Europe’s biggest gas field--Groningen in the north of the Netherlands--has been pumping gas for more than half a century and supplies gas to 98 percent of the Dutch population. But the field has been causing earthquakes that have become a growing concern for residents and authorities.
After years of debates and measures to curb production at the field, the Dutch government decided this week that output at Groningen will be terminated by 2030, with a reduction by two-thirds until 2021-2022 and another cut after that. The authorities have already limited production from the field because of the earthquakes, but now they have decided that the risks and costs are no longer acceptable.
“Safety perception as well as actual safety can only be guaranteed for the near future in Groningen by fully eliminating the source of the earthquake risk. The Dutch Cabinet, therefore, is taking measures for natural gas extraction from this gas field to be reduced to zero, as soon as possible,” the government said, noting that the consequences of natural gas extraction “are no longer socially acceptable.”
“According to Cabinet, ongoing natural gas extraction, combined with massive financial compensation and restoration and reinforcement operations, form an untenable situation,” the Dutch ministers say.
To cope with the new reality of natural gas supply and demand in the country with reduced Groningen gas production and ultimately without Groningen gas at all, the Netherlands is building a nitrogen plant near Zuidbroek that will convert natural gas of a high caloric value into low-calorie natural gas and that will cost US$615 million (500 million euro).
The new nitrogen plant--which adds nitrogen to the high-calorific gas sourced from the Netherlands and other countries, making the gas suitable for domestic household use--is planned to come online in early 2022, the Dutch gas network operator Gasunie said.
In addition, by 2022, all 170 industrial Groningen-gas users must have switched to natural gas of a high caloric value or to other sustainable sources of energy, the government says, adding that constructive talks are being held with 45 of those companies.
The Netherlands will also be scaling down exports to Germany, France, and Belgium.
Germany’s EWE, for example, announced plans to drastically cut its Groningen gas imports by 75 percent by the end of next year, while the Dutch government was still mulling over the specific measures to limit Groningen production and earthquake risks.
Europe’s gas networks can cope with decreased Groningen gas input, Stephan Kamphues, board spokesman of Vier Gas Transport, told Reuters in an interview earlier this year.
Vier Gas owns Germany’s 12,000 km (7,500 mile) gas pipeline Open Grid Europe.
Still, lower gas supply from the Netherlands to its neighbors would raise the overall dependence of the northwest European gas market on gas supply from other areas. Currently, most of that supply comes from pipelines from Norway and Russia.
Experts also believe that northwest Europe could see growing purchases of liquefied natural gas (LNG) from the United States and Qatar, for example.
“During 2018-30, European LNG imports are anticipated to grow faster than previously expected due to restrictions on production at the giant Groningen gas field in the Netherlands,” John Twomey, head of European gas analysis at Bloomberg New Energy Finance (BNEF), said in the Global LNG Outlook by BNEF published last week.
“In the long term, declines in Dutch and Norwegian gas production and retirement of coal capacity will push LNG imports over 104MMtpa by 2030, as Europe aims to keep its reliance on Russian pipeline gas under control,” Twomey added.
According to the Outlook, global LNG imports will set a new record in 2018, rising by 7.2 percent.
“A further surge in demand to 2030 will be driven by environmental measures in China, rising power generation in South and Southeast Asia, and a reduction in domestic gas production in Europe,” according to BNEF.
By Tsvetana Paraskova for Oilprice.com
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