and Sustainability Research Institute, University of Groningen – Professor Rien Herber – Netherlands
Professor Rien Herber gives his opinion on the potential for shale gas in the Netherlands, as well as an overview of the current challenges and opportunities for oil and gas explorers in the mature Netherlands onshore and offshore plays. He also makes comment on the potential of CO2 storage to ameliorate the country’s carbon emissions in the near future.
How can reexamination of old data assist E&P companies access new resources here in the Netherlands?
It might not be the primary route to accessing new resources, but it is a prominent one. As technology and science progress, data analyzed with historic techniques can benefit from more modern interpretative abilities. Furthermore, efforts to explore are far more international than they were- and the far greater degree of insight sharing from other operators in the same geological province, which extends from the southern UK to Poland, can help experts take a fresh look at geological features in the Netherlands. This does not mean that reexamination is a completely risk-free route to success, but it is a cardinal sin to ignore existing data when looking for new exploration plays.
The Dutch regulatory system requires well and seismic data to be published five years after it was obtained. That ensures that today, we have a great deal of material where novel imaging and processing techniques can deliver new information. In the Netherlands, much of the activity of this ilk takes place in the Northern offshore which, despite many dry wells, might still be underexplored. The D, E and even F blocks do represent untested potential where further resources may be realized. Further South, the K and L blocks are the historically successful engines of gas production and although mature, still hold considerable discovered but yet unrecovered reserves.
In the late 80s, there were many oil and gas companies here in the Netherlands– both large and small. In the 90s there was a significant consolidation of the number of players here, yet in the last 5-10 years, the number of smaller players has increased again. This is simply to do with how the gas price and profit margins interact in an area with a dense gas infrastructure.
With regard to shale gas, currently under moratorium until the publication of a strategic environmental assessment, what prospects do you envisage in the Netherlands?
There is very modest potential for this resource in the Netherlands. Following the success of shale gas in North America, its potential in the Netherlands has been dramatically over-hyped as even though there is a great deal of shale in the country, it does not everywhere have the qualities which will make gas production prolific. Offshore, shale gas is not economic, so one must look onshore. In the Dutch onshore territory, over 3,000 wells have been delivered which do represent a useful source of information on which to base initial estimates of the resource.
There is a great amount of shale gas in the USA, but currently fuel prices are close to the cost of recovery even there- there has been a great deal of reduction in the number of wells drilled. Due to this, there is more emphasis on shale oil, which is affected by the higher, global oil price. At the moment, USD 85 per barrel is economic, but prices closer to USD 70 can be considered problematic, even in the USA.
In the Netherlands, gigantic estimates have been made of potential shale resources. EBN in 2009 published a claim that there were 500,000 BCM of gas held in unconventional accumulations. That is a figure derived from assuming that all the shale, offshore and onshore in the Netherlands contains gas. This is not realistic and my own estimate is that there is closer to 30 BCM in the Netherlands. This is a far more modest figure, even though for some players, this could prove profitable at current European gas prices. Shale gas should not in any way be considered a replacement for the Groningen gas resource however. To give a clearer idea of what shale gas could deliver in the Netherlands, it is worth remembering that the country is currently consuming 40-45 BCM per annum. Even if one took 1,000 shale gas wells, producing flat out (not at the initial rate, but at a respectable average rate of 10-15,000 m3 per day for a shale well), their collective production annually would be around 3.5 BCM.
That is not even ten percent of our domestic consumption. On top of that, shale gas wells only last for around ten years even after repeated fracking and industry experience in North America learns that of 100 wells drilled, initially around 20 are likely to be unproductive. With the dense population of the Netherlands, it is questionable if seeking this resource is worth the social cost. However, we do need a fully tested well to determine the potential for shale gas before we can make a final call.
You have previously spoken about the potential for CO2 geological storage. How realistic is this ambition in the Netherlands?
The technical possibilities are clearly there. Barriers are purely social and psychological – many are worried that something is being put underground that is potentially harmful and could possibly escape. This is almost paradoxical, because the Dutch populace is very comfortable with the presence, transport and usage of natural gas. Whilst one should not be in a cloud of CO2– one would suffocate- it is not toxic as opposed to natural gas which is also highly flammable. Industry has shown that it can deal safely with natural gas, so why not with CO2? It seems strange that the relative risks of these two gases are not evaluated on a level playing field, particularly as CO2 emissions to the atmosphere form a hazard through their influence on climate change.
There are many issues here centralized on distrust of corporate and governmental interests to conflating tremors caused by conventional gas extraction at Groningen with the potential impacts of geological storage- but CO2 gas storage offers a useful route to sequester carbon emissions. Offshore and onshore, the Netherlands has 2,500 million tons capacity of safe CO2 storage at most if you fill up all existing gasfields, except the giant Groningen field, once they have been depleted. The Netherlands produces 160 million tons of CO2 annually – though much of this is from diffuse sources such as cars where the CO2 would be difficult to capture. Around 40 percent of Dutch emissions originate at point sources and could be captured for geological storage. Theoretically this could serve us for several decades but CO2 storage remains a transitional measure on the road towards renewable energy.
CO2 storage can also help stimulate recovery from mature assets. To what extent can wider enhanced gas recovery techniques ensure that falling production from Groningen does not have a severe impact on Dutch production totals?
Producing as normal, we are likely to be producing at least 40 BCM per annum until the late 2020s, thus meeting domestic demand. I think there is considerable potential in existing fields to utilize new technologies to get another five percent from this fields. This will not make a huge impact- but can help. A typical Rotliegend field has a recovery rate of 85-95 percent. Continued export of gas at current levels of some 30 BCM per annum, however will not help efforts to continue supplying consumers in the Netherlands with Dutch gas of course. It’s the government’s call, balancing national revenue with security of supply.
You have worked at the forefront of the Dutch commercial sector too, with the likes of Shell and NAM. With this insight, is it fair to describe the Netherlands as a ‘junior’s paradise’ at the moment?
This is of course relative. Greenfield development is often very risky for a junior player. The Netherlands is however a mature gas province, but there is little prospect left of finding a new large, let’s say 10 BCM field . If one is happier seeking smaller fields, there is infrastructure, data, experience and information which will allow production of gas fields containing as low as a quarter of a BCM. Exploring for such resources in the Netherlands has a proven track record of a typical success rate of around 60 percent. This does make the Dutch context welcoming to juniors, certainly.
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