Dutch producer Tulip cuts output under 'leave gas in the ground' strategy

London — Dutch gas producer Tulip Oil cut output from its key Q10 offshore gas field in the second quarter given low prices under a "leave gas in the ground" strategy, the company said July 15.

In a statement, Tulip said it produced 119 million cu m of gas in Q2 -- or an average of 1.3 million cu m/d -- well down on output of 198 million cu m in Q1.

Tulip -- which began production from Q10 in February 2019 -- has said previously the field has the potential to become the "largest single offshore producing asset in the Netherlands."

"The production of the Q10-A field has been partially reduced to 'leave gas in the ground' in view of the current low gas prices," Tulip said.

"Spare production capacity is being managed in conjunction with the gas price outlook," it said, adding that output was being maintained at around 1 million cu m/d.

Realized price

The average realized gas price for Q10 gas during Q2 was just Eur5.60/MWh, it said, down from Eur9.90/MWh in Q1.

The realized Q2 price was a little higher than the average TTF day-ahead price of Eur5.33/MWh, according to S&P Global Platts assessments.

The Q10 field development plan is based around the Q10-A platform, which has a total facility capacity of 5 million cu m/d.

Tulip operates Q10 with a 60% stake. Its partner is Dutch upstream company EBN, which holds the remaining 40%.

Tulip said July 15 that preparations continued for two additional future Q10 wells.

"Steps are also being taken to increase production capacity substantially by activating existing third-party compression facilities," it said.

Q10 was discovered in 2015 and is 20 km offshore the Netherlands in a shallow water environment.

Tulip was awarded a production license for the field in July 2017 by the Dutch Ministry of Economic Affairs.