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How Earthquakes Might Be Crimes in Netherlands

Can a natural disaster be a crime? That’s the question in The Netherlands, where an investigation has been ordered into whether Royal Dutch Shell Plc and Exxon Mobil Corp. are criminally responsible for earthquakes triggered by production at Europe’s largest natural gas field, Groningen. Some of the earthquakes have been strong enough to damage homes in nearby farming communities. Though Groningen is a mainstay of the Dutch budget, its output is gradually decreasing to protect residents.

1. Could this really be a crime?

There’s been some disagreement on that. The prosecutor had previously declined to investigate, saying there was no criminal case. But in ordering the investigation, the appeals court of Arnhem-Leeuwarden said it had grounds to believe Royal Dutch Shell-Exxon Mobil joint venture NAM had violated a law prohibiting damaging buildings to such a degree that it poses a threat to human life. Separately, a court has already ruled that in addition to paying for physical damage, NAM is partly responsible for “immaterial” damage related to the earthquakes after residents complained to a Dutch court about the emotional toll.

2. What do the companies say?

The joint venture said it was “surprised” by the court’s order, since the authorities had previously found no reason for prosecution. It said it will fully cooperate.

3. Should they be worried?

No one has been injured so far from the Groningen earthquakes, and there are signs output limitations have already cut down the frequency and severity of tremors. Additionally, a 2016 study shows prison time for environmental offenders is rare — less than 2.5 percent of environmental-crime court cases in the EU result in jail time. The punishments are usually reserved for severe, repeat offenders and even then offenders often never see the inside of a prison, and serve their time as probation or as a suspended sentence. The insurance company that covers the NAM joint venture for costs related to criminal accusations may be the one to bear the greatest burden.

4. What causes the earthquakes?

Gas is found in the pores of rocks, and in rare instances, extracting it can cause the rocks to compact slightly, causing tremors. The quakes become more severe and more frequent as the gas field becomes more depleted. Other activitiesassociated with energy development, including hydraulic fracturing, or “fracking,” also can induce earthquakes by affecting the position of rocks underground.

5. How bad is the problem?

The Groningen gas field, discovered in 1959, had its first small, nearly imperceptible tremors recorded in 1986. Since then, there have been about 1,000 earthquakes. While most are undetectable except by instruments, a 2012 tremor reached 3.6 on the Richter scale, which is similar to a heavy truck driving by and can rattle dishes and doors. It resulted in more than 2,000 property damage claims. There are about 130,000 seismic events between 3 and 4 on the Richter scale annually, or 356 a day, according to the U.S. Geological Survey.

6. What can be done?

Starting in 2014, the Dutch government has placed ever-stricter limits on gas production from the field. In the year that begins in October, production can’t exceed 21.6 billion cubic meters (762 billion cubic feet), according to a plan published in April. Later this month, the decision will be formalized. Separately, individual citizens, 19 municipalities and some environmental organizations appealed the government’s five-year output plan, prior to the latest 10 percent cut. A trial to hear evidence on the combined complaints will take place on July 13.

7. What will the new Dutch government do?

After the March 15 elections, the Netherlands still doesn’t have a new government. Prime Minister Mark Rutte, leader of the Liberal Party, is holding coalition talks with the Greens, the Christian Democrats and D66. The Groningen gas production is very likely one of the topics the parties have to reach an agreement on. Though no single party puts a specific number on the future gas production in their election program, the Liberal Party said gas production will have to be cut if independent research shows it’s necessary. Liesbeth van Tongeren, a member of parliament for the Greens, said production should be cut to 12 billion cubic meters.

8. What’s the impact on energy markets?

Dutch gas prices jumped in April when the Dutch economic ministry announced the latest 10 percent output cut at Groningen starting Oct. 1. The Netherlands and parts of Germany, Belgium and France have built their networks to run on the low-calorific fuel produced at Groningen and don’t yet have the ability to convert enough richer gas from Russia or Norway by adding nitrogen. The complexity of shutting down the field abruptly has kept NAM tied to the field, even as accusations of wrongdoing against the company have intensified. The continent’s dependency on its supply give the company a compelling reason to remain Groningen’s operator throughout its gradual closure.

The Reference Shelf

  • Why Moscow wins when Groningen output is cut.
  • A look at Groningen by Nederlandse Aardolie Maatschappij BV, the joint venture by Royal Dutch Shell and Exxon Mobil.
  • A story on Groningen tremors and impact on residents.
  • The impact of Groningen cuts on the Dutch state budget
  • A summer 2017 gas market outlook report for Europe by Bloomberg New Energy Finance

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