Gas reserves and reservoir trends in The Netherlands

Abstract

The Netherlands is one of the largest gas producers in Europe with about 71.2 Bcm (2.51 Tcf) of gas produced during the year 2002, half of which is exported, supplying Europe with about 20% of its total consumption. Significant gas production in The Netherlands started in 1965, reached a peak during 1976 with 101 Bcm (3 Tcf) and by year end 2002, a total of 2622 Bcm (92.6 Tcf) had been extracted. Currently the government limits yearly gas production to 80 Bcm, although the rate in the past four years has been well under this limit. Early exploration was started before the Second World War by a precursor of NAM (the 50/50 Shell-Exxon joint venture active in The Netherlands) and in 1943 the Schoonebeek oil field was found followed by Coevorden gas field in 1951. In 1959, the giant Groningen gas field was discovered by NAM, changing the face of exploration in The Netherlands. Since that time NAM has retained its dominant position as operator controlling about three quarters of annual gas production and reserves. Public domain access of data on gas and oil fields in The Netherlands is scarce, with pre-2003 legislation allowing operators to hold tight all information on onshore wells. Since most onshore concessions are large, held over long periods of time (several in perpetuity), and have no relinquishment obligations, many fields have been found and are in production without any data entering the public arena. Offshore, pre-2003 legislation required operators to release well data after 10 years. Offshore concessions are relatively large and many contain several producing fields for which no or little data is in the public domain. Following the new legislation in force since 1 January 2003 detailed production data and all on- and offshore wells and seismic data older than 5 years have to be released. However, reserve figures of fields are not in the public domain. Reserve data submitted by the operators remain confidential for a period of 10 years and in the absence of any legal requirement operators use this advantage. On a yearly basis, the government publishes general estimates on reserves, but not for individual fields. Data on the current reserve distribution for fields, reservoir trends and for licence holders are not easily ascertained. This paper attempts to fill this information gap by reviewing reserves whether these are in developed or undeveloped fields. Reserves are oil or gas volumes that can be commercially recovered at current economic conditions, industry practices and government regulations. Developed reserves are those being produced today while undeveloped fields are not yet on stream. Remaining reserves are those left in a producing field. Initial (or ultimate) reserves of a field are the cumulative production plus the remaining reserves. Because the technical data of the fields are not available, the different reserves categories are used here informally and without strict definitions. In this paper a difference has been made between the giant Groningen gas field and the other fields that are collectively called the ‘Small fields’. This term is used in a comparative sense with the Groningen field as the measuring stick, and is applied due to the Small Field Policy in The Netherlands, which allows operators priority to bring small gas fields immediately on stream in lieu of production from the Groningen field. Exploration for and production from small fields is therefore not constrained by demand for gas. Moreover because the Groningen field acts as a swing producer, small fields can produce with high load factors. The Small Field Policy sets production constraints on the Groningen field. In addition the gas price is kept relatively high because it is linked to a basket of oil product prices. Without these production constraints and the linkage of the gas price to that for oil, the low production costs and high production capacity of the Groningen field would result in low gas prices for Western Europe and most small fields in The Netherlands and surrounding countries would have been uneconomic during much of the lifetime of the Groningen field.