Natural gas production reduced and funds earmarked for Groningen

Natural gas production in Groningen province will be reduced over the next three years.  And over the next five years, a total of nearly €1.2 billion will be made available to reinforce homes and other buildings, strengthen infrastructure, and improve quality of life in the region.  Further investments will also be made in the region's economy.  An agreement has been made for details of the measures to be further elaborated together with provincial and local government leaders in Groningen, and the close involvement of area residents in the process will also be promoted through a "dialogue table".

Dutch Minister of Economic Affairs Henk Kamp announced this decision today in Groningen.  "To ensure the safety of those living above the Groningen natural gas field, we are reducing production in those areas most at risk and limiting total production levels," the Minister explained.  "We are taking measures to prevent damage where possible and to streamline the process of damage compensation.  And in partnership with stakeholders, we will improve economic prospects in the region and boost quality of life."

The decision was made in response to Dutch petroleum company NAM's natural gas extraction plans for the area over the next few years, and is based on fourteen studies and numerous recommendations, including those of the State Supervision of Mines (Staatstoezicht op de Mijnen, or SodM).  

Production in those areas most at risk (near Loppersum) will be reduced by 80% over the next three years.  In addition, limits will be placed on total natural gas production from the Groningen field for 2014, 2015, and 2016, with limits set at 42.5, 42.5, and 40 billion m3, respectively.  Production levels in 2013 reached nearly 54 billion m3.  The Government's decision to impose limits is informed by recommendations made by SodM.  Production will not be halted entirely in drilling locations near Loppersum to ensure a sufficient supply of natural gas during periods of peak demand (i.e. the coldest days). 

A sum of €850 million will be earmarked for damage prevention and repairs to homes, other buildings, and infrastructure.  By the end of next year, NAM will inspect more than 15,000 homes to reinforce those most susceptible to damage.  Another €15 million will be set aside in a special fund, to be used in special circumstances to cover overdue maintenance and property buy-ups.  Dikes will be reinforced as needed.  NAM is making another €10 million available for the preventive reinforcement of homes and other buildings yet to be built. 

Over €180 million will be made available for measures to boost quality of life in the region and improve regional economic perspectives. In terms of the quality of life, this will include a restructuring of the offer of housing and shopping facilities, the roll-out of high speed internet in rural areas and stimulating the local generation of renewable energies. The improvements to regional economic perspectives will be undertaken by an ‘Economic Board’, comprising entrepreneurs from the region.

Homeowners qualify for measures to increase the value of their property. This includes insulation and other energy-saving measures, for which €125 million will be made available in the next five years. The focus here is on property in the risk areas. Home sellers faced with a decrease in the value of their property due to the earthquakes will qualify for compensation, if the right conditions are met. Details will be elaborated by the Nederlandse Aardolie Maatschappij b.v. (NAM).

The abovementioned measures amount to almost €1.2 billion for the next five years and will be the responsibility of NAM (with Groningen province contributing €57.5 million). This will have a negative impact on the national budget, as the costs incurred by NAM will be deducted from natural gas revenues the government receives. For the period 2014-2018, this will amount to an annual total of €144 million. Cutting gas production will also reduce natural gas revenues. On the basis of the most recent estimates, this will amount to €0.7, 0.6, and 1 billion for 2014, 2015 and 2016 respectively.