Dutch Regulator to Issue Groningen Advice Feb.1
Dutch mining regulator SodM will present its official advice to the minister of economic affairs and climate on Groningen gas extraction February 1. A decision on the future production cap is then expected from the minister before the end of March. It comes as the field operator NAM has received more bad news this week, in the form of a ruling favouring householders in the region.
SodM said January 24 that its advice is a direct result of the January 8 magnitude 3.4 earthquake at Zeerijp in Groningen province, the most powerful in the region for five years. It said will propose measures with a view to the safety of the inhabitants of Groningen such as lowering gas production.
"Reducing gas production may have consequences for the supply of gas to companies and households. It is not the role of SodM, as supervisor of the safety of energy production, to take this into account. SodM's advice will therefore only be based on safety considerations. [Dutch gas grid owner Gasunie's] Gas Transport Services advises the minister about security of supply. It is up to the minister to weigh up security and security of supply if necessary. The minister ultimately decides what must be done with gas production in Groningen," said the mining regulator.
The highest court in the Netherlands ordered the minister in mid-November to give a new ruling on the production cap for Groningen by the end of 2018, even before the January 8 earthquake.
Groningen field operator, Shell-Exxon joint venture NAM, said January 10 that a production cut should be one of the options on the table.
A spokesperson for the minister told NGW last week that minister Wiebes told parliament January 18 that in the long term the production of gas eventually will end, that he as minister is seeking opportunities for a further reduction of the gas extraction before 2021, and that he will inform parliament whether this is possible or not also at the end of this quarter.
NAM loses appeal over damage to property
In a separate court ruling in Leeuwarden January 23, NAM has been ordered to compensate homeowners in the Groningen catchment area directly for any depreciation of their home, according to NOS, the state broadcaster. NAM did not want to pay the compensation until the sale of the house.
NAM director for earthquake issues Thijs Jurgens said the company's view is that the moment of sale is the logical and reasonable point to assess any depreciation in the property value, but conceded: "The court rules otherwise and we are going to take that seriously." He said NAM pays a depreciation on the sale of a house since January 2013 and that, since the scheme started, 94% of the NAM compensation compensation proposals had been accepted by the seller.
The main lawyer for plaintiffs, Pieter Huitema of law firm De Haan, said: "It is a clear judgment. We have litigated long and intensively and we are pleased that it is clear to the 4,000 affiliated households in the earthquake zone that NAM is liable for the depreciation of their homes, without the house having to be sold first." He said the Leeuwarden court of appeal had once again upheld the case made by residents group, WAG Foundation, representing 4,000 homeowners, adding: "This means that all owners of real estate in the earthquake area can submit their claims to the NAM via Stichting WAG and that the NAM has to pay. According to experts, the depreciation can be up to 20%, regardless of physical damage."