• Linkedin
  • Twitter
  • Rss

Oil, Gas & Energy Law

Skip navigation

Oil, Gas & Energy Law

Global Energy Law & Regulation Portal

Join OGELFORUM

Oil, Gas & Energy Law

Global Energy Law & Regulation Portal

  • Sign in
  • Subscribe
  • Home
  • Sign in
  • About About
    1. Home
    2. About
    3. About OGEL
    4. About OGEL
    5. Founding Editor T.W. Wälde
    6. T.W. Wälde
    7. Editorial team
    8. Editorial team
    9. Contributing Authors
    10. Contributing Authors
    11. Subscriptions
    12. Subscriptions
  • Journal Journal
    1. Home
    2. Journal
    3. Browse Issues
    4. Browse
    5. Articles by Category
    6. By Category
    7. Articles by Author
    8. By Author
    9. Advance publication
    10. Advance publication
    11. Specials
    12. Specials
    13. Search
    14. Search
    15. Book reviews
    16. Reviews
  • Legal & Regulatory docs. L & R docs
    1. Home
    2. Legal & Regulatory docs.
    3. L&R by Country
    4. L&R by Country
    5. L&R by Category
    6. L&R by Category
    7. L&R recent additions
    8. L&R recent additions
    9. Search
    10. Search
  • OGELFORUM OGELFORUM
    1. Home
    2. OGELFORUM
    3. About OGELFORUM
    4. About OGELFORUM
    5. Browse archive
    6. Browse by date / topic
    7. Search
    8. Search
    9. Join
    10. Join
  • News & Events Events
    1. Home
    2. News & Events
    3. News
    4. News
    5. Events
    6. Events
  • OGEL Studies OGEL Studies
    1. Home
    2. OGEL Studies
    3. About OGEL Studies
    4. About OGEL Studies
  • Subscribe
Home > Journal > Advance publication

Groningen Gas: The Loss of a Social License to Operate

  • Sign in
  • Suggested citation
J. van den Beukel
J. van den Beukel
L. van Geuns
L. van Geuns

Published 16 April 2019

Abstract

In March 2018, the Dutch government decided to stop natural gas production from the Groningen field as soon as the demand for Groningen gas allows. This implies that gas production will stop in 2030 at the latest and that about 500 BcM of gas will be left in the ground.

Since the first registered induced earthquake in the Groningen field in 1991 the amount of seismic energy released per unit of produced gas has gradually increased. Up until 2012 this did not receive the attention it should have received from the operator (NAM) and from the Dutch state.

In the years following the 2012 Huizinge earthquake (the largest earthquake so far) a number of legal and regulatory measures were taken that made a long-term continuation of gas production increasingly difficult. From late 2015 onwards, production has been set at the minimum level that meets domestic demand and existing export contracts for Groningen gas.

A reversal of the burden of proof for damage to houses, in combination with a large rise in the number of associated damage claims, has greatly increased the non-technical cost of gas production. Many of the more recent claims, especially those on the outer fringes of the field, were not, or were only to a very small extent, related to damage caused by earthquakes but this could usually not be proven. The application of a relatively strict norm for safety related to earthquakes implied that a long-term continuation of significant gas production would require a major house strengthening program. Home owners are currently entitled to compensation for any related reduction in the value of their houses. People have the right to claim compensation for psychological duress.

As a result of the rapid increase in non-technical costs, of which a relatively large share had to be paid by the operator, the Groningen gas field had by 2017 become a major liability to Shell and ExxonMobil (the NAM shareholders). For a long-term continuation of gas production these costs would have been of the order of several tens of billion euros. The measures taken in 2018, apart from leading to a planned cessation of gas production also included a more equitable division of costs between NAM and the Dutch state and implied a large reduction in the house-strengthening program.

