It has been recommended that production at the Groningen gas facility be reduced significantly to ensure the safety of local residents following earthquakes.
The Dutch State Supervision of Mines (SSM) has advised the Minister of Economic Affairs and Climate that gas production in Groningen should be cut to a maximum of 12 billion cubic meters per year for the safety of residents in the local area. At present 21.6 billion cubic metres can be pumped from the local are this year.
Safety measures are being considered following an earthquake at Zeerijp on the 8th of January which was possibly caused by the extraction process at the Groningen facility.
Inspector General of Mines, Theodor Kockelkoren, said: "A major intervention is necessary in order to properly meet the safety standard and to reduce the risk of damage. Despite our inability to predict accurately which earthquakes will occur at which level of production, we advise the Minister to reduce the gas production as soon as possible to a maximum production level of 12 billion cubic meters per annum. The uncertainties in this assessment are large. We therefore choose to be on the conservative side. After all, it concerns the safety of the inhabitants of Groningen"
SSM propose that the Loppersum clusters are closed immediately which consist of clusters; Ten Post, Overschild, De Paauwen, 't Zand and Leermens. This would prevent the clusters from being used at a high capacity during very cold periods. Research shows that deploying the Loppersum clusters at full capacity could increase the likelihood of more frequent and stronger earthquakes.
This has had a noticeable impact on gas prices this morning with monthly contracts showing significant gains. You can find a more in-depth analysis of changes on the gas market here.