In 2012, the Netherlands suffered an earthquake measuring 3.6 on the Richter scale. This earthquake was caused by one of the largest gas fields in the world, known as Groningen. This seismic phenomenon unleashed a series of events that today are crucially contributing to soaring energy prices in Europe.
That earthquake led to a movement in the Netherlands to put an end to this gas activity that is generating important changes in the subsoil and endangering its stability in certain areas of the country. After years of debate and deliberation, the Government decided to begin dismantling these facilities, which in one year produced all the gas consumed by the whole of Germany in the same period of time.
Since then, gas production in this field began to decline significantly, making Europe an increasingly dependent region on gas coming from Russia and Africa. Now, the need for natural gas to produce energy together with the inability of other sources to supply the electricity grid of the Old Continent are causing an energy crisis with a difficult solution. This is how the natural gas market works
In addition, the Government of the Netherlands has confirmed that it will go ahead with its plans to end gas production in Groningen. Production from this field will be reduced by more than 50% in the year to October 2022, which will be the last year of regular production, the government said.
It will only be extracted in extreme weather conditions
In 2019, the Dutch state announced that production in Groningen would end in mid-2022 to limit seismic risks in the region, and that gas will only be extracted thereafter in the event of extreme weather conditions, so some sites will remain on hold.
To keep these zones operational, around 1.5 bcm of gas will be extracted annually. The government believes that this area could become a storage facilities between 2025 and 2028, but they have asked regulators to analyze whether this process can be done faster.
Low storage levels
Today, not even imported gas is worth it. Dutch gas storage levels are around 60% its potential capacity, which is a cause for concern, but “not a crisis,” a member of the Netherlands government said in early October.
Britta van Boven, a board member of Gasunie, the Dutch gas network operator, believes that storage levels should be higher to cope with a harsh winter, but rising prices and supply shortages have led to this situation which also affects Europe.
“Storage levels are around 60% of capacity, which is a bit of concern as they should be almost full at the end of winter to cover cold days,” Van Boven said.
The importance of gas
Natural gas constitutes approximately 40% of the Dutch energy mix. This energy source is widely used by industrial companies at European level and also to heat millions of homes.
After decades of being a net exporter, the country has been forced to significantly increase gas imports from Russia and Norway in the face of the planned shutdown of the huge Groningen gas field.
To meet the growing demand, the Dutch and Europeans will have to compete in the jungle for the gas they need, this is to look for the necessary gas in the international market, where prices are reaching record levels due to supply shortages.
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