A Dutch court on Nov. 18 ordered more cuts in gas production at Groningen, Europe's largest gas field, saying the government had given too little consideration to the stronger and more frequent earthquakes extraction had caused.
Output at the field, the world's 10th largest, will now be capped at 27 billion cubic meters (bcm) per year from 33 bcm, the court said, adding that the government had failed to sufficiently weigh public safety risks.
The spate of earthquakes has caused extensive damage in the Netherlands' northernmost province.
Groningen, along with a few smaller Dutch fields, supplies about 15 percent of Europe's gas and proceeds made up more than 5 percent of government revenues for the national budget during recession years 2011-2013.
"Although the minister (economy minister Henk Kamp) was entitled to attach great importance to the security of supply, he permitted a higher level of extraction than the average that is required," a summary of the 70-page ruling said.
Kamp had argued that 33 bcm was the minimum needed to guarantee supply in a cold winter. The court said 27 bcm was enough for an average winter, but added: "Should it turn out to be a relatively cold year, the maximum gas extraction can be raised to 33 billion cubic metres."
The order applies to production through October 2016.
The court also rejected Kamp's calculations of safety risks from earthquakes and said he would have to incorporate a better assessment by October 2016.
The government has twice this year reduced production from its original target of 39.4 bcm, sending regional prices higher.
But British gas prices for delivery next summer and next winter fell by more than 3 percent to 34.60 pence per therm and 38.40 pence/therm respectively.
Point Carbon analyst Oliver Sanderson said the announcement was not a great surprise.
"Healthy supply from other sources such as LNG (liquefied natural gas) from Qatar, as well as piped imports from Russia and Norway have eroded any bullish impact of Groningen production cuts over the past 10 months," he said.
In February, Kamp ordered production cut to an annualised rate of 33 bcm for the first half of the year. In June Kamp ordered a further cut to 13.5 bcm for the second half of the year.
Recommended Reading
Exxon’s Payara Hits 220,000 bbl/d Ceiling in Just Three Months
2024-02-05 - ExxonMobil Corp.’s third development offshore Guyana in the Stabroek Block — the Payara project— reached its nameplate production capacity of 220,000 bbl/d in January 2024, less than three months after commencing production and ahead of schedule.
Venture Global, Grain LNG Ink Deal to Provide LNG to UK
2024-02-05 - Under the agreement, Venture Global will have the ability to access 3 million tonnes per annum of LNG storage and regasification capacity at the Isle of Grain LNG terminal.
What's Affecting Oil Prices This Week? (Feb. 5, 2024)
2024-02-05 - Stratas Advisors says the U.S.’ response (so far) to the recent attack on U.S. troops has been measured without direct confrontation of Iran, which reduces the possibility of oil flows being disrupted.
McKinsey: US Output Hinges on E&P Capital Discipline, Permian Well Trends
2024-02-07 - U.S. oil production reached record levels to close out 2023. But the future of U.S. output hinges on E&P capital discipline and well-productivity trends in the Permian Basin, according to McKinsey & Co.
EIA: Oil Prices Could Move Up as Global Tensions Threaten Crude Supply
2024-02-07 - Geopolitical tensions in the Middle East and ongoing risks that threaten global supply have experts questioning where oil prices will move next.