Last month, Nederlandse Aardolie Maatschappij BV (NAM), a joint venture of ExxonMobil Corp. and Royal Dutch Shell PLC, celebrated the 50th anniversary of its discovery of the massive Groningen natural gas field in the northern part of the Netherlands. It is one of the largest gas fields in Europe and—in 1959—was the third largest in the world based on its known reserves.
National transformation
Groningen, which lies 3,000 m underground, changed the Dutch economy. Gas from the field was exported to western Europe, which positioned the Netherlands as an important supplier. However, several events including the oil crisis in the 1970s, the liberalization of the European gas market, and the rise of other gas producers like Norway and Algeria forced the Dutch government to devise a ‘small fields’ policy, which exploited smaller fields in the hopes of slowing Groningen field’s depletion rate.
To date, the field has produced more than 60% of its original producible gas reserves estimated at 2.7-2.8 trillion cu m.
Groningen is set to contribute to Europe’s gas supply security for at least another 50 years. About 300 wells have been drilled over 29 production clusters. The reservoir is 900 sq km. In September NAM will complete its compressor installation program and update equipment so that it can be operated remotely.
When the field was first discovered, it was a disappointment because gas was not a highly valued commodity at the time. At discovery, the field also was only thought to hold 50-150 billion cu m in reserves.
Also underappreciated was Groningen’s future impact on economic terminology. The term ‘Dutch disease’ emerged: “Because the natural gas exports kept the balance of payments in surplus, the Dutch gilder remained a hard currency,” wrote Joep Schenk, author of ‘Groningen’s Gas Field—The First 50 Years.’ Schenk wrote, “This made it increasingly difficult for companies to sell their products abroad. Consequently, employment in the Dutch economy suffered a severe decline: the economists’ diagnosis was that the Dutch economy was suffering from the ‘Dutch disease.’”
Celebration program
NAM has launched different initiatives to mark the anniversary of Groningen. Queen Beatrix inaugurated artwork created by Marc Ruygrok: a gas molecule, which commemorates the first gas well and symbolizes the past, present, and future importance of Groningen gas, along the A7 Motorway.
There is also an interactive exhibition depicting the history of the field at the stunning Fraeylemaborg estate, which is frozen in the 19th century. The exhibition has technological, geological, social, and economic details and will end in October.
The sculpture trail—‘Gas in glass’—has different glass sculptures symbolizing various themes, such as the dimensions and shape of the gas field and the significance of natural gas. Glass was chosen to represent the invisible nature of natural gas. A free arts program also will run until Sept. 12 and will showcase pop and classical music, theatre, multimedia, and crossover theatre.
Public-private partnership
Speakers at the conference reflecting on the history of the field stressed the importance of the public-private partnership between NAM and the Dutch government that ensured the field would be quickly commercialized. Maria van der Hoeven, minister of economic affairs, said, “There is no need to be humble here. Our performance as a gas-producing country has over the years been absolutely world-class.”
Jeroen van der Veer, Royal Dutch Shell PLC chief executive officer, said this type of gas-building hasn’t been seen in other countries. In his opinion, the Netherlands had probably been successful because of its stable fiscal system and coalition government structure; in other places successive governments could block previous policies and delay projects.
Groningen has become a landmark in Dutch history and predictions failed to capture the magnitude of its development. Although it will no longer be a net exporter of gas in 15 years, the Dutch government is keen to position the nation as the gas hub of northwest Europe with gas storage capacity, transport capacity, and trading facilities. This will ensure that the Dutch gas industry will be a prominent force for many decades to come.