Shell, Exxon Challenge Lower Groningen Cap

NAM, the Dutch Shell-Exxon gas production joint venture operator, said June 28 it has lodged an appeal to the Netherlands highest administrative court, Raad van State, against a ministerial decree that further reduces the production cap at the Groningen field by 10% from this October.

It said the Raad van State (Council of State) is expected to hold a hearing on the matter July 13-14.

NAM operates the field with a 60% interest while Dutch state-owned EBN is its 40% partner. Last year the government agreed to cap the country's largest field at 24bn m³/yr for the 12-month gas year starting October 2016 and also the four subsequent ‘gas year’ periods to September 2021.

But in late May, following more advice from its geologists, the government adopted an amendment to that 2016 ruling, calling for the cap to be reduced to 21.6bn m³/yr – just 40% of its 2013 output – in each of those four gas years to September 2021.

NAM said June 28 that “with the amendment decree, the minister appears to be abandoning the previously accepted security frameworks. That creates fundamental ambiguity. Therefore, NAM has asked the Council of State to assess the minister's decision on this point."  NAM director Gerald Schotman argued that his company believes the 2016 production plan meets all safety standards.

In recent years, the government has officially accepted that Groningen gas production caused earth tremors which, because they were only 3km sub-surface, were quite disruptive. The worst tremor, of 3.6 magnitude, occurred August 16, 2012 near the village of Huizinge. In recent years, residents pressed unsuccessfully for all Groningen gas production to be halted; but claims are still being made for damage to property and psychological distress.

Mark Smedley