Shell-ExxonMobil joint venture NAM. The Dutch government is taking steps to reduce and cap production from the field due to increasing earthquake activity and property damage related to gas extraction activities.

SodM said the government is “taking strong steps” to move the field’s gas production to 12 Bcm/y “as quickly as possible.” To accelerate the phasing-out, the regulator recommends the government take tax measures that encourage large consumers to become more sustainable and discourage the use of Groningen gas.

It added the government needs to introduce a ban on Groningen gas for large-scale users in due course, so they can prepare for it; and ensure the gas transmission systems does “everything it can” to reduce demand from Groningen gas, which is low-calorific. Industrial consumers will have to invest in the conversion of low-calorific gas to high-calorific gas.

The Dutch government plans to end production in Groningen completely by 2030 to minimise future seismic risk leaving 450 Bcm of gas in the ground – a volume worth €70 billion ($80.97 billion).

On June 25, the Dutch government said that Shell and Exxon would not submit a claim for the lost revenue following the decision to close the Groningen field.

It has brokered a deal with the companies whereby their share of the revenue from Groningen will rise from 10 to 27% in the years before closure, and they will also contribute a total of 500 million euros to strengthen the economy in the Groningen region.

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