DUTCH GRONINGEN GAS DOWN 6%

PLATTS - Production at the two remaining active Groningen gas fields in the Netherlands totaled 1.26 Bcm in August, taking cumulative output from Groningen in the current gas year to 16.37 Bcm, well below the government-set quota of 19.4 Bcm with just one month of the period remaining.

Production in August was down 6% on the year but up 6% from to 1.26 Bcm, according to data from operator NAM.

August's cumulative production output of 16.37 Bcm allows for output of 3.03 Bcm in September, the last month of the current gas year, meaning output could be increased.

However, production at Groningen's remaining active fields will need to fall significantly in GY-19, starting October 1, to meet the sharply reduced quota of 11.8 Bcm proposed Tuesday by the Dutch government for the coming gas year.

A production cap has been put in place to prevent earthquakes linked to gas extraction at the field. The Dutch government plans to phase out gas extraction at Groningen completely by mid-2022, Dutch Minister of Economic Affairs and Climate Eric Wiebes wrote Tuesday in a letter to the House of Representatives.

Production at two of Groningen's four fields has already ceased. Production at Loppersum stopped in March 2018 while output at Eemskanaal ended in April 2018.

For two remaining active areas, Oost's output in August was 826 million cu m, up 4% from July but down 7% year on year, while production at Zuidwest of 430 million cu m was 12% higher on the month but 6% lower compared with August 2018.

To compensate for the loss of L-cal gas from Groningen -- which produced close to 54 Bcm in 2013 prior to the introduction of quotas -- the Netherlands has increased conversion of H-cal gas into L-cal gas, achieved by adding nitrogen at blending stations.

In addition to a higher usage of nitrogen, Wiebes has also decided to fill the Norg gas storage with L-cal gas from the conversion, which means less gas is needed from the Groningen gas field.

Dutch demand for H-Cal to L-Cal conversion fell to 1.28 Bcm in August, down from 1.56 Bcm in August 2018 and up from 1.108 Bcm in August 2017. With the recently revised GY-19 production output quota of 11.8 Bcm, the demand for H-cal to L-cal gas conversion is poised to increase significantly.

Looking ahead, the rapid decline in production of L-Cal gas from Groningen will continue to make the Netherlands increasingly dependent on LNG and pipeline gas imports from Norway and Russia. LNG could continue to provide the needed flexibility, while the new reverse UK-to-Netherlands flow on the BBL interconnector pipeline between the two countries, in effect since July, will offer greater supply capacity to the Netherlands.

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Earlier:

2019, May, 29, 10:35:00 GRONINGEN'S SEISMIC RISKS A 3.4 magnitude earthquake prompted the Dutch government last year to promise to end Groningen production by 2030 and to lower output as quickly as possible in the coming years. English

2018, December, 5, 09:35:00 GRONINGEN GAS PRODUCTION WILL DOWN BY 75% REUTERS - Gas production at the earthquake-prone Groningen field will drop by at least 75 percent in the next five years, ahead of schedule towards the projected end of extraction. English

2015, March, 12, 20:45:00 DUTCH QUAKES Towns in the northern province of Groningen sit atop the continent’s biggest gas field, where the Dutch government says exploration by Royal Dutch Shell Plc and Exxon Mobil Corp. has triggered 196 earthquakes since 2013, damaging buildings and making home sales difficult. Lawmakers, seeking support in provincial elections March 18, have responded to residents’ complaints with a proposed cut in gas production, the second since December, in the hope that less output means fewer tremors. English