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    NAM Says It Stuck to Production Cap in 2016-17

Summary

Dutch gas producer NAM, 50-50%-owned by Shell and Exxon, said its gas production from the Groningen field in 2016-17 was compliant. It awaits a court ruling.

by: Mark Smedley

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NAM Says It Stuck to Production Cap in 2016-17

Netherlands gas producer NAM, 50-50%-owned by Shell and Exxon, said its gas production from the Groningen field in 2016-17 was legally compliant.

In a statement October 5, NAM said it produced 23.98bn m3 in the 12-month 'gas year' ending September 30 2017, thus complying with various directives, not least an official cap imposed on production from the field of 24bn m3 during that period.

In May 2017, the country's economy minister announced it would shave a further 10% off that annual cap during the five gas years starting October 1 2017. The ministry said its decision followed April 13 advice from mining inspectorate SODM that a lower cap was needed to reduce risk of damaging earth tremors. Shell and Exxon said June 28 they would challenge that reduction of the cap to 21.6bn m³/yr, 40% of the field's 54bn m3 output in 2013. 

However NAM is anxiously awaiting a ruling from the Raad van State (Council of State), the highest court in the Netherlands. This will determine at what level, if at all, the giant field should continue producing. It was originally due in mid-November, but NAM says it is expected early next month.

NAM director Gerald Schotman said October 5: "It is crucial for us to know within what frameworks we should remain in our role as a producer." He said he had asked the Council of State to examine economy minister Henk Kamp's decision in spring 2017 to trim the cap by 10%, as part of its deliberation. Schotman said that safe production of gas from the Groningen field "is a common concern for all concerned, above all residents."

Political, as well as legal, uncertainties

Kamp had hoped to have retired from politics by now, following elections this March. However as news website Politico points out, on October 9 Dutch politicians will break their own record for failing to form a new coalition government: "It will have been 208 days since the March 15 parliamentary election with no government in place, despite extensive talks, breaking a record dating back to 1977."

 

Mark Smedley