A gas facility at Grijpskerk, in the northern Groningen province

Gas is not a gift

Natural gas deposits, exploited in the northern Netherlands, provide billions of euros to the Dutch state. But the extraction is the cause of an increasing number of earthquakes and this, combined with a lack of long-term investment, has made energy policy a focus of debate.

Published on 25 February 2013 at 13:15
A gas facility at Grijpskerk, in the northern Groningen province

The first sign comes when the cat jumps off the bed. Domesticated animals sense catastrophes coming. Then there is a groaning sound that ends with a crash causing windows to shake and walls to tremble. It will be another sleepless night in the districts of Loppersum and Slochteren - maybe even as far away as the suburbs of Groningen.

Cracking walls, sticking doors and falling roof tiles, these are all unpleasant damage but they can be repaired. What is worse is the fear. Will it ever end? There is little chance of that, according to a report published by the Dutch State Mining supervisor, [which regulates mining activity]. Made public at the end of last month by Economic Affairs Minister Henk Kamp, the report states that earthquakes caused by the extraction of gas in the Groningen deposit have increased considerably both in frequency and in magnitude. It also forecasts that the earth should continue to quake for some 50 years.

World's largest deposit

Henk Kamp has done what the Nederlandse Aardolie Maatschappij (NAM) [the Dutch Petroleum Company] should have done years ago - he realised that the ground in the province of Groningen is subsiding due to the extraction of natural gas and that this is accompanied by slight underground tremors. Reint Wobbes from the village of Huizinge is a member of the Old Churches of Groningen Foundation [which strives to protect the region's old churches]. "Kamp is talking about preventive measures but I have no idea what needs to be done. This region is culturally one of the oldest in Europe. How must we now protect homes and other buildings that are several centuries old? These measures should have been taken earlier. Why did the impetus have to come from a citizen's group, the Groninger Bodem Beweging [Groningen Earth Movement]? Why did the authorities not protect the population sooner?" he asks.

In the barren, snow-covered fields, the furrowed soil waits for spring. On the high ground, the gas extraction facilities go almost undetected. They give off no odour and they cannot be seen. Foraging on the "Slochteren deposit" first began on July 22, 1959, near the village of Kolham, on land belonging to a farmer named Boon. But the boom years came some time later when it was discovered that the deposit was the largest single gas reserve in the world. This, however, has not enriched the region. Under the 1810 mining law, the mineral rights do not belong to the landowner but to the State. This can lead to some conflicting interests.

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Generous social benefits

These conflicts are not serious, says Herman de Jong, professor of economic history at the [University of Groningen (RuG)]. "I'd rather not think what would have happened had the mining law not existed. We would now have a slew of people from Groningen who would be wealthy and who would have crazy ideas and the impact on employment would have been short-lived. This way, we were able to establish a generous social benefits programme and to invest significantly in infrastructure projects, especially those of the Delta Plan," he says, [referring to a huge construction project to protect the South-western seaboard].

"We would do better to seek to manage the economy while keeping in mind that gas revenues are forecast to dry up in 30 years' time. The Netherlands has never had a long-term vision because it was convinced it would move to nuclear power. Revenues from the natural gas deposit were used for years to plug the holes in the budget. Norway adopted a more judicious approach by putting petrol and gas revenues into a public fund. The interest generated by the fund is spent on education and infrastructure expenditures," he added.

Shell and Esso, NAM's partners, are making a hefty profit from Groningen gas extraction, says Herman de Jong. "But the State also benefits. A well-negotiated contract has allowed it, from the beginning, to earn high royalty fees," he explained. The Groningen deposit has already poured more than €200bn into the State's coffers. In 20 years, the Netherlands will have benefited from it for 75 years.

Groningen energy hub

However, residents of Groningen are beginning to wonder what the gas has brought them other than the slow collapse of the ground beneath their feet. The Partij voor het Noorden or Northern Party which lobbies in favour of the northern provinces of Groningen, Drenthe and Friesland, is demanding that a quarter of the natural gas revenue be earmarked for the region.

Jan Willem Velthuijsen, an associate with PricewaterhouseCooper and a professor of energy economics at the University of Groningen, also says the Netherlands should invest in the province of Groningen. Not because that is where the gas is extracted but because the north has an important role to play in energy supply. "There are good reasons to invest in Groningen province as an energy hub. The hub we are building is capital for the supply of energy in Europe. We are linked to the German market, which favours sustainable development and that provides an advantage to natural gas plants. They are cheap and clean. The underwater cable that supplies hydro-powered electricity from Norway is connected here and we also get Russian gas. The infrastructure is fantastic, the pipelines and the gas deposits are perfect, not only for extracting the gas but also for stocking it. We can stock Russian gas cheaply then supply it when the price rises," he says, concluding, "The tap can be turned on or off at will, it is much easier here than anywhere else."

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