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How Europe’s Monster Gas Field Turned Into a Monster Headache

By Kelly Gilblom and Fred Pals: 13 July 2017

  • Judge to consider demands to close Europe’s largest gas field

  • Groningen has contributed almost 300 billion euros to budget

  • What was once a blessing is now an expensive curse

  • Officials are also considering criminal charges against NAM executives

Ebe Treffers’s dog was antsy for hours before the boom sounded and the house began to shake, scattering dishes across the kitchen floor.

Like other residents of the Groningen region near The Netherlands’ North Sea coast, the retired art teacher was used to the subtle tremors caused by decades of extraction at Europe’s largest gas field. But nobody was prepared for the magnitude 3.6 earthquake that struck after dark on Aug. 16, 2012, assured by both state and project officials that there was nothing to fear.

Half a decade later, Treffers is still reeling. His claim for damages to his brick home, which he had to gut and retrofit with quake-resistant framing, is one of 80,000 that have been filed with the company tapping the underground riches, a venture between Royal Dutch Shell Plc and Exxon Mobil Corp. known as NAM.

“I think people underestimate what it does to a person,” the 68-year-old pensioner said. “It determines your life, for years now.”

It took officials more than a year to start curbing output at the field to prevent what was once unforeseen from happening again, turning a major fuel exporter into a net importer nearly overnight. But even those cuts aren’t enough for Treffers and an increasing number of his compatriots. On Thursday, a court will hear more than 20 objections to the government’s reduction plan from residents and environmental groups, many of whom want production banned entirely.

Rudderless in The Hague

While it’s not clear when a court decision will be reached, a ruling for further cuts may add pressure to the four political parties that are trying to form anew government in The Hague, as less output means lower budget revenue. NAM itself filed a legal complaint to force clarity from regulators on safety standards under the new operational guidelines.

It’s hard to overstate the impact the quake has had, not only on the local community but also on the overall economy, as well as wider European Union efforts to cut reliance on Russian gas, which surged to an all-time high in 2016. Prior to the 2012 quake, natural gas accounted for as much as 4 percent of gross domestic product, contributing almost 300 billion euros ($343 billion) to state coffers and funding one of the world’s most generous social safety nets.

Economists even have a special term — Dutch Disease — for how the field’s discovery in 1959 affected the country. It refers to the downsides of sudden inflows of foreign currency, which can drive up the value of local money, hurting exporters and discouraging the development of other industries. Still, on balance, the massive deposit was widely viewed as a godsend.

“Groningen gas has always been a source of pride to the Dutch,” Prime Minister Mark Rutte said in the region last month.

Condemned Housing 

Those days are gone. What was once a blessing is now an expensive curse. Aside from slashing the amount of gas NAM can pump, the state has set aside 1.2 billion euros to compensate residents, including for emotional damages, and the final bill will almost certainly swell. Officials are also considering criminal charges against NAM executives for posing a threat to human life, which would be a first in the Netherlands, where Shell is triple the size of the next biggest company.

Pieter Stapel, 62, is among the legions of residents who’re still seething over the way their concerns were ignored by both the government and NAM — even after the extent of the damage became apparent. The old church that Stapel bought to start the theater and music school he always dreamed of running was jolted off its foundation and declared unfit for human occupancy.

On a visit five months after the quake, Economy Minister Henk Kamp was the first senior official to survey the damage. A year later, when Kamp returned to announce the first output cuts, police had to stop an angry crowd from pelting a building he was in with eggs. The episode was aired on television, raising national awareness of the community’s plight.

While NAM has created thousands of jobs, the payments the government is starting to make are the first direct benefits most of the residents of this low-income community have ever received from the gas under their homes.

‘Tipping Point’

Thierry Bros, a senior research fellow at the Oxford Institute for Energy Studies, predicted that if this week’s hearing doesn’t result in Groningen’s shuttering, local residents will keep fighting until they force a closure.

“The fact the state compensated for the tremor was the tipping point for the whole thing,” Bros said from Paris. “People thought: ‘Why should we be put at risk if we only get something out of it when something bad happens?”’

The government’s economy ministry said it couldn’t comment in time for the publication date of this story.

Hein Dek, a spokesman for NAM, said that the company has always kept the public updated on the latest scientific understanding of earthquakes and that it’s up to the government to alleviate the region’s social problems.

“Despite its rich history, the Groningen countryside is marked by persistent low incomes, unemployment and an aging population,” Dek said by email. “While NAM is very willing to help in finding these solutions, it is incumbent on Dutch government authorities to take the lead in addressing these issues.”

For Hiltje Zwarberg, one of thousands of Groningen residents forced to abandon their homes, that sounds like more buck-passing.

“I’ve talked to half of parliament, mayors — everybody agrees this is a drama, but my situation hasn’t changed one bit,” said Zwarberg, 59. “Nobody seems to be able to force a breakthrough.”

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