Page 16 - EurOil Week 25

EurOil POLICY EurOil

Some gas users not ready for

Groningen shutdown

NETHERLANDS THE staged shutdown of the Netherlands’ pro- only came into force last week. The lengthy
lific but earthquake-causing Groningen gas field processes of obtaining permits and developing
Groningen is due to continues, but some industrial gas users are not potential mitigation measures are also to blame,
close completely in ready for its supply to dry up. GTS said.
2022. Dutch transmission system operator (TSO) The law bars consumers that have used
GTS warned this week that four of the Neth- more than 100mn cubic metres of low-calorie
erlands’ nine industrial gas consumers that gas in at least two of the past three gas years
use the low-calorie gas that Groningen flows from receiving any of this supply after Sep-
will not meet the October 1, 2022 deadline for tember 2022. They will have to adapt to either
converting to high-calorie imported gas. Three high-calorific imports or renewable energy
of the users are not expected to complete the sources, but all of those affected will be asked if
switch until the second quarter of 2023, GTS they want their facilities connected to the new
said, while the last will not do so until the third high-calorie grid.
quarter of that year. Small delays can be significant, as consum-
Groningen, operated by a joint venture ers cannot make the switch in winter, GTS said.
between ExxonMobil and Royal Dutch Shell, However, the operator noted that their failure to
started up in the early 1960s and produced meet the deadline would not result in delays to
around 100bn cubic metres per year of gas dur- Groningen’s wind-down, as the users were rely-
ing its first decade of operation. But after years of ing almost entirely on converted low-calorie gas.
complaints that production activities were caus- Exxon and Shell were naturally somewhat
ing earthquakes damaging buildings and putting displeased by the Netherlands’ decision to bring
lives in danger, the Dutch government in 2014 forward Groningen’s shutdown by eight years.
ordered the field’s operators to start reducing It was revealed in late May that the pair were
output. planning to file an arbitration claim against the
In 2018, Shell and Exxon were told to halt government in order to get compensation. The
extraction completely by 2030, only for the gov- exact date of Groningen’s closure has not yet
ernment later to bring forward the deadline to been agreed.
2022. Groningen’s output in the gas year start- “Negotiations with the state are ongoing
ing October 1 2020 has been capped at 9.3 bcm, to determine how the accelerated close-down
down from 11.8 bcm in the current year. should be managed,” Shell said back in March.
Industrial users have fallen behind in prepar- “[The] joint venture partners will review its
ing for the field’s closure because of delays to a bill financial robustness against different scenarios
becoming law that requires the switch, GTS said. for Groningen’s liabilities and costs, with the
That bill had been expected to be passed and objective that the venture can self-fund any addi-
introduced at the start of this year, but instead tional expenses and claims.” ™

P16 www. NEWSBASE .com Week 25 25•June•2020