February 18, 2015 / 10:25 AM / 4 years ago

UPDATE 2-Dutch gas field earthquake dangers ignored for decades -Safety Board

(Adds reaction from government, companies)

By Anthony Deutsch

AMSTERDAM, Feb 18 (Reuters) - Royal Dutch Shell, Exxon Mobil Corp and the Dutch government ignored the danger of earthquakes caused by gas extraction at the massive Groningen gas field for decades, the Dutch Safety Board said on Wednesday.

Its critical report is one of several recommendations to the government of Liberal Party Prime Minister Mark Rutte in coming months about production levels at the Groningen field. The issue has become a political flashpoint ahead of local elections.

The correlation between gas extraction and earthquakes was clear in 1993, but “the risks to residents were not recognised” until 2013, the report said.

The board’s year-long inquiry concluded that the Economy Ministry, State Supervision of Mines and NAM, the Shell-Exxon Mobil joint venture which operates the gas field, worked collectively to maximise production.

“The parties concerned considered the safety risk to the population to be negligible and thus disregarded the uncertainties surrounding this risk assessment,” it said. They “failed to act with due care for citizen safety in Groningen.”

The Dutch government has ordered production to be reduced from the field, the largest in the European Union, to 16.5 billion cubic metres (bcm) in the first half of 2015. It is considering permanently cutting output to below a cap of 39.4 bcm for 2015.

Economy Minister Henk Kamp said on Wednesday alternative methods of extraction were being studied with the aim of reducing earthquakes.

Production could be as low as an annual 35 bcm if studies indicate that a higher level is unsafe and if the Netherlands can still fill delivery contracts, he has said.

Opposition parties, which are expected to strip control of the Senate from Rutte’s ruling coalition after March 18 elections, have pushed for an annual cap of 30 bcm.

NAM said it would increase safety by funding construction improvements at 8,000 houses and inspecting another 15,000 homes. It will also launch an independent inquiry.

“The uncertainty about earthquakes is larger than was assumed in the past,” NAM head Gerald Schotman said in a statement. “We understand the residents’ feelings of anxiety and insecurity.”

Gas extraction has resulted in increasingly strong earth tremors, some measuring as much as 3.6 on the Richter scale.

The cost of damage repairs, structural improvements to buildings, and compensation for home value decreases has been estimated at 6.5 billion euros. Around 35,000 homes are said to be affected, parliament heard last week.

Dutch gas exports in 2012 totalled nearly 57.3 bcm, or around 12 percent of Europe’s gas demand, about 75 percent of it from the Groningen field.

The field is operated by government-owned Gasunie and output jointly exploited by the government, Royal Dutch Shell and Exxon Mobil through NAM (Nederlandse Aardolie Maatschappij).

Trader GasTerra said it will have to buy gas on the open market to meet contractual obligations following the ordered production cut at Groningen. (Editing by David Evans)

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