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A Historic Shift: The Netherlands Sets a Legal End to Groningen Field Gas Extraction

by Simon Vanpoucke, Global Policy Analyst, FiscalNote Professional Services

The Dutch government is taking steps to end gas extraction from the Groningen field, marking the end of an era after over 60 years and addressing environmental and societal costs.

Groningen Field Gas Extraction

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It’s the end of an era. The amendments to the Gas Act and Mining Act — currently tabled for discussion in the Dutch Senate — would explicitly mark the end of gas extraction from the Groningen field.

The discovery of gas in the Groningen hamlet of Kolham on 29 May 1959 was crucial in the post-war economy of the Netherlands. Initially, the size of the Groningen field was estimated at 60 billion cubic meters; however, current estimates reach 2700 billion cubic meters, making it the biggest natural gas field in Europe and one of the largest in the world.

The Dutch Disease

Over the last 60 years, the Netherlands has generated an enormous total revenue of more than 363 billion euros from gas exploitation. The impact on the Dutch economy has been so large that The Economist coined a term after it: the Dutch disease, meaning the apparent decline of manufacturing industries following the discovery of a large deposit of natural resources.

The Cost of Overreliance on Natural Gas

The environmental and societal cost of gas extraction became increasingly evident with the rising frequency of earthquakes due to the ground sinking. By 2023, over a quarter million claims for damages were filed. An unprecedentedly strong earthquake in 2012 of 3.6 on the Richter scale in Huizinge accelerated the public debate on the impact of gas extraction.

The Beginning of the End

The real turning point didn’t come until 2018 after the 3.4 magnitude earthquake in Zeerijp. Following the earthquake, the government decided to stop the gas extraction from the Groningen field by 2030. This date was later moved further up after another heavy earthquake in Westerwijtwerd in May 2019.

The momentum created by the 2018 earthquake in Zeerijp culminated with the 17 October 2018 Act amending the Gas Act and the Mining Act to minimize gas production from the Groningen field. In March 2019, the House of Representatives passed Member Tom van der Lee’s motion on establishing a parliamentary inquiry into gas production in Groningen. These inquiries are used sparingly in the Netherlands and carry a lot of weight.

Government bill 36441, tabled for senate discussion, amends the Gas Act and Mining Act to explicitly ban any future gas production stemming from the Groningen field. The bill prescribes an explicit end date for gas production from this field, sets the legal framework for ending gas extraction, adapts regulatory frameworks concerning gas supply security, and sets post-extraction measures for the Groningen field.

Energy Industry Implications

The impact is two-fold: on the one side it arranges the termination of gas extraction, while on the other, it defines the requirements for stakeholders involved moving forward. The changes include the post-extraction measures for the sites that will be terminated.

Specifically, extraction permit holders would be tasked to take measures to minimize adverse effects post-extraction, such as potential seismic activities. They also would be obliged to support analyses of seismic activities. Furthermore, the bill redirects reporting efforts; this responsibility would mainly fall on the Netherlands Petroleum Company (NAM - Nederlandse Aardolie Maatschappij). Shell and ExxonMobil jointly own NAM with equal share. NAM has been the main concession holder of Dutch gas exploration in the Netherlands since the beginning of gas extraction in the country.

Impactful Amendments

The House of Representatives comfortably adopted the bill on 12 March with 146 of the 150 votes; only Forum for Democracy (Forum voor Democratie - FVD) and JA21 voted against the bill. Notable are the motions and amendments passed together with the bill.

MP Tjeerd de Groot's successful amendment would no longer allow mineral and gas extraction permits in the Nature 2000-protected Wadden Sea area, further limiting gas extraction in the Netherlands. The amendment comes after a dispute between NAM and the government, which led to the Council of State ruling that the government must clarify whether it will permit drilling in the Wadden Sea. State Secretary for Mining Hans Vijlbrief stated before the vote that extraction in the area would not be allowed.

Additional amendments to the bill were adopted, increasing the responsibility post-extraction for NAM. Furthermore, a new amendment would also require concession holders to meet the social responsibility criteria with every approval of a new extraction plan in the Netherlands, not only when issuing the initial exploration and extraction permit.

Security Challenges

Within the current energy climate, stopping the gas extraction from the Groningen field poses energy security challenges to the Netherlands. While current legislation and regulation already severely limited any extraction from the Groningen field, The government left open the opportunity to restart extraction when needed. When this bill comes into force, The Groningen field failsafe will be fully gone.

Additionally, gas supply in Europe continues to be severely affected by the Russian invasion of Ukraine, leading to increased demand for gas from alternative sources such as liquefied natural gas (LNG) imports and domestic extraction when possible. The Netherlands has already increased its LNG imports and will remain dependent on it for at least the near future. According to the U.S. Energy Information Administration, the Netherlands is one of the biggest imports of the U.S. LNG, which has a considerable environmental footprint due to transport and methane losses associated with shale gas production in the U.S.

Furthermore, there will be an effort to increase the extraction of the remaining gas fields in the Netherlands. Approximately 50 percent of these fields are located offshore in the North Sea. In 2022, Secretary of State Vijlbrief informed the parliament of the government's plan to increase North Sea gas extraction. However, in a subsequent communication in September 2023, Vijlbrief acknowledged that these efforts had been unsuccessful so far. Following the lack of results, the House of Representatives adopted a motion urging the government to take additional measures to ramp up North Sea extraction.

Although gas extraction in the Groningen fields will most likely come to an end, gas will remain an important part of the Dutch energy mix for the foreseeable future. Moving forward, it will prove crucial for the Netherlands to successfully accelerate the off-shore gas extraction, while renewable sources further develop.

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