Groningen production to see new cap

Netherlands

AMSTERDAM, June 23, 2015 – Europe’s largest gasfield is set to see a production cap that would reduce output by 3 bcm (106 bcf) in the second half of 2015.

The Groningen field, a key supplier of gas to the European market, will have its output capped at 13.5 bcm for this period if the Dutch government approves the proposal, brought to the table by the country’s economy minister, Henk Kamp.

European gas prices rose following news of the proposal. Dutch prices on the Title Transfer Facility hub were up 1.48 percent for July contracts, at €20.60 per MW.

Kamp had ordered the field’s production capped to 33 bcm (1.17 tcf) for 2015 in February after concerns were raised about a lack of preparedness for earthquakes. The new cut would reduce this total to 30 bcm (1.06 tcf).

The Dutch Safety Board said in February that the government, regulators and companies had failed to take the earthquake threat seriously.

Earthquakes in the area have risen along with production increases at the field, causing alarm for residents and leading to protests.

Shell and ExxonMobil, which operate the Groningen field through a joint venture, have not commented on the proposed restriction.

A government decision on the proposal is expected as early as Tuesday.