Holland is a Gas Country

Excerpts of a speech by the Dutch Director-general of Energy, Telecom and Markets, Hans Vijlbrief, on behalf of the Maxime Verhagen, Deputy Prime Minister and Minister of Economic Affairs, Agriculture and Innovation, Maxime Verhagen, at the opening of Gastech.

Ladies and gentlemen,

Will the 21st century be `the Golden Age of Gas'?

That, in any event, is what the International Energy Agency believes. A leading institute that will soon be led by the previous Dutch minister of Economic Affairs, Maria van der Hoeven.

Notwithstanding the uncertainties about our energy future, there is a growing consensus among policymakers, business leaders and energy experts that the outlook for natural gas is bright.

And with good reason.

Both gas demand and supply have increased dramatically in recent years. And they are expected to increase by over 40 per cent by 2035. Of course, you all know why. In its most recent five-year plan, China aims at doubling its domestic consumption of natural gas by 2015.

Meanwhile, European gas consumption is also expected to increase substantially in the next two decades as more and more power plants rely on gas.

In the Netherlands, for instance, no less than 60 per cent of all electricity is generated by gas-fired power plants. Gas also adds flexibility to coal-fired and nuclear power plants and serves as a back-up for wind and solar energy production.

Gas prices could have soared in line with demand. But they haven't. Companies are investing heavily to meet present and future demand.

Unconventional gas might be another game changer. The United States is leading the way: it has seen a mind-boggling twenty-fold increase in unconventional gas output in the past decade. Many other countries are following its lead.

We recently granted a licence to the British company Cuadrilla Resources for test drilling of shale gas near the Dutch town of Boxtel.

In short, while demand is increasing, gas prices are becoming more competitive worldwide. The trend is likely to be further enhanced by environmental regulations. Such as stricter standards for coal-fired power plants. Or demands to reduce CO2 pollution through an improved emission trading system.

Holland is a gas country

These bright prospects for gas, ladies and gentlemen, are good news for the Netherlands - and for Europe. We have been a gas-producing country for over half a century, following the discovery of gas near the northern village of Slochteren. At that time, Slochteren was the largest field in the world; nowadays, it still is the 10th largest, but it will be depleted within a generation. Yet paradoxically, our future as a gas country is only getting brighter.

In the ten years from 2005 to 2015, no less than 20 billion euros will have been invested in the Netherlands in the exploration and production of gas, in transport infrastructure and in gas-fired power plants. In business, in politics and among the Dutch public, support for gas is widespread. We believe that gas is here to stay. And we want it to stay. For three clear reasons:

* it's a crucial sector of our economy;

* it can help us meet our climate goals;

* it can help guarantee energy supplies for the future.

Let me briefly elaborate.

First, gas equals income and jobs. Holland is the largest gas producer in the EU and 8th largest worldwide. The industry provides jobs to some 66 thousand people, represents 3 per cent of our GDP and exports and some 8 per cent of central government revenues. Gas is in every household, as almost all households are connected to the gas grid. The share of gas in the Dutch energy mix is 40 per cent - compared with an average of 25 per cent for the EU as a whole.

Second, gas is the cleanest of all fossil fuels. We are aiming for a low-carbon society by 2050, as agreed in the EU's Roadmap 2050. Sustainable energy alone will not do the trick; there is enough evidence that green energy cannot fully replace fossil fuels in the foreseeable future. But switching from more polluting fossils to gas will help us reach our short-term and long-term climate goals. Gas can help us make the transition to an almost carbon-free society in a cost-effective way.

Third, gas will help us ensure security of supply. Political uncertainty in different parts of the world remind us of the wisdom of not relying on supplies from a single source. We need to diversify our sources of supply, our supply routes and the types of fuel we use.

Gas will be available in the Netherlands and Northwest Europe for decades to come. Not only from our own fields but also from numerous foreign sources. Our regional gas market is one of the most liquid and well-functioning in the world. Clearly, gas is and should remain a central component of our energy mix.

Enhancing the role of gas: what the Dutch government will do

So, what will I do to enhance the role of gas in the future energy mix? First of all, ladies and gentlemen, the Dutch government will continue to seek cooperation within Europe and beyond. To increase the share of gas in the Northwest European energy mix. To develop the European energy market. To meet climate goals. And to improve interconnections.

I can assure you the Dutch government is highly motivated in this area: we aim to firmly anchor gas in our present and future energy system. We believe countries should focus on what they do best, and work hard to do it even better. This is why I decided to go the extra mile for energy as one of the top sectors of the Dutch economy.

Former Shell CEO Jeroen van der Veer now leads a lean and mean team that will shortly be advising me on how to strengthen the energy sector. I see three priorities we will certainly agree on.

First, develop our gas hub strategy and at the same time comply with emission targets. Second, further improve the business climate, cut red tape and stimulate investment in new technologies. Third, foster cooperation and innovation. Our commitment to strengthening Holland's position as the gas hub of Northwest Europe means that we will continue to develop a sound and stable legal and regulatory environment. It also means we will promote investment in LNG facilities and gas storage.

Gas storage allows us to meet increased demand in wintertime and if supplies are disrupted. It also stimulates trade and the further development of the European gas market. That is why I am convinced that we must push forward with the Bergermeer gas storage project near the city of Alkmaar. The government will take a decision on the 8th of April.

Fostering game-changing innovation is an essential part of our policy for the top sectors. New technologies will allow us to explore and exploit new fields and new varieties of gas. To create new applications for gas. And more economic activity. This is why I will be supporting a range of current initiatives. Like a new energy institute in northern Holland to strengthen our knowledge infrastructure. Like new and stronger energy clusters such as Energy Valley. Like exploring the opportunities for unconventional gas and LNG, such as the use of LNG by ships in the North Sea and on domestic waterways.

Enhancing the role of gas: what the industry should do.

Source: Niewsbank