Exxon-Shell Gas Venture to Adjust Groningen Output

Dutch gas production company NAM and national gas trading company GasTerra said on Wednesday they were studying how to compensate for a court ruling that halted production at part of the massive Groningen gas field because of safety concerns.

A spokesman for GasTerra said it was not yet clear whether his organisation may have to purchase additional gas on the open market, or whether NAM may be able to increase production in other areas to make up for the production halt around the town of Loppersum.

"Yes we do think we can meet all our contractual obligations, so in that sense the court ruling doesn't change much," Anton Buijs said.

"What does change is where does the gas come from" he said.

Production at the Groningen gas field, Europe's largest, has been increasingly under fire since the Dutch Safey Board censored the government in February for failing to take into account adequately the risk the small earthquakes it causes pose to citizens of Groningen.

GasTerra, which buys and sells all the gas produced by NAM and a number of smaller Dutch fields, also purchases some of its supplies from the TTF trading hub, where Norwegian and Russian gas are also traded.

Buijs noted that fields around Loppersum, which make up about 9 percent of Groningen production, have already pumped one billion cubic meters (bcm) of gas this year, one third of their budgeted output in 2015 before the court ruling.

In a letter to parliament on Wednesday, Economic Affairs Minister Henk Kamp said NAM may have to make "operational adjustments" in other areas to compensate for the Loppersum halt.

NAM spokesman Ernst Moeksis declined to say whether that would mean increasing production in other areas of Groningen, which is possible under the court ruling but would be unpopular in Groningen -- and politically sensitive in The Hague.

GasTerra spokesman Buijs said other possibilities include a mix of increasing purchases from Norway or Russia, using stored gas if necessary, and increasing purchases from many small Dutch fields outside Groningen.

And the court's ruling doesn't exclude the possibility of restarting production at Loppersum in an emergency, he added.

NAM (Nederlandse Aardolie Maatschappij) is a joint venture between Royal Dutch Shell (RYDAF) and Exxon Mobil (XOM).

The national gas trading company GasTerra, half owned by the Dutch state and half owned by NAM, said GasTerra, NAM and government-owned grid operator GasUnie would discuss the next steps on Wednesday.

Reporting By Toby Sterling; additional reporting by Anthony Deutsch