Full Groningen gas field closure possible as early as 2023: Dutch GTS

The full closure of the giant Groningen gas field onshore the Netherlands could take place as early as 2023, according to gas grid operator Gasunie Transport Services (GTS), well ahead of a previously proposed schedule.

In a statement late June 25, GTS said it had told the economic affairs minister of its recommendations on when Groningen -- which is operated by the NAM joint venture between Shell and ExxonMobil -- could end production completely.

Under current plans, the majority of Groningen production will halt in mid-2022, but parts of the field will be kept open as a "back-up" gas source with full closure likely between mid-2025 and mid-2028.

However, GTS said the final closure of Groningen -- which has seen production capped due to the risk of earthquakes associated with drilling at the field -- could be realized earlier.

"As an independent national gas grid operator, GTS has indicated to the minister that it is possible to have the final closure of the Groningen field take place as early as 2023," it said.

It said this would be possible thanks to several factors. These include: the accelerated conversion of end-users in Belgium from low-calorific gas (L-gas) to high-calorific gas (H-gas); and the possible switch of the Grijpskerk gas storage facility from H-gas to L-gas.

Belgium still purchases L-gas from the Netherlands, but with the end of production from Groningen, agreements have been made between the Dutch and Belgian governments to make gas installations in Belgium suitable for H-gas.

In this way, "they are no longer dependent on Dutch supply," GTS said.

The Belgian government has indicated that it will be able to complete the conversion process a number of years earlier than previously agreed.

Storage conversion

GTS also said that with the full closure of Groningen, it would be important that the L-gas storage areas are used to support gas supply security.

Instead of parts of Groningen remaining open to supply Dutch consumers in the event of a supply emergency, L-gas can be supplied out of storage.

"Gas storage facilities can quickly supply suitable L-gas in times of extra demand for gas," GTS said.

It is planned for the Grijpskerk gas storage facility, also operated by NAM and currently an H-gas site, to be converted to L-gas.

"By switching the gas storage to L-gas, Grijpskerk can take over the back-up role of the Groningen field," it said.

However, licenses for the conversion have not yet been granted, which could mean a possible delay in the conversion of Grijpskerk.

Consequently, if total Dutch gas demand does not fall, it might only be possible to close Groningen completely by Q3 2024 "at the latest," GTS said.

One final factor is the development of the nitrogen installations in Zuidbroek.

This, GTS said, is a necessary measure to bring gas extraction in Groningen to zero "as quickly as possible."

"By adding nitrogen to imported gas from Norway and Russia, this H-gas can be turned into L-gas," it said.

"This is the same quality as Groningen gas and therefore suitable for our heating boilers and gas stoves, among other things. As soon as the Zuidbroek nitrogen installation is fully available, gas extraction from Groningen will be limited to a minimum," it said.

GTS said it expects the Zuidbroek facility to be ready in the spring of 2022.

In addition, two large industrial consumers of L-gas are expected to continue to consume L-gas after the full closure of Groningen, with these consumers likely able to source L-gas via the Zuidbroek conversion facility.

It had been hoped that a number of large industrial consumers of L-gas would be converted to H-gas to help facilitate Groningen's full closure.

"Since two large consumers will be converted after the possible closing date of the Groningen field, GTS believes that conversion is no longer necessary," GTS said.

The market reaction to the GTS news was muted, with one Dutch gas trader pointing to the fact that a number of big L-gas consumers would need L-gas for "a few years longer."

But, he said, more generally the market was not concerned about Groningen given that its closure has been factored in for some time.

Minimum flow

The Dutch government expects to reduce the quota for gas production from Groningen to 3.9 Bcm for the next gas year (October 2021-September 2022). The quota for output from Groningen, running from October 2020 to September 2021, is 8.1 Bcm.

A "minimum" flow is expected to continue from the field -- seen at 1.3 Bcm in Gas Year 22 (October 2022-September 2023).

The economic affairs ministry said it would take a final decision for Gas Year 2021-22 in September. "That is then the very last 'normal' production decision for the Groningen field," it said.