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SAFETY CONCERNS As more than 75% of the reserves have already been extracted, the pressure in the sandstone layer of the Groningen gas field has been decreasing; which in turn has increased the chance of earthquakes in the region. The first seismic event occurred in 1991 with a magnitude of 2.4 on the Richter scale but the public opinion really started to change in 2012 when a stronger earthquake of a 3.6 magnitude caused some material damages in the surface.


In response to growing safety and material concerns about seismic activity, a number of annual production caps were implemented and continuously revised from 2014. Following an unusually strong earthquake in January 2018, the Dutch government announced a plan to phase out gas production of the Groningen field by 2030. In September 2019, the Economy Minister Eric Wiebes mentioned gas production could be phased out by 2022 as additional capacity to substitute Groningen gas was available.


ALTERNATIVES The main challenge for the Netherlands and the other European countries importing Dutch gas has been to find a different source of Energy to substitute the Low Calorific gas (L-gas) of the Groningen field.


The first alternative is to import gas from exporting countries such as Norway and Russia. However, gas imported is generally High Calorific gas (H-gas) and therefore would require conversion to L-gas (usually through dilution with nitrogen). The Dutch government is already going in this direction as three nitrogen generation plants are currently under construction in Zuidbroek near Groningen.


However, importing gas by pipeline such as LNG would contain a non-negligible transport cost and also includes a significant environmental cost as additional gas is used and lost during transportation.


WHEN IT WAS DISCOVERED, THE GRONINGEN GAS FIELD WAS THE LARGEST IN THE WORLD. THE FIELD WAS COVERING AN AREA OF 900KM2 WHICH IS COMPARABLE TO THE LAND AREA OF NEW YORK CITY AND PARIS COMBINED.


The second alternative would be to convert the end-user appliance to H-gas specifications. On the short term, this transition would be more expensive than converting H-gas to L-gas. However, on the long term, this strategy may be more cost effective. Belgium, France and Germany have already started in some degree to switch their L-gas system to H-gas system.


The third alternative would be to produce more gas from smaller local fields but they are generally more expensive to explore and drill. More than 250 onshore and offshore smaller gas fields have been developed in the North Sea after the 1973 oil crisis. However, most of those additional reserves available are now in depleted fields in which production have been declining since its peak in 2000. Moreover, those reserves represent only a small portion of the remaining gas available in the Groningen field and therefore cannot be considered as a long term replacement as production from mature fields declines faster than new fields being discovered or developed.


Another alternative would be to accelerate the transition towards green energy by increasing solar photovoltaic and wind capacity or producing green hydrogen from renewable energy.


CONCLUSION The Dutch energy market is now at a turning point. 60 years after being discovered, production from the Groningen gas field will cease at some point in the near future. After being a gas exporter for decades, today the Dutch energy market is reliable on exportation to remain balanced.


Mickael Soussant E: mickael.soussant@admisi.com T: +44(0) 20 7716 8073


9 | ADMISI - The Ghost In The Machine | November/December 2019


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