Contributions to closure of Groningen field

In January each year, GTS advises the Dutch State Secretary for the Extractive Industries in the area of security of supply for the upcoming gas year. This advice includes an analysis of the expected supply and demand. In its analysis, GTS calculates the amount of production from the Groningen gas field necessary to ensure security of supply based on the amount of gas expected from the different sources (for example from foreign import, offshore production, small fields, etc.). In 2022, GTS reported that in gas year 2022/2023 the Groningen gas field would only need to operate on ‘pilot light’ mode, with a minimal level of production.

 In February, Russia invaded Ukraine, dramatically changing the geopolitical landscape. This has had major consequences for the energy markets. The flow of Russian gas coming into Europe has dropped, causing an historic increase in gas prices and a significant reduction in demand due to demand destruction. Meanwhile, European countries have pursued policies to top up their stores of gas. In response, GTS carried out additional research in September to determine the consequences of all of this for security of supply and the level of production now required from the Groningen gas field. Based on the findings of this new analysis, it was determined that the conclusions from January still applied: the capacity of 4.4 million Nm3/hour and the resulting volume of 2.8 billion Nm3 for gas year 2022/2023 is enough to ensure security of supply.

 In its advice of January 2023, GTS requested that the State Secretary not close the Groningen field definitively in the 2023-2024 gas year either. GTS recommends that the Groningen field be kept on ‘pilot light’ so that, in the event of setbacks, the Ministry of Economic Affairs and Climate Policy has the option of allowing additional production, alongside any other measures such as (possibly mandatory) demand reduction.

Thanks to the deployment of additional workers, the construction of the Zuidbroek II nitrogen plant was nearing completion at the start of 2023. Various deadlines for the delivery of the plant were not met in 2022 due to friction between the main contractor Air Products and subcontractor Ballast Nedam Industriebouw. The construction work that still needed to be completed at the end of 2022 was relatively limited in scope. Construction is expected to be completed in October 2023. Given the considerable decline in market demand for natural gas and the now well-stocked storage facilities, this situation will have no consequences for gas production from the Groningen gas field for the coming gas year (October 2022 to October 2023). GTS’s nitrogen installations already in operation can supply sufficient volumes.