The oil and gas sector in the Netherlands is preparing to receive an additional deflationary shock, after the government announced the suspension of new onshore exploration activities.
Today, Friday, January 20 (2023), the Dutch government announced its readiness to stop research and land exploration activities for fossil fuel sources, according to Reuters.
The Dutch government bases its decision to restrict onshore oil and gas exploration activities on seismic risks that it wants to reduce, in addition to long-term climate goals, as monitored by the specialized energy platform.
The sufficiency of marine fields
The government says it will limit itself to offshore gas fields in the North Sea exclusive economic zone, which will remain crucial to reducing the country’s dependence on Russian gas.
It will also limit onshore exploration to previously permitted gas fields, while banning any new permits for onshore exploration.
The North Sea is surrounded by 6 European countries: Norway and Denmark to the east, the United Kingdom to the west, the Netherlands and Belgium to the south, in addition to part of France.
We still need gas.
The Dutch Deputy Minister of Mining, Hans Filbreev, said that his country still needs gas despite the major shift in the field of renewable energy. Because of the repercussions of the Russian-Ukrainian war and the interruption of Russian gas supplies, in addition to oil, which is in dire need.
The Netherlands was previously one of the major gas suppliers to Europe through the huge Groningen field, whose production has shrunk in recent years to a minimum, with decisions aimed at avoiding earthquake risks in the region.
The field’s production is scheduled to end during the next year 2024, based on a gradual plan approved years ago, according to what was monitored by the specialized energy platform.
The Netherlands discovered the huge Groningen field in 1959, through the American companies Exxon Mobil and the Anglo-Dutch Royal Dutch Shell.
The field’s production continued for decades, with it being exported to Europe, reaching its peak production in 1978, when it recorded 88 billion cubic meters in that year.
Earthquake hazards
The field area was hit by a strong earthquake in January 2018. due to drilling and excavations; This led to the collapse of the surrounding buildings.
Immediately after the earthquake, the Dutch government pledged to close the field permanently by 2030 at the latest, according to a gradual plan that begins with reducing production over 5 to 7 years.
The Netherlands has about 175 onshore gas production fields – under operation – and most of them are small in size, with reserves amounting to 400 billion cubic meters of gas.
Shell and ExxonMobil operators estimate the volume of production that will remain underground after closing the Groningen field at about 450 billion cubic meters of gas.
The Dutch government plans to reduce carbon emissions by 55% by 2030; as a prelude to reaching carbon neutrality with its European partners by 2050.
Campaign against companies in the Netherlands
Oil and gas companies in the Netherlands and European countries have been subjected to organized campaigns for years by environmental and climate activists and a number of human rights organizations against fossil fuels in the world.
Climate activists use various methods to pressure governments and companies, most notably vigils, lawsuits, and parliamentary pressure.
In May 2021, a Dutch court issued a ruling against Shell to oblige it to reduce carbon emissions by 45% by 2030.
The company has appealed the preliminary ruling since its issuance, and the dispute is still circulating in court and no decision has yet been issued regarding it, according to what was monitored by the specialized energy platform.
The company argues that the issue of reducing emissions is a global issue, which no company operating in oil and gas can bear alone, and hopes to overturn the decision of the Court of First Instance at the appeal stage.
The environmental organization “Melodefense” is targeting 30 major oil and gas companies for prosecution for causing greenhouse gases.
Climate activists have filed nearly a thousand court disputes related to climate issues, including 37 against governments to oblige them to fulfill their ambitious climate promises, according to the specialized energy platform.
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