January 11, 2018 / 12:11 PM / 2 months ago

UPDATE 2-Substantial cut in Groningen gas output needed - Dutch regulator

(Adds regulator’s response and more detail)

AMSTERDAM, Jan 11 (Reuters) - The Dutch gas regulator said on Thursday that a substantial cut in gas production at the Groningen field was needed to reduce the risk of earthquakes, following a tremor there this week.

Monday’s tremor prompted operator NAM to propose halting production at six points at Groningen and lowering its overall production.

The State Supervision of Mines said these proposals were a “step in the right direction” but were too vague.

It will now conduct a survey on where and how to reduce production and will advise the energy minister, who will take the final decision, before Jan. 25.

“A substantial production cut is needed” to limit seismic risks, the regulator said.

“This could impact gas supply to households and businesses, but we will not take that into account. It is up to the minister to balance safety and certainty of supply,” it said.

The mines supervisor is one of the parties advising the minister, with gas company Gasunie tasked to determine the production level needed to make sure supply can meet demand.

The government has lowered output from Groningen several times in recent years, as decades of extraction have triggered dozens of earthquakes each year in the region, causing damage to thousands of homes and buildings.

Monday’s 3.4 tremor was the largest in years and prompted NAM to propose a cut in production, without naming a specific level.

But lowering output will not put an end to all earthquakes, NAM said, as a fluctuation in production levels increases seismic risks.

NAM, a joint venture between Royal Dutch Shell and Exxon Mobil, said that, as a basic rule, a 10 percent cut could prevent two or three earthquakes with a magnitude of at least 1.5 each year.

Production at Groningen was lowered by 10 percent last October to 21.6 billion cubic metres (bcm) per year and the government has agreed to reduce that to around 20 bcm by 2021. Production stood at 54 bcm in 2013.

Possibilities for further cuts are limited in the short run, as almost all Dutch households use the low-calorific gas produced in Groningen.

Imported high-calorific gas can be adapted for use in the Netherlands, but the facilities need to do this are already working near full capacity.

Reporting by Bart Meijer; Editing by Jason Neely and Edmund Blair

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