Dutch Cabinet: termination of natural gas extraction in Groningen
Natural gas extraction from the Groningenveld gas field will be terminated. Safety perception as well as actual safety can only be guaranteed for the near future in Groningen by fully eliminating the source of the earthquake risk. The Dutch Cabinet, therefore, is taking measures for natural gas extraction from this gas field to be reduced to zero, as soon as possible.
The natural gas extraction level will be reduced to below 12 billion Nm3 (standard cubic metres), no later than October 2022 and possibly even one year sooner. Depending on the impact of the measures, extraction after October 2022 is expected to decrease to at least 7.5 billion Nm3 and possibly to substantially less than that. In subsequent years, it will gradually be reduced to zero.
This is the message of a letter by Minister Wiebes of the Ministry of Economic Affairs and Climate about natural gas extraction in the Dutch province of Groningen, to which the Dutch Council of Ministers agreed. The consequences of the extraction are no longer socially acceptable, according to Cabinet. The resulting earthquakes are damaging homes and other buildings and cause uncertainty among the occupants. In addition, the required reinforcements also have great consequences for the visual impression of the province. According to Cabinet, ongoing natural gas extraction, combined with massive financial compensation and restoration and reinforcement operations, form an untenable situation.
Cabinet’s stance on this subject goes beyond the advice by the SodM (Dutch State Supervision of Mines) to reduce annual extractions from the Groningenveld to 12 billion Nm3. However, at this level of natural gas extraction, the risk of severe earthquakes will remain. Cabinet’s main consideration is that of safety, which is why the extraction from the Groningenveld will be terminated. By removing the cause of the earthquakes, the level of safety in the area will improve, substantially. It will also have a positive effect on the reinforcement task: Groningen will remain Groningen. Cabinet has requsted KNMI, SodM, TNO and NEN to outline the impact on safety risks. Building structures that are clearly unsafe must be reinforced, immediately. Subsequently, in collaboration with the region, the parties will consider what the consequences could be for reinforcement operations and what measures are needed to guarantee safety. Cabinet does not intend to take any other irreversable steps until there is more clarity about the region’s safety perspective.
The termination of natural gas extraction in Groningen is a turning point with regard to regional safety. However, other social challenges will remain, such as sustainability, demographic decline and employment. Together with the region, Cabinet is working on a regional vision for the future. The Coalition Agreement includes a reservation of funds equalling 2.5% of natural gas revenues to address these issues. According to Cabinet, the success of this approach cannot be dependent on the level of natural gas extraction in Groningen. Therefore, it is considering a substantial, multiannual contribution to Groningen, independent from both gas revenues and reinforcement operations.
Measures to reduce natural gas extraction
Termination of the natural gas extraction in Groningen calls for a number of far-reaching measures, in both demand and supply. For example, a new nitrogen installation is being built in Zuidbroek, costing 500 million euros, to convert natural gas of a high caloric value into low-calorie natural gas. From October 2022, this installation is projected to save an annual 7 billion Nm3 in natural gas from the Groningenveld. In addition, the possibilities of buying more nitrogen for existing installations are also being studied.
By the year 2022, all industrial Groningen-gas users must have switched to natural gas of a high caloric value or to other sustainable sources of energy. This concerns a total of 170 companies that, together, consume around 4.4 billion Nm3 in low-calorie gas. Since last December, all of them have been contacted and, to date, constructive discussions are ongoing with 45 industrial users. Such a switch by the 8 largest users alone may reduce the demand for Groningen gas by 2.4 billion Nm3. If the 45 other companies that are connected to the national transport network would also switch to low-calorie gas, annual demand would decrease by a total of 3.4 billion Nm3.
Demand for low-calorie natural gas from Germany, France and Belgium is projected to decrease by 2 billion Nm3 per year, in the coming years. Currently, the switch by foreign users cannot be accelerated any further, but the possibility of a German power plant switching to high-caloric natural gas is currently being studied. In addition, EWE (a power plant in northern Germany) intends to lower the demand for natural gas from Groningen by around 1.7 billion Nm3, among other things by building a nitrogen installation.
Dutch households will also need to contribute to the reduction in natural gas extraction. The investment costs of the Zuidbroek nitrogen installation, for example, will be factored into the transport costs. The conversion of existing buildings to make them natural-gas-free, as announced in the Coalition Agreement, is expected to lead to a decrease in the demand for Groningen gas, over the coming years. Furthermore, Cabinet has asked participants in the climate agreement to present their proposals for a rapid phase-out of traditional central heating gas boilers. In addition, together with the household appliances sector, it also plans to stimulate private consumers switching from gas cookers to electric stoves.
Impact on natural gas extraction
Many measures could be implemented immediately, and, in the near future, an additional number of them will be elaborated further. Current extraction levels from the Groningenveld total a maximum of 21.6 billion Nm3 in an average year, and 27 billion in years with cooler temperatures. On the basis of these measures, Gasunie Transport Services, owner and operator of the national gas transport system, has constructed a timetable for the coming year, showing the minimum amount of natural gas that needs to be extracted for years with average, cooler and warmer temperatures. The timetable includes the measures that Cabinet considers sufficiently certain, such as the construction of a new nitrogen installation, the reduction in foreign demand, and the conversion of the 53 largest industrial users of natural gas from Groningen. Depending on weather conditions and the level of success of the additional package of gas-saving measures, such as the additional purchase of nitrogen and a larger number of companies switching to other sources of energy, the level of natural gas extraction may be reduced more rapidly than Cabinet’s current timetable.