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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Natural Gas Prices To Spike In Europe After Supply Disruptions Here

Natural Gas Groningen

The oil and gas fallout has been contained from Oklahoma’s major earthquake last week. With regulators ruling this week that a number of the shut-in water disposals wells in the state can be re-activated.

But, at the same time, quakes are becoming a big issue in a completely different part of the petroleum world.

The European natural gas market.

Platts reported yesterday that European natgas prices are rising. Because of a possible supply disruption from the Continent’s biggest field — Groningen, in the Netherlands.

The massive Groningen field has been in the news a lot recently. After a growing number of earthquakes around the project prompted Dutch regulators to impose a cap on natgas output this past June.

And now it appears that the reduction may not have been enough. With Dutch parliament scheduled to meet today to discuss further reductions in natgas production from Groningen.

The measures are coming as regulators continue to study the seismic data around the field. With new information showing that the previous production restrictions may not go far enough in guaranteeing public safety.

That could mean another big cut coming to European natural gas supply. Which would have a number of consequences for energy markets here.

Perhaps most importantly, it would put sustained upward pressure on natgas prices — which would help support development in other established European production hubs like the North Sea. A stronger natgas market might also push Europe’s governments to speed shale gas development, which has a hit a lull in places like Germany due to stringent environmental regulations.

The cuts aren’t a done deal yet, with the Dutch government scheduled for a debate over the issue. Watch to see what the ultimate decision is here — and for knock-on effects in natgas pricing if more restrictions do materialize.

Here’s to taming a giant.

By Dave Forest

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