Page 6 - EurOil Week 31

EurOil COMMENTARY EurOil

Shell, Exxon rule out using

Groningen as back-up

The pair want to call time on Groningen after years of government-mandated

cuts, instead of keeping the giant field for reserve supply

NETHERLANDS THE operator of the Netherlands’ giant Gronin- in gas demand occurs. This is despite the coun-
gen gas field, the NAM joint venture between try having access to piped supplies from Russia
WHAT: Royal Dutch Shell and ExxonMobil, has voiced and Norway, as well as LNG imports at the Gate
Shell and ExxonMobil its opposition to using the deposit as a back-up terminal in Rotterdam.
oppose keeping source of supply in 2022. NAM argues that Groningen would still need
Groningen as a back-up The Dutch government had asked the con- to produce between 2.4and 5.8 bcm per year of
gas supply source. sortium to ensure the field was ready to supply gas in order to remain on standby, however.
gas in case of a cold snap. But NAM said in a Running the field as a back-up source would be
WHY: statement that this plan was both “undesirable “similar to idling a car”, it said, therefore requir-
The pair argue that it and unnecessary.” ing output to be kept at a minimum level.
is unfeasible to keep Groningen was launched in the early 1960s Groningen’s production has been capped at
Groningen offline and in and flowed around 100bn cubic metres per year 9.3 bcm for the gas year commencing on Octo-
reserve. of gas during its first decade of operation. But ber 1, down from 11.8 bcm in the current year.
the government in 2014 ordered NAM to start The government estimates that only 3 bcm of
WHAT NEXT: reducing supply after years of complaints that supply will be necessary in 2021-2022.
Dutch gas producers face production activities were causing earthquakes. NAM added that the field’s facilities were not
market and regulatory Last year it brought forward the deadline for designed for back-up supply and could there-
challenges, and some the field’s complete closure from 2030 to mid- fore prove unreliable. The consortium could not
see hydrogen as a new 2022. The new deadline will coincide with the take any responsibility for possible disruptions,
opportunity. start-up of a facility in Zuidbroek that will greatly it said.
increase the Netherlands’ capacity to convert A decision on using Groningen as a safeguard
imported high-calorie gas into low-calorie sup- against supply risks could only be taken if a
ply, as produced at Groningen. “thorough quantitative analysis of all additional
Even so, the government is concerned that risks, side effects, costs and benefits” supports
without Groningen, the Netherlands could be this, NAM said. This analysis should take into
vulnerable to supply shortages if a sudden spike account EU standards on how much capacity is

P6 www. NEWSBASE .com Week 31 06•August•2020