Groningen Gas Demand to Fall from 2020

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A natural gas pipework stands above ground at an onshore gas extraction site operated by Nederlandse Aardolie Maatschappij BV (NAM) in Ten Post, Groningen, Netherlands, on Thursday, Jan. 23, 2014. The Netherlands will spend 1.2 billion euros ($1.6 billion) to compensate for damaged houses and buildings after temblors linked to extraction of natural gas in the Groningen province led to a public backlash. Photographer: Jasper Juinen/Bloomberg

By Bala Chambers and Masha Tsnompilantze

Groningen’s demand for gas will fall due to the decision of the Dutch Parliament to reduce gas extraction in order to prevent further earthquakes in the province.

This decision is going to affect the national budget as the Government is planning to invest €1.2 billion in compensating people, whose homes were damaged by earthquakes caused by the nearby gas extraction. Moreover, the economy of the Netherlands is highly reliant upon gas production. It sits 8th on a global footing for gas production, according to International Energy Agency.

The income from the gas sector adds €13 billion per year to the national budget, an amount that will be difficult to reach, after the decision to reduce gas extraction.

There have been around 1,000 earthquakes as the result of gas extraction since 1986. Tremors have registered from 0.1 to 3.6 on the Richter scale, damaging local homes and businesses which are situated close to the gas plant.

Groningen is a lead supplier of gas, contributing €10 billion per year to the national budget alone, which it provides on a domestic level, but also on a European and global scale.

The Government expects this leading position to be shaken by such political decisions, as they look to prevent further destruction to local residents.

Pim van Strien, the spokesman for the Dutch Ministry of Economic Affairs, declined an interview due to the delicate nature of the matter.

Gas is an important source for heating and providing electricity, but the process of gas extraction can be detrimental to locals and local environments. Causal links between gas extraction and earthquakes were initially denied by leading gas companies. Both Shell CEO Marjan Van Loon and Exxon Mobil CEO, Rolf de Jong, who jointly oversee operations from Nederlandse Aardolie Maatschappij (NAM), recently expressed regret over past events.

At the beginning of this year, the Ministry of Economic Affairs reduced the gas extraction in Groningen, which decreased the frequency and magnitude of tremors by half compared to the previous year.

“It’s a complicated process. There is an argument on whether the gas reduction is enough, many people have seen their homes being damaged as the drilling took place”, said Energy Systems Analysis professor, Andre Faaij.

The Netherlands is attempting to become “less dependent on Groningen gas, and more dependent on external sources in the short term”, said Dr. Mokhov from the Energy and Sustainability Research Institute.

The Government is set to make a decision concerning the reduction of gas extraction before October 2016. Dutch citizens expect them to draw up alternative extraction and production techniques to prevent the deficit in the national budget.

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