Bloomberg Gadfly: Exxon's Dutch Gas Gag

If you’ve never been to Groningen, it’s a pleasant college town in the northern Netherlands. It also happens to share its name with one of the world’s largest natural gas fields. Tourists are best advised to focus on the scenic bicycling routes. Exxon Mobil is more attuned to what lies beneath.

The region around Groningen has a problem that is becoming familiar in places like Oklahoma: earthquakes brought on by gas production. On Wednesday, a Dutch court ruled that the production cap on the giant field should be reduced temporarily by another 18 percent, to about 950 billion cubic feet for the year that started October 1. Altogether, the cap has been cut by about a third since 2014.

That’s a problem for Exxon, which owns 50 percent of the joint venture that operates the Groningen field (its partner is Royal Dutch Shell). And it’s not just about the constraint on output. The market’s reaction is also troubling -- or rather, the fact that the market didn't react at all. U.K. natural gas futures were actually lower on the day.

Read the full article HERE.