Dutch Freeze Does not Change Groningen Plan: Ministry
The cold now gripping northwest Europe has not affected the Netherlands' plan to close down the giant swing gas producer Groningen, the new ministry for economic affairs told NGW February 9. However, the field, operated by NAM, is flowing at higher rates in order to meet residential demand at home and abroad.
A spokesman for the minister Bas van 't Wout said: "We're still on schedule to close the Groningen gas field in spring 2022. From that moment on, there will be only a minimal flow to make sure we can still use the field as a fall-back option in case of an extreme cold winter and problems in the gas system. The current cold does not affect the planned volume for this gas year, set at 8.1bn m³." However van 't Wout's suggestion that it might be turned on again suggests a little more flexibility than his predecessor, Eric Wiebes, showed.
The output target is set annually by the government, based on a formula that takes into account average temperatures and the capacity of the nitrogen plants that are needed to create low-calorie Groningen gas by injection into high-calorie gas pipes. For the October 2019- September 2020 gas year, which saw demand fall, the minstry cut the figure from 11.8bn m³ to 10.7bn m³. The out-turn figure however was 8.6bn m³.
Dutch gas marketer GasTerra, jointly owned by the government (50%) and two majors Anglo-Dutch Shell and US ExxonMobil, is the sole off-taker. It told NGW that the volumes it nominated were confidential but "obviously, we presently nominate more because of the low temperatures. How this will play out during the rest of this period remains to be seen, but we are confident that our gas system will deliver. The underground gas storage facilities contain enough gas. Groningen is still producing albeit less than before. The nitrogen plants are up and running. Let's not forget that in the history of gas production in the Netherlands NAM/Gasunie/GasTerra never have failed the market. We don't expect it to be different this time."
Gas demand has risen with the cold spell, taking prices up with it. Day-ahead gas was trading at the Title Transfer Facility at €17.9/MWh on February 3, compared with the market close value of €20.6/MWh February 8.
The former economic affairs minister Eric Wiebes, who set the timetable for Groningen, was succeeded last month by Bas van 't Wout. A child benefits scandal brought down the government. The country goes to the ballot box March 17.
Without the Groningen field gas to market, GasTerra itself will cease trading by December 2024.