NAM Ready to Reduce Groningen Output (Update from Regulator)
Update from Dutch regulator at end
The largest Netherlands gas producer NAM, a Exxon-Shell joint venture, has admitted that it is “technically sensible” in the wake of this week’s 3.4 magnitude quake to further reduce Groningen production.
After last year contesting ministerial plans to cut output, NAM has now come up with four ‘control measures’ including the one above, in a report submitted January 10 to the state mining regulator (SodM). The report from NAM is a requirement within 48 hours of such an event. NAM is operator of the giant Groningen field with 60% equity, in production since 1963, while Dutch state holding EBN holds the remaining 40% equity. It did not advise by how much Groningen production should be further reduced, below the current 21.6bn m3/yr cap.
The other measures that NAM says should be included for the consideration of economy and climate minster Eric Wiebes are shutting production in the Loppersum area (Overschild, De Pauwen and Ten Post clusters); in the Eemskanaal cluster (particularly to reduce quakes to the northeast of Groningen city); and in the Leermens and 't Zandt clusters.
NAM said a combination of the four measures, on top of the existing interim 10% production cut to 21.6bn m3/yr since October 2017, are expected to enable it to achieve the safety target within acceptable parameters.
It noted however that the Zeerijp 3.4 tremor on January 8 was within the parameters of an official ‘Induced Seismicity in Groningen - Hazard, Building Damage and Risk Assessment’ report of November 2017 which said that the probability of an earthquake in 2018 with a magnitude higher than 3.6 (the strength of the August 2012 Huizinge quake) is estimated at no more than one in six.
A 3.4 magnitude quake may not sound significant by global standards, but the shallowness of the event – just 3 km sub-surface – means that it damages hundreds of homes and other buildings. Wiebes visited the Groningen area January 10 and held talks with local government officials.
Update January 12: The state mining regulator SodM issued a statement January 11 describing the measures outlined by NAM as "a step in the right direction" but added they were not yet detailed enough.
"NAM ... proposes to reduce the annual production of the Groningen field, but does not state specifically how much with it. SodM is going to investigate how high this reduction should be and whether there are specific clusters where the production reduction has the most effect," the regulator said.
It is SodM's obligation to provide advice to minister Wiebes on what action to take following the Jan.8 quake, and the regulator said it would issue such advice "within two weeks with a view to the safety of the residents of Groningen." It said that reducing gas production may have consequences for the supply of gas to companies and households, but said its advice would not take this into account "but will only be based on safety considerations. It is up to the Minister to weigh up security and security of supply if necessary. The minister ultimately decides what must be done with gas production in Groningen."