Modern global society is steeped in the idea of trade-offs, the notion that one must suffer losses to obtain desired gains. This prepares the way for disingenuous leaders to explain why sacrifices are necessary to reach supposedly exalted goals. Usually, those sacrifices are made by the powerless in society; they are certainly not made by the leaders who call for sacrifices nor by the wealthy and powerful who benefit from them.*
This coming fateful winter season in Europe is likely to include a lively debate about whether the Dutch should make a perilous trade-off on behalf of an energy-starved Europe. So far, the Dutch have been firm about closing one of the world's largest natural gas fields, Groningen, no later than 2024—even in the face of severe European gas shortages resulting from the loss of gas from Russian pipelines.
The reason for that firmness has to do with the damage earthquakes are inflicting on the buildings located above and around the field, earthquakes related directly to withdrawal of Groningen's gas. In the northeastern part of the country, some 1200 earthquakes have severely damaged 27,000 buildings to the point that they are uninhabitable. About 3,300 structures have been demolished. A 2015 study reported that 152,000 homes need to be reinforced. As a result the government has been reducing gas withdrawals to mitigate the problem with an eye toward closing the field. Closing the field also comports with the government's greenhouse gas reduction goals.
But, will the Dutch be able to withstand calls for increasing production from Groningen as the European winter arrives?
The Dutch government has sort of left itself an out saying that production could be resumed after a planned 2024 permanent shutdown as a last resort if Dutch households were faced with running out of natural gas. It's worth noting that Groningen still has large reserves—some 450 billion cubic meters of gas (15.8 trillion cubic feet) which is the equivalent of more than one year of European Union consumption. But, the field, which opened in 1963, is now more than 80 percent depleted. However, even at the reduced rate of production set back in 2015 of 27 billion cubic meters per year, that gas could help supply Dutch households and export customers in other countries for another 16 years. But, production has been capped at 2.8 billion cubic meters for the coming year in advance of the planned shutdown in 2024.
High natural gas prices are affecting the Netherlands just as they are most other European countries. The sprawling Dutch greenhouse industry, for example, which uses a large amount of gas to heat its greenhouses, is under extreme financial pressure. Bakeries, too, use a lot of natural gas for obvious reasons, and many are close to failure as energy bills approach 10 times what bakeries paid just two years ago. And, Dutch households which are filled with appliances and furnaces that burn methane—installed during the era of cheap gas—are suffering as well. (I previously wrote about the Groningen field's problems in 2017 in a piece entitled "The Dutch love affair with natural gas: A cautionary tale for the United States?")
Not surprisingly, the Netherlands is teaming up with Germany to explore for more natural gas in the North Sea starting in 2024.
European Union ministers are meeting in Prague this week to discuss how to address Europe's energy crisis. Will the Netherlands ultimately give in to calls for increasing natural gas production? Will the country forever turn its back on a resource worth €750 billion as of Friday's market close?
The coming winter will test Dutch resolve.
By Kurt Cobb via Resourceinsights
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