Protests have stymied gas production in the Netherlands that could replace most of Russia's supply to Germany
This winter may see Europeans freezing to death, unable to heat their homes as natural gas supplies dwindle. Unemployment and bankruptcies will soar, as companies find themselves unable to cover their costs due to high energy prices. Germany’s vaunted chemical industry, heavily dependent on natural gas feedstock, is likely to wither on the vine. An economic and social disaster reminiscent of the 1930s is possible. The word “deindustrialization” is becoming real.
And yet, as Bloomberg reports:
Beneath the windmill-dotted marshlands of the Netherlands lies Europe’s largest natural gas reserve. The sprawling Groningen field has enough untapped capacity to replace, as soon as this winter, much of the fuel Germany once imported from Russia.
Instead the field is in the process of shutting down, and the Netherlands is rebuffing calls to pump more, even as Europe braces for perhaps its toughest winter since World War II. The reason: Drilling has led to repeated earthquakes, and Dutch officials are loath to risk a backlash from residents by breaking promises.
Groningen Gas Field
There is about 450 billion cubic meters of gas, worth a trillion dollars, available now and expansion is possible raising that by 50%. But extraction of the gas has caused subsidence and earthquakes that have damaged some homes in the area:
Wilnur Hollaar, 50, who’s lived in Groningen for almost two decades, is still seething over the way officials ignored his concerns. “When I bought this house in 2004, it was a palace,”
Hollaar says of his home, which was built in 1926 and features stained-glass windows and detailed stonework. But like thousands of homes in the area, it’s been damaged by quakes; it’s full of cracks and the facade is sinking. “My house has turned into a ruin,” he says.
That’s a shame, and Mr. Hollar has my sympathy. But instead of receiving overly generous compensation allowing him to buy an even nicer home, people are going to freeze to death or have their lives ruined by unemployment. What about the “greater good” that utilitarians preach about?
The damage is not insignificant, but apparently not life threatening:
Groningen recorded its first small tremors in 1986. Since then, there have been hundreds more. Although most are undetectable except by instruments, a magnitude 3.6 earthquake hit the province in 2012, resulting in thousands of property damage claims. Starting in 2014, the Dutch government has placed ever-stricter limits on production from the field, and the output dropped from 54 billion cubic meters in 2013 to an expected 4.5 billion cubic meters this year.
Of the approximately 327,000 homes in the region, at least 127,000 have reported some damage, according to the Groningen Mining Damage Institute. More than 3,300 buildings have been demolished in the area since 2012 because earthquakes have rendered them unsafe, Dutch broadcaster NOS reported.
But the revenue to be gained can more than compensate property owners (and generate plenty of jobs):
Adjusted for inflation, the field yielded a total profit of €428 billion ($422 billion), of which the Dutch state received €363.7 billion over the past 60 years, according to newspaper Het Financieele Dagblad.
The Dutch are a very compassionate people and have been exposed to the suffering of the locals affected by the subsidence. For that reason, the field is unlikely to reawaken and expand. But as the potential catastrophe for Europe starts to be realized, will they continue to believe that the righteous course is to strangle gas output? Holland is all too familiar with the potentisl consequences of mass unemployment and social chaos in Germany.
I hope that my doomsaying is mistaken and that Europe is not plunged into a wave of death and economic depression. But I have grave worries about what lies ahead, even if the nuclear potential of the war in Ukraine is not realized. Compensating those affected so amply as to improve their circumstances seems the way to go.
Hat tip: Ed Lasky
Map Credit: Staatstoezicht op de Mijnen Public domain