Groningen gas field produces 61 percent of Dutch fuel
Complainants say gas extraction has caused earthquakes
By Kelly Gilblom: BLOOMBERG.COM: Sept 10, 2015
A Dutch court is set to hear arguments that production from Europe’s largest natural gas field should be suspended because of earthquakes linked to extraction.
The Netherlands has progressively cut the amount of gas won from the Groningen field in the north amid protests over the tremors, with the Economy Ministry in June slashing this year’s output cap by 29 percent. The Administrative Jurisdiction Division of the Council of State will hear about 40 appeals from local political parties, environmental organizations and individuals against production from the area on Thursday, and possibly Friday, before making a final ruling in October or November.
Further cuts in output from Groningen would limit options for gas buyers in the Netherlands, Germany, Belgium and France, which built their networks to use the low-calorific fuel the field produces and don’t yet have the capacity to convert enough richer gas from nations including Russia. It would also be a blow to the Netherlands, which expects gas sales of 9.1 billion euros ($10 billion) this year, more than 60 percent of which comes from Groningen.
“The main impact is not likely to be immediate — although there may be some winter repercussions, especially if it’s cold — but longer term, especially post-2020,” Jonathan Stern, chairman of the Oxford Institute for Energy Studies, said by e-mail Wednesday. “It’s probably not as crucial as we thought unless the outcome is to radically reduce production.”
The court in April suspended production from one cluster of the field in an accelerated motion on the case, after which Economy Minister Henk Kamp in June lowered the 2015 cap by 29 percent to 30 billion cubic meters (1 trillion cubic feet).
Complainants say that’s not enough. They are seeking to stop gas extraction from Groningen completely or at least limit it further.
“They argue that the Minister unjustly attaches more value to the security of gas supply and the economic importance of gas extraction than to the need for a safe living and work environment,” the Council of State said on its website Thursday. “The parties also say, among others, that gas production contravenes human rights.”
Groningen generated about 10.7 billion euros in revenue last year. The field, operated by a Royal Dutch Shell Plc-Exxon Mobil Corp. joint venture that owns 60 percent of it, accounted for 61 percent of Dutch production in the first half of 2015, down from 66 percent a year earlier. Every cut of 1 billion cubic meters lowers the state’s proceeds by about 200 million euros, Dutch central planning agency CPB said in June.
Production from the deposit fell 25 percent from a year earlier to 20.5 billion cubic meters in the year to August. With at least 33 billion cubic meters of low-calorific gas needed to ensure consumers have enough supply to heat their homes and cook, according to the State Supervision of Mines, the Economy Ministry plans to make up lost production by pulling gas out of storage.
1959: Groningen gas field discovered.
1986: First tremors in Groningen province reported.
January 2014: Dutch Economy Ministry limits Groningen gas production to 42.5 billion cubic meters a year in 2014 and 2015 and to 40 billion cubic meters in 2016. In 2013, the field produced 54 billion cubic meters of gas. Also sets aside 1.2 billion euros for home repairs.
December 2014: Dutch Economy Ministry scales back gas extraction from Groningen in 2015 to 39.4 billion cubic meters in response to increased seismic activity in south of field. Opposition groups file a lawsuit to challenge this output level.
February 2015: The government-funded Dutch Safety Board concludes: “The parties concerned failed to act with due care for citizen safety in Groningen with regard to the earthquakes caused by gas extraction.”
April 2015: Dutch Council of State, the country’s highest court, issues a preliminary ruling to immediately halt production around the village of Loppersum, where the most severe earthquakes have taken place, unless absolutely necessary for security of supply.
May 2015: Council of State rejects request by local residents to suspend production from Eemshaven cluster of Groningen field.
June 2015: Dutch Economy Ministry restricts production to 30 billion cubic meters for 2015, and 13.5 billion cubic meters for the second half of 2015, based on advice given by State Supervision of Mines.
September 2015: Council of State will spend two days hearing arguments from both sides in appeal of Economy Ministry’s Groningen gas extraction decision.
October or November 2015: Court expected to announce judgment on appeal.
December 2015: Government plans to make decision on Groningen gas production in 2016.