Dutch Operator Reacts to Output Ruling

The Dutch government's decision to cut Groningen gas will be implemented faster than had been anticipated, according to the field's operator NAM. In a statement February 21, it said that according to a new calculation, the volume from the Groningen field in the new gas year (October 2019 - October 2020) will fall to to 15.9bn m³, which is 1.5bn m³ less than the current scheme for the reduction of gas production in Groningen.

The estimate of grid operator Gasunie Transport Services (GTS) shows that lower demand for Groningen gas is mainly due to the faster reduction of exports to Germany and the additional purchase of nitrogen. High-calorific gas can be reduced to low-calorie, Groningen-type gas using nitrogen, NAM said. 

As a result of the commissioning of the new nitrogen plant in Zuidbroek, gas production will decline from 2022 to well below the level of 12bn m³ recommended by the subsoil regulator, the state supervisor of mines. In the following period, the gas extraction from the Groningen field is completely terminated.

Analysts Timera said, in a related development, that NAM had told the market February 20 that it would close its 2.8bn m³ Grijpskerk storage facility by 2021 as it had outlived its purpose – managing Groningen production and providing flexibility at the Dutch gas hub. Timera said that decision would put  in doubt the future of Gasterra's virtual storage auctions, as it was Grijpskerk that underpinned them. GasTerra is the sole buyer of Groningen gas. NAM is a 50-50 joint venture owned by Anglo-Dutch Shell and US major ExxonMobil, who discovered the giant field.