June 4:
LOPPERSUM,
the Netherlands — Deep below the cow pastures and farming villages in this
picturesque northeastern corner of the Netherlands lies an extraordinary
resource: Europe’s largest source of natural gas, known as the Groningen gas
field.
Since its
discovery in Groningen Province in 1959, the field has powered the economy of
the Netherlands and has been a reliable supply of gas for Northern Europe. Five
decades and counting is a remarkable run of productivity for a field of fossil
fuel.
But as it
enters old age, Groningen has grown cranky.
A
half-century of extraction has reduced the field’s natural pressure in recent
years, and seismic shifts fromgeological settling have set off increasingly
frequent earthquakes — more than 120 last year, and at least 40 this year.
Though most of the tremors have been small, and resulted in no reported deaths
or serious injuries, they have caused widespread damage to buildings,
endangered nearby dikes and frightened and angered local residents.
In light of those
problems, the Dutch government is now demanding that the field’s operator, a
joint venture of Royal Dutch Shell and Exxon Mobil, curtail production, making
the Groningen field much more than a local worry.
The field
accounts for about one-third of the natural gas produced in the European Union.
Any reduction in Groningen’s output might be especially hard for the European
economy to bear now that tension in Ukraine is making the receipt of gas from
Russia uncertain and as Moscow pivots its energy attention toward China.
“Groningen is
one of the few facilities able to swing up in terms of production when demand
rises,” said Jonathan Stern, chairman of the gas program at the Oxford
Institute for Energy Studies.
He and other
analysts say the cuts could influence gas supplies and prices in Europe in the
event of a tight market this year. “We don’t know how this will affect us in a
cold winter,” Mr. Stern said.
People living
atop the Groningen field are trying to cope with the on-the-ground
consequences.
Nienke
Pastoor and her husband, Jaap, spent years restoring a 110-year-old farmhouse.
But an earthquake in 2012 left cracks in the outer brick walls and inflicted
more serious structural damage to the home of Mr. Pastoor’s parents across the
road, causing them to suspend plans to swap homes so the younger couple would
be closer to the family farmland.
“I have four
children,” Mrs. Pastoor said. “If they go to sleep and it starts to shake, what
is going to happen?”
The Groningen
field was developed with traditional drilling techniques. But the geological
problems posed even by a conventional gas field could provide additional fodder
for critics of hydraulic fracturing technique, or fracking, which is being used
elsewhere to extract gas from shale rock and has been known to cause minor
earthquakes in Britain.
As part of a
three-year test, the Dutch government has ordered the joint venture that
operates the Groningen field, Nederlandse Aardolie Maatschappij, or NAM, to cut
production by about 20 percent from last year’s level. It has also demanded
other corrective measures, including reinvesting some of the profit from the
field into the local economy. About 150,000 people live above the field, which
occupies about 900 square kilometers, or 350 square miles.
In a delicate
balancing act, the government is taking those steps to avoid curbing output
even more at Groningen, where production was already expected to start
declining steeply in the next decade. The field contributes as much as 12
billion euros, or $16.4 billion, to the national government each year, or more
than 4 percent of its revenue. Shell and Exxon do not disclose their profits
from Groningen, but the companies are thought to split around €1 billion a year
in earnings from the field.
Despite the government
action, many local people are skeptical that anything will really change.
“The main
question is, Can you rebuild trust?” said Jacques Wallage, a former member of
the Dutch cabinet and a former mayor of Groningen who is co-chairman of an
effort to create a dialogue between the gas company and local citizens’ groups.
“NAM has spoiled trust over the last 20 to 30 years.”
Jan Willem
Jacobs, NAM’s project director for the Groningen field, made clear during an
interview that the company accepted responsibility for the earthquakes and for
fixing the damage they caused.
Still, “it is
a very unpleasant problem that I would rather not have,” Mr. Jacobs said in
NAM’s hulking white-stone headquarters in Assen, a town about a half-hour drive
south of Groningen.
