Groningen monthly gas output drops below 500 mil cu m for first time

London — Output at Europe's largest onshore L-cal gas field, Groningen in the Netherlands, registered a new record low in June, falling below 500 million cu m for the first time, NAM data released July 7 showed.

Recent advice from the Dutch regulator, the State Supervision of the Mines (SodM), to further restrict output at the field starting in October 2020 to 9.3 Bcm will pave the way for further production cuts.

Gas production at Groningen's remaining active fields (Zuidwest, Zuidoost, Loppersum, Centraal-Oost, Eemskanaal and Bierum) totaled 470 million cu m in June, from 1.15 Bcm in May. Production was down 63% year on year at Groningen amid stricter production quotas at the field limiting extraction at the field to 11.8 Bcm in Gas Year 2019 (October 1, 2019-September 30, 2020).

Year-on-year production declines are very much expected due to the increasingly rapid phasing out of gas extraction, which was found to have triggered earthquakes. The recent month-on-month deceleration in output resulted from the high flexibility of Dutch supply, with storage levels significant, Henry Hub pricing weak and the economy contracting due to the coronavirus pandemic.

Dutch storage facilities were a very healthy 73% full at 104 TWh (9.5 Bcm) by the end of June, data from Gas Infrastructure Europe data.

Production at the Centraal-Oost gas field nosedived in June, falling 96% to 6.7 million cu m, NAM data showed. There were also noteworthy declines at Zuidwest and Zuidoost, where output fell 67% and 50% to 121 million cu m and 203 million cu m, respectively. Production also dropped at the remaining fields.

Output at the Groningen Loppersum field stopped in March 2018, while production at Eemskanaal continued to fade to just 6,500 cu m in June.

Production in GY-19 totaled 7.9 Bcm by the end of June, NAM data showed, meaning production will need to remain below 1.3 Bcm/month over July-September to stay within the full-year quota, NAM data showed.

Spot TTF prices in June rose 8.5% month on month, S&P Global Platts data showed. The TTF day-ahead price rebounded to average Eur4.928/MWh in June, was still down 53.3% from June 2019.

Looking to GY-20, the Dutch gas regulator has advised the government to further reduce production at Groningen to 9.3 Bcm, the Dutch Ministry of Economic Affairs and Climate Policy (EZK) said mid-June.

This will reduce the probability of an earthquake of magnitude 3.6 or higher striking the field from 12.5% to 5%, SodM said.

The quota for the current GY-19 of 11.8 Bcm and was already down dratically from the GY-18 quota of 19.4 Bcm at the field.