Neptune Hails Dutch Support for Offshore

Dutch offshore gas production might be in a state of managed decline – output forecasts for the province are all pointing the same way, especially in today's market – but Neptune Energy's country head Lex de Groot is optimistic that there is still life on the continental shelf for years to come. And further ahead, gas production can give way to carbon storage and other means of reducing emissions.

Neptune's Dutch assets, including transport facilities – it is the biggest offshore producer there – can be brought into play in the energy transition, extending the company's business, he told NGW in an interview early April. The company announced a carbon intensity reduction plan April 6.

Transporting hydrogen might be a part of that future, or gas-to-hydrogen  that will produce CO2 for injection. This will help the country meet its national emission reduction targets. There are already some major Dutch projects, like Porthos and Athos, but there is enough CO2 to go round, he says.

And at last there has been some good news for the offshore, he said: "Politically, gas has cleared one obstacle: the Cabinet has stated on our national broadcaster that gas is better for power generation than coal. There are still three coal-fired plants in the Netherlands but the government is considering closing them; rumours are that one might have to close this year.

"It is not news that gas is better than coal; but it has never been stated like this. And then, yesterday [April 2] a resolution was approved in the House of Representatives to support and continue to develop safe offshore gas production in the Dutch part of the North Sea.

"A huge majority of the parties – even GroenLinks (the Dutch Green party) – was in favour. Securing the support of this party was a major step and acknowledgement, since so far they have opposed all carbon – not only high carbon sources of energy. This is a good light at the end of the tunnel for gas.

"It still needs parliamentary approval but we have been talking to members of parliament about the importance of Dutch offshore gas and therefore the marginal field incentive for new investments. It was first announced two years ago, but so far it has not been implemented. There is also a state aid issue with the European Commission, and talks are continuing," he said.

The incentive will not apply to onshore production, where no new production licences will be granted. However, the major producer NAM is drilling infill wells at old licences to test if more gas can be produced commercially.

Neptune still sees “many opportunities” for increasing output de Groot said, and has invested in well-workovers and integrity work to make infrastructure future-ready. It drilled two wells last year, in order to maintain production and extract more from its fields than was planned at the start of their active life.

"Last year we more than replaced production, adding 135% to reserves. We also have been awarded a new exploration a licence for block F5, to work on. So we aim to produce for longer safely," he said, "This year we are aiming to produce the same amount as last year (about 21,700 barrels of oil equivalent/day). If we look further, I cannot talk exactly about growth numbers.

"But there is even the possibility of acquisitions as other companies struggle with the low price. We are keeping our ears and eyes open and looking for good opportunities for distressed companies," he said.

Neptune sells its gas to the big Dutch utilities, some at a discount to the title transfer facility. Some of it is hedged at higher prices than the Dutch hub, where prices have plummeted since last year. It also does some gas processing and transport for third parties, including gas from Wingate on the UK-Netherlands border but this is a minor part of its operations.