These measures were taken against a setting in which the social license to operate for Groningen gas production was gradually lost. Earthquakes played a major role; those with damaged houses that had trouble receiving compensation received widespread sympathy in the Netherlands. Concerns about climate change and a desire among the population in Groningen (who did not financially benefit from gas production) to have a greater say in what was happening in their region also played an important role. Amongst decision makers there was a greater emphasis on environmental and safety concerns at the expense of financial and economic considerations. Electorally, it had become very difficult to defend a long-term continuation of Groningen gas production. 

It is the loss of the social license to operate that we see as the core reason for the termination of Groningen gas production. 

Republished with kind permission. First published February 2019 by The Hague Centre for Strategic Studies. "Groningen gas: the loss of a social license to operate" https://hcss.nl/report/groningen-gas-loss-social-license-operate

This paper will be part of the OGEL Special Issue on "Social Licence to Operate (SLO) in the Extractive and Energy Sectors". More information here https://www.ogel.org/news.asp?key=571

To read this article you need to be a subscriber

Sign in

Forgot password?

Sign in

Subscribe

Fill in the registration form and answer a few simple questions to receive a quote.

Subscribe now

Suggested Citation

J. van den Beukel; L. van Geuns (2019, forthcoming) "Groningen Gas: The Loss of a Social License to Operate"
(OGEL, ISSN 1875-418X) April 2019, www.ogel.org

"Advance publication" is the name given to material that is published ahead of its appearance in a regular structured issue of our Journal. It is also possible to monitor this via RSS. Subscribers will receive update alerts via e-mail of the published articles as soon as they have been added to the website.

Other recently published material:

Addendum OGEL 5 (2022) - WTO Law on Subsidies and Local Content Rules in the Offshore Renewable Energy Sector

16 January 2023

The Domestication of the Principle of Permanent Sovereignty over Natural Resources in the Tanzania Petroleum Industry: The Move Towards Nationalism is it a Sovereign Right or Wrong?

10 January 2023

Towards a Common Gas Market: The Reform and Integration of the Domestic Natural Gas Markets of the Eurasian Economic Union

7 December 2022

Energy Auctions: An Alternative for Energy Investment in Cuba

7 December 2022

A 'Peculiar Energy Transition' in Nigeria: International Oil Companies, Onshore and Shallow Offshore Divestitures, and Deep Offshore Investments

6 December 2022

Complete listing of Advance publication.

Call for contributions

OGEL Call for Papers: Carbon Capture and Storage

Professor Tara Righetti and Dr. Matteo Fermeglia

  • Professor Tara Righetti
  • Dr. Matteo Fermeglia

OGEL Call for Papers: The Impact of the War in Ukraine on the Energy Sector

Agnieszka Ason, Konstantin Christie, Prof. Kim Talus

  • Agnieszka Ason
  • Konstantin Christie
  • Kim Talus

OGEL Call for Papers: Energy Market Creation: Liberalisations and Transformations

Prof. Kim Talus

  • Kim Talus

Call for Papers: OGEL Energy Law Journal 2023

Call for Papers: OGEL Energy Law Journal 2023

OGEL Editorial Team

  • More
  • Contribute

Stay connected

Sign up for our email alerts.

  • Issues
  • Advance publication
  • News
  • Linkedin
  • Twitter
  • RSS

Join the debate

Want to join OGELFORUM, our unique platform for oil, gas and energy issues?

Simply fill in the registration form to start your trial membership.

Download the app

  1. App store
  2. Google play

The Oil, Gas & Energy Law Intelligence (OGEL, ISSN 1875-418X) Journal and OGELFORUM listserv focus on recent developments in the area of oil, gas, energy law, regulation, treaties, judicial and arbitral cases, voluntary guidelines, tax and contracting, including the oil, gas, energy geopolitics. Read our Terms & Conditions here, and our Privacy Policy here.

About OGEL

  • Terms & Conditions
  • Contribute
  • Subscriptions
  • Contact
  • Help

Other publications

  • Transnational Dispute Management (TDM)

© 2004 - 2023. Published by MARIS.

  • Home
  • Contribute
  • Subscriptions
  • Contact
  • Help