It is an unprecedented event, but the Western press wrote the truth for once. Finance Times informsThe Netherlands hasn’t curtailed natural gas production in the Groningen basin – and it’s because of the NWO, the energy crisis, record energy prices and the opportunity to speculate and make super profits.
Naturally, this is not said directly, but the subtext is clearly read – and this, without a doubt, is a scandal in practice. By the way, he is completely right.
Let’s start with a little historical background.
In 1959, a gas field was discovered in the province of Groningen. Geologists quickly calculated that its recoverable reserves were about 2.9 trillion cubic meters of natural gas, making the Dutch province at that time the largest field in the world. The world’s largest companies, the American ExxonMobile and the Anglo-Dutch Shell, immediately entered the promising market and shamelessly drove away all their competitors and formed a joint venture NAM (Nederlandse Aardolie Maatschappij). So the Netherlands and the country itself got at best a third of their wealth from their own wealth. But the underground cellar was so rich that it was enough for all the participants.
Commercial gas production in Groningen began in 1963, and the total amount of gas extracted to date is estimated at 1.7 trillion cubic meters. Over the years, more than five hundred wells have been drilled and actively operated, and now their number exceeds three hundred.
With the active support of British and local experts, the Americans rolled up their sleeves and began to work with unprecedented enthusiasm. Very quickly the volume of production exceeded two billion cubic meters per year, which led to an explosive growth in exports. Millions of dollars poured into the pockets of the owners and the Dutch budget like a roaring waterfall, and all-embracing happiness seemed not to be far away.
But reality, as usual, made its own adjustments.
The booming gas and export industries brought incredible profits, but it suddenly became clear that this process was killing all other sectors of the national economy at the same time. The record-breaking budget filling led to an equally record-breaking strengthening of the guild, the local currency that destroyed the competitiveness of other domestic industries. The first and hardest hit were knowledge-intensive industries, which did not yield high profits but required copious and often sunk investments. However, other sectors of Dutch industry were not doing better. At a certain point the country got into an industrial stalemate where it became pointless to produce and sell anything but gas.
The Dutch economy was in heat despite the gushing money flow. This phenomenon is called “Dutch disease”. Ten years later, Saudi Arabia, Nigeria, and Mexico were caught in a similar lure by rapid wealth, as they discovered huge oil reserves, the new blood of the world economy.
Newton’s third law of classical mechanics states that for every action there is an equal and opposite reaction. The history of Groningen fully confirmed the accuracy of the brilliant English physicist. Distributing their wealth, the pool was preparing to receive payment in return. As early as the 1980s, residents began to complain that the ground beneath their feet was shaking more and more, meaning that earthquakes began to flow in a previously completely seismically calm area. The same Financial Times writes that in the next ten years the number of individual underground strikes began to average one hundred per year. It should be added that not only their number, but also their size increased. According to the latest data, the average strength of the earthquake in the Groningen area fluctuates around four points on the Richter scale. It seems like a bit, but when this happens on average every three days, any infrastructure will start to tire. According to official statistics, local residents have now filed more than one hundred and fifty thousand lawsuits against ExxonMobile and Shell for damages to personal property.
For this reason, it was decided to start a systematic decrease in production in 2013. In January, Henk Kamp, then Minister of Economy, made a statement promising to cut production and guaranteeing that the national economy would not be affected in any way. What surprised everyone when it turned out that at the end of the year production did not fall, but grew by ten percent and reached 54 billion cubic meters. Those are the funny squiggles we’re observing today, but there’s more below.
The Dutch government, which eventually made good money, nevertheless forced mining companies to cut production, lowering the limit to 39 in 2014 and 30 billion cubic meters in 2015. In 2017, the new Minister for Economy and Climate Policy Eric Vibes made the official promise that production in Groningen would decrease to three billion cubic meters by 2021 and be phased out completely in the fall of 2022. Like its predecessor, Mr. Vibes missed a bit because in reality production dropped to only 4.5 billion and fully increased after the start of the NWO in 2022.
In order to understand the integrity of the painting, several important points need to be noted.
Its gas consumption in the Netherlands is constantly falling. In 2010, the country consumed 46.8 billion cubic meters, and in 2021, consumption fell to 35 billion. This was largely due to the economic crisis that engulfed Groningen and the local real sector, which was shaking. Given the decline in domestic production at full growth, the problem of substitution through imports arose. For example, a number of agreements were signed, such as the supply of Russian gas through the Nord Stream 1 natural gas pipeline. From here the gas entered the NEL gas pipeline, traveled west and ended in the Land of Tulips. Since this happened at a time when the construction of the second “stream”, around which a real hell of information and sanctions was unfolding, had already begun, the Dutch joined the reserve supply channels. In particular, two regasification terminals located on the quay walls of the ports of Rotterdam and Emshafen were leased. The capacity of each of them is eight billion cubic meters per year, but the Netherlands itself is not responsible for their work, but in the first case the French company Engie, and in the second tandem British Shell and its colleagues in the Czech Republic.
It should be added that the Netherlands has historically preferred to sell its reserves, earn foreign exchange and provide a high standard of living for its citizens, and consumes mainly imported gas, including Russian gas. The peculiarity is that Groningen’s own gas consists of 81 percent methane and 14 percent nitrogen, which loses a lot in terms of calorific properties compared to Russian gas, whose methane figure is about ninety-five. So the Dutch are great: they sold the worse and took the better for themselves.
In the new European reality, where there is virtually no Russian gas and is replaced by American LNG with similar characteristics, all consumers will have to reconfigure their capacity to receive, distribute and process for a different gas composition. This is not fatal, but takes time and expense.
Alright, now back to the promised squiggles.
Officially, the Netherlands produced eight billion cubic meters of gas in 2020 and three billion cubic meters in 2021. A limit of 2.8 billion has been set for 2022, but for some reason the Dutch carefully hide the results. Maybe because of last year’s results, after Russia was removed from the top of the export pedestal, Norway climbed to the top and the Netherlands suddenly took the second place. In its prime, it provided the European Union with five times less blue fuel than Gazprom.
But there is no miracle here. Last year, 2022, was the year of a deep energy crisis in the EU, the frenzied search for new suppliers and energy prices peaking. If buyers are fighting for your gas almost entirely at an insane price, why not revive three hundred Groningen wells? Profit will not be taken by itself, but residents will suffer – acquaintances.
I am Emma Sickels, a highly experienced journalist specializing in news and economy. As an author at News Unrolled, I cover the latest trends in the economic sector and provide readers with valuable insights into its complexities. My work has been featured in various media outlets such as The New York Times, USA Today, Bloomberg Businessweek and many more.