Dutch court rejects government's Groningen gas production plan

11/15/2017

THE HAGUE (Reuters) — The highest Dutch administrative court has rejected the government's plan to cap production at a major gas field that has caused damaging earthquakes, saying it might be possible to cut output further without endangering supplies.

The government had proposed capping production at the Groningen gas field at 21.6 Bcm per year over the next 5 yr, after a 2015 report found production was risking lives. That would be down from 24 Bcm in the production year just ended and 39.4 Bcm in 2015-16.

But the Council of State said on Wednesday the government had failed to properly substantiate its decision, describing it as "unacceptable" to potentially keep production unchanged for five years when it might be possible to further reduce demand.

The Council ordered the government to review its decision within the next 12 mos, but production could be maintained at 21.6 Bcm for the year through Oct. 1, 2018.

The decision was met with jubilation from citizens in the northern Dutch province that is home to the field, where thousands of small earthquakes have damaged buildings.

"We won on all fronts. All lousy excuses the government used to justify production have been tossed out the window," said Dirk Kleijer, a spokesman for the Groninger Bodembeweging campaign group.

"The minister now needs to put the safety of residents first. He now needs to come up with a good plan: to lower production and to guarantee our safety."

Hein Dek, a spokesman for NAM, the joint venture between Royal Dutch Shell and ExxonMobil that operates the Groningen field, said the company was studying the verdict and would respond later on Wednesday.

Government spokesman Job van de Sande said the Economic Affairs Ministry was studying the ruling.

Reporting by Bart Meijer. Additional reporting by Anthony Deutsch and Toby Sterling.; Editing by Mark Potter