Groningen to terminate gas production

Edition 29 May 2018, by Phoebe Potter

For Groningers it has been a long time coming. Eric Wiebes’ phone call to Eelco Eikenaar at the end of March to tell him that gas production from the Groningen field will be completely stopped was met with disbelief by the SP representative. In a statement to the rest of the country later that day, Wiebes (the Minister of Economic Affairs and Climate) laid out a decisive commitment to the Groningen people. Where previously the government has been reluctant to firmly come to the defence of the residents of the area, Wiebes’ statement firmly put the safety of Groningen first. Having had to put up with years of earthquakes caused by the extensive gas drilling, this decision was met with palpable relief from Groningers.

‘Gas production from the Groningen field will be completely terminated. Only by removing the cause of the earthquake risk can the safety and safety experience in Groningen be guaranteed in the foreseeable future,’ Wiebes affirmed in the March statement. ‘The government is therefore taking measures to completely reduce gas production as quickly as possible.’ Of course, ‘as quickly as possible’ does not mean that gas drilling is going to cease tomorrow, or even within the next couple of years – in part because of the success the gas drilling company, NAM. The Dutch Petroleum Company (or Nederlandse Aardolie Maatschappij BV) – which is a joint venture between Shell and Exxon ,first found natural gas in the Netherlands in 1948. It was the discovery of the gas field near Groningen (Slochteren) in 1959, however, that guaranteed its longevity. Containing nearly 3 billion cubic metres of gas, it is one of the largest natural gas fields in the world.

The early decades of drilling went from success to success. Between 1963 and 1965, 1200 kilometres of gas pipeline were installed. In fact, within ten years of the first drilling in the 1963, three quarters of the Netherlands was connected to Groningen gas, as the Dutch flocked away from coal in preference of this cleaner energy source. Throughout the 1970s, 80 billion cubic meters of gas were brought up every year – proving extremely lucrative for the Dutch government, which is a 40% stakeholder in the field. By now, out of 8 million Dutch households, 7 million are connected to the gas network in Groningen. Because of this, suddenly switching off the gas taps would cause an impossible disruption. As well as the domestic pressure, the Netherlands has obligations to deliver gas abroad, primarily to France and Germany, until 2030. Though the Netherlands does already import some gas from Russia and Norway to keep up with both foreign and domestic demand, this cannot simply be increased to bridge the gap as the Netherlands works to phase out gas entirely.

The only gas possible to import is different to the gas found at Groningen and must be treated with nitrogen before it can be used in the Netherlands. Building enough processing plants to use this as a temporary substitute to Groningen gas would be an incredibly expensive investment (around 2 billion euros) and take years to complete – not a viable option considering the commitments both at home and abroad. Wiebes will be introducing various measures to help with the phase-out. These will include a smaller nitrogen processing plant, costing around 500 million euros and set to result in a saving of 7 million cubic meters of gas from 2022. The 170 companies that use the most gas in the Netherlands will be made to switch alternative energy sources by 2022 and foreign contracts are being phased out. For new houses being built in the Netherlands, central heating boilers and kitchens will no longer be fired by gas, and existing houses will be converted step-by-step where it is possible to do so. These measures will hit households financially to help pay for the transition, and the average gas bill is expected to rise by two euros per year. All of this, Wiebes says, will guide towards his final aim: a reduction of gas extraction to fall below the level of 12 billion cubic meters by October 2022, and down to zero in the following years. This timeline, apparently, has been drawn up conservatively and factors such as favourable weather conditions and companies’ commitments to a switch to other energy sources may well speed up the process. The government has suggested the process could be complete up to a year earlier if things go well.

The reduction in drilling cannot come soon enough for Groningers. Since the 1990s, earthquakes caused by soil subsidence from the gas extraction have plagued the area. Just 2018 alone, there have been over 1100 earthquakes documented, a few dozen of which have been recorded at over a force 3 on the Richter Scale – still classified as minor but noticeable and felt by people as they happen. A particularly strong quake at Zeerijp in January of this year, which was marked at 3.4 on the Richter Scale, brought tensions to a boiling point. Anxieties over the damage and disruption caused by the earthquakes has not been helped by the handling of the situation. Despite all agreeing that Groningers were entitled to receive compensation for the damage done by results of the earthquakes, residents have not yet benefitted from these payments. This is because no damage protocol currently exists for the area. A damage protocol should provide a handbook for the settlement of damage caused by the quakes – setting out who is eligible for reimbursement, how and where they can report the damage done and who handles their claim.

Though originally a damage protocol was in place, it was met with heavy criticism when it was understood that it would be NAM’s own contractors who would assess the damage. Concern over the gas company’s responsibilities led to calls for this process to be undertaken by an independent body. These demands were acknowledged but have thrown the compensation process into disarray. The different authorities, agencies and action groups involved in the Groningen affair have not yet been able to entirely agree on the content of the damage protocol and residents are left in uncertainty in the meantime. The Safe Living Center (or Centrum Veilig Wonen) should have started working on a new protocol in July of 2017, but residents are still awaiting its results. Claims taken out since April last year have not been settled and almost 3000 cases await processing.

Given the years of uncertainty in Groningen, the decision has been received well by politicians in the House, despite the fact a total figure its cost will not be communicated until the Spring Memorandum (before June 1st). Dilan Yesilgöz (VVD) spoke of a ‘turning point for Groningen’ while Rob Jetten (D66) called it a ‘historical decision.’ Liesbeth van Tongeren, a GroenLinks politician, pushed to see guarantees for the process whilst sending her congratulations to Groningers on their victory. While Van Tongeren may await these guarantees, Wiebes’ detailed letter to the House over the process certainly suggests a strong commitment to a win for the Groningers.