ICIS view: Something doesn’t add up in Groningen

Inconsistent and irregular data reporting for the Dutch Norg storage site has created uncertainty over what the potential market impact will be if a decision by local authorities is made to halt the expansion of the facility next week.

The municipal councils of Noordenveld and Leek to the southwest of Groningen on Thursday are seeking to stop the Dutch government from expanding the Norg low-calorific natural gas (L-gas) storage facility. A decision will be made by the Netherlands’ highest general administration court, the council of state, on 7 September.

The Norg expansion remains highly uncertain pending the outcome of the latest hearing, but REMIT data reported by Norg’s operator NAM is telling a different story.

The technical capacity of the site has increased unannounced and a conspicuous rise in storage levels at the end of July was also recorded (see separate story).

According to AGSI+ data for 30 August, accessed on 1 September, Norg stocks were “confirmed” at 55.4TWh – 79% of the listed 69.8TWh capacity.

As the market now awaits the 7 September ruling, there is much uncertainty about the true situation regarding Groningen L-gas fundamentals.

What will happen if the court blocks the expansion on 7 September? Will the technical capacity fall back to 58.2TWh – as it was in July – and will the irregular 6.56TWh jump in gas stocks be reversed?

These are important questions as the market seeks to gauge L-gas fundamentals for the end of summer and the start of winter.

At the moment it looks like there could be room for a further 14.4TWh (1.5bcm) of injections if the expansion is permitted, or 9TWh (0.9bcm) if recent changes to Norg’s capacity and stocks are reversed. Only the operator and the government can confirm this, but neither responded to ICIS’ request for information on Friday.

Around 1.7bcm of Groningen production is likely to be available in September with around 1.4-2bcm of high-calorific gas conversion. This will need to cover remaining Norg injections – whatever the level transpires to be – and local and export demand of around 2.2bcm, based on the recent average for the month of September. jake.horslen@icis.com