For much of
Groningen’s first 50 years, the field was so prolific that it required little
additional drilling after the initial development. The 20 or so production
centers scattered about the countryside — arrays of pipes and metal vessels —
are partly hidden by trees, and for decades quietly did their work with little
direct human intervention, sending the extracted gas into the national pipeline
network and points beyond.
Then came the
earthquakes, beginning in the early 1990s, with an increase in frequency and
intensity ever since. In August 2012, a seismic threshold was crossed when a
quake with a magnitude of 3.6, the largest so far, frightened residents and
caused widespread damage but no casualties.
“At that
time, the region awoke to the real danger for this area,” said Albert
Rodenboog, the mayor of Loppersum, who has helped coordinate efforts urging the
national government and NAM to take action.
The gas is
trapped in porous sandstone deep beneath the ground. When the fuel flows to the
surface, the rock contracts like a squeezed sponge. In some places in the
Groningen area, this contraction has caused the surface of what is already a
low-lying area drained by numerous canals to sink as much as 35 centimeters, or
nearly 14 inches. That has caused NAM to invest heavily in new water pumping
stations and other water management systems.
After the
2012 quake, scientists at the Royal Netherlands Meteorological Institute raised
their estimate of how big an earthquake was possible from the field to a
magnitude of 5, or more than 30 times the energy of their previous top-end
forecasts.
Even that
would still be relatively small, compared with the 8.9-magnitude quake that
caused the devastating tsunami that hit Japan in March 2011. But the Groningen
tremors have been occurring relatively near the earth’s surface — about 3,000
meters, or 1.9 miles, deep — which magnifies the impact, said Bernard Dost,
director of the meteorological institute’s seismology division. And because
Groningen was not previously subject to earthquakes, he said, buildings in the
region were not designed to withstand them.
During the
three-year test, NAM will hold overall output to about 80 percent of what was
produced in 2013. Even with the cutback, Groningen will remain a large
producer. The new annual production ceiling, at 42.5 billion cubic meters,
would still be higher than the 38 billion cubic meters a year that Russia
recently agreed to supply to China.
But the Dutch government is placing Groningen’s most
accessible gas further out of reach. It has ordered the company to sharply
curtail production at five sites in the Loppersum area, which has been the
epicenter of the quakes. Mr. Jacobs, the NAM project director, says those sites
are in Groningen’s “sweet spot” — its most prolific zones for gas extraction.
The company and various government authorities have also
agreed on a five-year, €1.2 billion package to repair and reinforce homes and
other buildings, including more than 20 of the medieval churches in the region
that have sustained substantial damage.
The government says the construction work will create 3,000
jobs in the region. Some of the money is also to be spent on bolstering the
rural electrical and telecommunications grids and to help compensate homeowners
who have had to sell at depressed prices because of earthquake-related
problems.
The hope is to win over locals. The field has never been a
big source of jobs, and the local governments have never received any special
tax revenue before.
Groningen residents say NAM’s biggest challenge may be in
repairing community relations.
“What a lot of people fear is that their whole surroundings
will die,” said Daniella Blanken, secretary of the 2,000-member citizens group
Groninger Bodem Beweging, or Groningen Earth Movement.
Ms. Blanken’s organization would like to see gas production
at Groningen cut by about 40 percent, and wants independent monitoring of the company.
“People don’t consider NAM a neighbor,” she said. “They consider it an
intruder.”
Mr. Dost, the seismologist, said that lowering production in
the epicenter will probably reduce the earthquake risk, but only time will
tell. “We should see over the next one to two years,” he said.
It is a test that residents say Groningen cannot afford to
fail. “If there is one casualty, everything is different here,” Ms. Blanken
said. “One casualty is going to put the region on fire.”
Source: http://www.nytimes.com/2014/06/05/business/international/europes-big-gas-cache-is-on-shakier-ground.html?&_r=0
Comments
Post a Comment