To become more independent from foreign gas, the government is considering greater involvement in gas production in the North Sea. The government currently holds a minority stake in all oil and gas projects onshore and in the Dutch part of the North Sea.
Due to the earthquake risk, 500 billion cubic meters of gas remain in Groningen territory. Around 100 billion cubic meters of gas can still be produced under the North Sea. Dutch households and companies currently consume around 30 billion cubic meters of gas per year.
A third of this consumption now comes from the North Sea, but this share is falling rapidly. Offshore gas production, i.e. offshore gas production, is more expensive than producing gas from the Groningen field. Companies’ investments in offshore gas production were already decreasing due to low gas prices before the gas crisis. However, despite today’s high gas prices, there is little interest in gas production in the North Sea.
Lengthy approval processes and lawsuits by environmental organizations are raising concerns among companies about new offshore gas drilling. It is more attractive for the oil and gas industry to invest in the exploitation of offshore gas fields in the UK and Norway. These countries have recently approved new gas drilling and, according to the sector, have more attractive conditions than the Netherlands.
In the video you can see how gas is produced in the North Sea 60 kilometers upstream from Terschelling:
The outgoing Dutch cabinet wants to extract the last remaining North Sea gas as quickly as possible. Although the government ultimately wants to phase out gas, about 87 percent of households still rely on natural gas to heat their homes.
Now alternatives using heat and geothermal energy are only slowly gaining momentum. The justification is that natural gas will be needed for now and it would be better if it comes from within the country.
Researchers at the Hague Center for Strategic Studies recently outlined the benefits of doing this. For example, methane emissions from domestic gas production are 30 percent lower than those from imported liquefied natural gas (LNG). North Sea gas also makes the Netherlands less dependent on foreign countries. In addition, our own gas production has the effect of reducing excessive fluctuations in gas prices.
Recent North Sea gas
Vijlbrief, Minister of State for Economic Affairs and Climate, wants to speed up the approval process and strengthen the role of the Dutch Energy Administration (EBN) to convince companies. EBN currently holds a 40 percent stake on behalf of the government in all oil and gas projects onshore and in the Dutch region of the North Sea.
In this way, a large part of the revenues from oil and natural gas production flows to the state treasury through EBN. Whether a majority stake in EBN with oil and gas companies will make it easier to develop new gas fields is now being examined. For some drilling, the interest rate could theoretically even rise to 100 percent, and oil and gas companies could be contracted to achieve this.
decide on elections
The investigation must be completed before the end of the year so that it can be part of cabinet deliberations after the November elections.
Not everyone in The Hague is in favor of gas production. The GroenLinks-PvdA association even wants a legal ban on the development of new gas fields for climate reasons.
VVD wants to expand natural gas production in the North Sea in order to reduce dependence on foreign countries. Pieter Omtzigt and his New Social Contract party also want to use North Sea gas to protect Dutch consumers from large price fluctuations.
“Sustainable electricity is better”
Opponents, including Greenpeace, believe new gas drilling is not only bad for the climate but also makes little sense. They say gas shortages will cause problems in the coming years due to the closure of the Groningen field and the ban on Russian gas.
They believe new wells are pointless because it takes several years for new wells to produce gas. Opponents say it is therefore better to accelerate the transition to sustainable electricity and energy conservation than to develop new gas fields.
Supporters believe new gas drilling investments must be rushed to be worthwhile. As existing offshore gas fields close, some of the pipelines at the bottom of the North Sea carrying gas to the mainland will also disappear. Depending on the industry, it’s now or never.
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
