The Dutch parliament will debate on Wednesday the government’s plan for a lower production cap at the Groningen natural gas field, which the economy ministry is due to finalise by the end of September.
News of the debate on Tuesday morning prompted some short-covering in the market according to one source. ICIS’ morning assessment saw the TTF Day-ahead and front-month contracts gain more than €0.20/MWh compared to Monday evening.
From October, the annual Groningen production cap is set to fall to 24 billion cubic metres (bcm)/year for five gas years under plans drawn up by the government. The limit for gas year 2015 is 27bcm.
The new cap is based on northwest Europe’s low-calorific gas (L-gas) consumption in an average year, after a study by Dutch grid operator GTS found that 24bcm/year of Groningen production – used in conjunction with around 77% of Dutch quality conversion capacity – would have been sufficient to meet demand in 50% of the previous 30 years.
The field’s operator NAM will aim to maintain as flat a profile of monthly production as possible to minimise seismic activity in the region, but a provision is in place to increase production by a maximum of 1.5bcm/year in the case of a technical fault or up to 6bcm/year in the event of below-average temperatures.
Groningen production will dip to an 11-month low of up to 1.97bcm in September, after 2.1bcm was extracted from the L-gas field in August to bring year-to-date production to 25bcm, or 93% of the 27bcm/year cap.
Combined L-gas demand from within the Netherlands and for export to neighbouring markets totalled 2.1bcm in August, which was fractionally higher than in July and up 12% on 2015.
Around 900 million cubic metres (mcm) of L-gas was injected into the 7bcm capacity Norg storage facility in August, boosting stocks by 12 percentage points to 85% of capacity. A further 1bcm of injections in September are needed to fill the site by the start of October.
Filling Norg is a key tenet of the proposed production plan as the facility will become the major source of flexible L-gas supply in the winter months as Groningen production will no longer swing up and down as the operator aims for stable monthly output to limit seismic activity in the region.
Dutch operator GTS did not respond to a request for information, but the conversion of an estimated 800-900mcm of H-gas to the L-gas grid is likely to have supplemented Groningen production in August to meet the combined 3bcm of consumption, export and injection demand across the month. Between October 2015 and July 2016, a total of 18.4bcm of H-gas was converted, up from 11.1bcm in the previous year. email@example.com