The Dutch transmission system operator (TSO) is tasked with advising the Dutch government annually on Groningen's production levels necessary for the country's security of supply, and as part of this task it sent an advising letter to the Dutch State Secretary for the Extractive Industries Hans Vijlbrief on Jan. 31. Groningen's exploitation triggers earthquakes and so the government aims to shut down the field in October but has already delayed the shutdown amid security of supply risks.
In May 2022, Vijlbrief announced the government delayed the field's complete closure to October 2023 to ensure the country's security of supply and said “it will be possible to completely shut down the gas field in October 2023 or 2024, once the geopolitical situation permits this,” indicating the government gave itself some margin for potential further delays. Vijlbrief's announcement was in line with Gasunie's annual advice on Groningen's production published in late March and which said to delay its closure to October 2023. All this indicates the government is more likely to again follow the latest advice and further delay the field's closure.
In a letter to the Dutch government dated Jan. 31, Vijlbrief said he will request Groningen's operator NAM to provide operational strategies for gas extraction at the field at zero level and at pilot flame level and will ask the Dutch Institute for Applied Scientific Research for a seismic threat and risk analysis for both strategies, before publishing his draft decision ahead of the Dutch parliament's summer recess which starts on Jul. 7. “At the start of next gas year, all technical conditions for terminating gas extraction will have been met, so that for the first time a decision can be made about whether or not to permanently terminate gas extraction,” his letter also says.
Instead of completely closing down Groningen in October as planned, Gasunie now advises keeping it on a “pilot flame” meaning on minimum production levels for the coming gas year which starts on Oct. 1, 2023, and ends on Sep. 31, 2024. This would mean that Groningen still produces 3.2 bn m3 of gas per year. As an indication of the Netherlands' gas consumption, the country consumed 18.4 bn m3 of gas in 2022, according to Eurostat data.
Groningen's closure remains the end goal and can be accelerated with the creation of additional capacity for gas supply, such as LNG terminals, or reduced exports to the Netherlands' neighbours as these neighbours increase their own LNG import capacity like Germany which is launching multiple LNG terminals by 2027. “Several projects are underway in this area, but the feasibility of these projects is still unclear. With all the uncertainty and developments on the gas market, we are therefore unable to give you any advice on a new closing date for the Groningen field at this time,” Gasunie said in its advising letter of Jan. 31.
The complete cessation of Russian pipeline gas supplies coupled with the uncertainty on the international gas and energy markets means there are still several scenarios where the Netherlands’ security of supply cannot be sufficiently guaranteed next winter without the backup availability of Groningen. Russia cut off pipeline supplies to the Netherlands as well as some regional neighbours like Germany and France last year. These countries have turned to LNG to help replace these lost supplies.
The Netherlands expanded the regasification capacity of its 8.8 mtpa (12 bn m3) Gate import terminal to add 4 bn m3 of interruptible capacities and launched a second terminal, the 5.9 mtpa Eemshaven, in September last year. Dutch LNG imports almost doubled year on year to 11.94 mt last year, Kpler data show. In the first month of 2023, Dutch imports rose by 46% year on year to just over 1 mt.
But increased LNG import capacities are still not enough to fully replace the lost Russian supplies, Gasunie noted in its advising letter. It is worth noting that Eemshaven has not been able to run at its full capacity and has been offline since Jan. 13 due to a heat connection failure. It is expected to resume operations at a third of its capacity on Feb. 6 - Mar. 1.
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