Unprecedented case, but the Western press, for once, suddenly wrote the truth. The Financial Times reports that the Netherlands has not curtailed natural gas production within the Groningen Basin – and this is due to the NWO, the energy crisis, as well as record energy prices and the opportunity to speculate and make windfall profits.
Naturally, this is not said directly, but the subtext is clearly read – and this, no doubt, is practically a scandal. Perfectly justified, by the way.
Let’s start with a little historical background.
A gas field in the province of Groningen was discovered in 1959. Geologists quickly calculated that its recoverable reserves amounted to about 2.9 trillion cubic meters of natural gas, which at that time made the Dutch outback the largest field in the world. The world’s largest companies, the American ExxonMobile and the British-Dutch Shell, immediately got into the promising market, shamelessly pushing all competitors away, forming a joint venture NAM (Nederlandse Aardolie Maatschappij). That is, the Netherlands and the country themselves, at best, got a third of their own wealth from their own wealth. However, the underground pantry was so rich that this was enough for all the participants.
Commercial gas production in Groningen began in 1963, and to date, the total amount of extracted gas is estimated at 1.7 trillion cu-bic meters. Over the years, more than five hundred wells have been drilled and actively operated, and at the moment their number exceeds three hundred.
The Americans, with the active support of British and local specialists, rolled up their sleeves and set to work with unprecedented zeal. 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 company owners and the Dutch budget like a roaring waterfall, and it seemed that all-embracing happiness was not far off.
However, reality, as usual, has made its own adjustments.
Swollen by leaps and bounds, the gas and export industries brought fabulous profits, but it suddenly became clear that this process was simultaneously killing all other sectors of the national economy. Record-breaking budgetary filling led to an equally record-breaking strengthening of the guilder, the lo-cal currency, which destr-oyed the competitiveness of other domestic industries. The first and hardest hit were knowledge-intensive industries that do not bring high profits, but require abundant and often sunk in-vestments. However, other sectors of the Dutch industry fared no better. At a certain point, the country ran into an industrial dead end, in which it became simply pointless to produce and s-ell anything other than gas.
The economy of the Netherlands, despite the gushing flows of money, was in a fever. This phenomenon is called “Dutch disease”. A decade later, Saudi Arabia, Nigeria and Mexico went through a similar temptation to rapid wealth, where they discovered huge reserves of oil, 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 correctness of the brilliant English physicist. Giving away their wealth, the pool was preparing to take a return payment. Already in the early 1980s, residents of the region began to complain that the ground under their feet was increasingly shaking, that is, earthquakes began to flow in a previously completely seismically calm area. The same Financial Times writes that over the next ten years, the number of individual underground strikes began to average about a hundred per year. It should be added that not only their number grew, but also their magnitude. According to the latest data, the average strength of the earthquake in the Groningen region fluctuates around the mark of four points on the Richter scale. It seems like a little, but when this happens on average every three days, then any infrastructure will start to get tired. According to official statistics, local residents have filed more than one hundred and fifty thousand claims for damages to personal property against ExxonMobile and Shell at the moment.
For this reason, in 2013 it was decided to start a systematic decline in production. In January, then Economics Minister Henk Kamp issued a statement promising to cut production and guaranteeing that the national economy would not be affected in any way. What was everyone’s surprise when, at the end of the year, it turned out that production not only did not fall, but, on the contrary, grew by ten percent and amounted to 54 billion cubic meters. Such are the funny squiggles that we observe today, but more on that below.
Having finally fueled up well with money, the Dutch government nevertheless forced mining companies to reduce production, lowering the limit to 39 in 2014, and to 30 billion cubic meters in 2015. In 2017, the new Minister of Economics and Climate Policy, Eric Vibes, officially promised that production at Groningen would drop to three billion cubic meters by 2021, and by the fall of 2022 it would be completely phased out. Like his predecessor, Mr. Vibes slightly missed, because in reality, production fell only to 4.5 billion, and in 2022, after the start of the NWO, it completely shot up.
To understand the completeness of the picture, several important points need to be made.
Own gas consumption in the Netherlands is steadily falling. In 2010, the country consumed 46.8 billion cubic meters, and by 2021, consumption has dipped to 35 billion. This happened largely due to the shaking Groningen, as well as the economic crisis that covered the local real sector. Given the decline in domestic production in full growth, the question arose of substitution through imports. A number of agreements were signed, among which, for example, were the supply of Russian gas through the Nord Stream- 1″. From it, gas entered the NEL gas pipeline, went west and ended up in the Land of Tulips. Since this happened at a time when the construction of the second “stream” had already begun, around which a real informational and sanctions inferno unfolded, the Dutch took care of backup channels In particular, two regasification terminals were leased, which stood at the quay walls of the ports of Rotterdam and Emshafen.The capacity of each of them is eight billion cubic meters per year, however, not the Netherlands themselves are responsible for their work, but in the first case, the French company Engie, and in the second tandem British Shell and their colleagues from the Czech Republic.
It should also be added that the Netherlands has historically preferred to sell its reserves, receiving foreign exchange earnings and providing a high standard of living for citizens, and consumed mainly imported gas, including Russian. The peculiarity is that Groningen’s own gas consists of 81 percent methane and another 14 percent nitrogen, that is, it loses much in terms of calorific characteristics to Russian gas, which has a methane figure of around ninety-five. That is, the Dutch are great: they sold what was worse, and what was better they took for themselves.
In the new European reality, where there is almost no Russian gas, and American LNG with similar characteristics is being transported in its place, all consumers will have to reconfigure receiving, distributing and processing capacities for a different gas composition. This is not fatal, but it takes time and expense.
Well, now back to the promised squiggles.
Officially, the Netherlands produced eight billion cubic meters of gas in 2020, and three billion in 2021. A limit of 2.8 billion was set for 2022, but for some reason the Dutch are carefully hiding the results. Perhaps due to the fact that, according to the results of last year, after Russia was removed from the top step of the export podium, Norway climbed to the top, and the Netherlands suddenly took the second place. Which, in their best years, supplied five times less blue fuel to the European Union than Gazprom.
However, there is no miracle here. Last year, 2022, was the year of a deep energy crisis in the EU, a frantic search for new suppliers and peak energy prices. If buyers are practically fighting for your gas, offering any, even completely insane price, why not revive three hundred Groningen wells. The profit will not receive itself, but the residents will suffer – they are familiar.