Originally published by Barclay Nicholson (US) and Robby Marcum (US).
Authorities in the Netherlands have proposed more production cuts in the Groningen gas field, Europe’s largest, in response to earthquake concerns. The cuts would limit production by another 10%, in addition to cuts that have already taken effect, with intent to further reduce the number of earthquakes occurring in the country’s north.
For decades, the Groningen has been a key industry asset, successfully developed by major players in the oil and gas space. However, in the early nineties, the region—one with no previous history of earthquakes—began experiencing seismic activity. The number of earthquakes grew until 2013, and the Dutch government intervened in early 2014 to reduce the number of earthquakes through production limits. Since the intervention, the number of earthquakes occurring per annum has declined, and Groningen’s gas production has been reduced by more than half.
The majority of earthquakes in the Groningen register low magnitudes, between 1.5 and 2 on the Richter scale. Occasionally, a more noticeable (though still low-magnitude) earthquake surfaces, like the magnitude 3.6 earthquake felt in 2012. The structures in the region were not designed to withstand even such low magnitude earthquakes, leading to damage.
More than 80,000 damage claims have been filed by local residents, and industry and the government have established funds aimed at compensating residents, strengthening structures, and stimulating the economy.
Regarding the latest proposed cuts, industry warns that continued changes to production limits could threaten the profitability of the project.
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