Groningen gas output could fall below 50mcm/day on cap

Daily natural gas production from the Groningen field in the Netherlands could drop below 50 million cubic metres towards the end of Q2 2015, according to calculations based on the latest cumulative Dutch production data from operator GTS.

Production from Groningen in the first half of 2015 is expected to fall well below the daily rate recorded during the same period of previous years, as the field’s operators seek to abide the 16.5 billion cubic metre (bcm) production cap recently imposed by the Dutch government.

Based on historic data, production from Groningen in 2015-to-date as 61% of total Dutch output. The projection to 30 June 2015 is based on an equal day-on-day decline in output across the 140-day period and assumes that the full 16.5bcm Groningen cap will be produced.

With an estimated 6.3bcm produced from Groningen so far in 2015 according to ICIS calculations, output from the field will need to average 73mcm/day between now and 30 June in order to adhere to the cap.

Last year, Groningen production averaged 115mcm/day between 12 February and 30 June with around 22.9bcm produced in total in the first half of the year.

Following the announcement of the H1 2015 cap on Tuesday, total production across all Dutch fields fell 15% session on session to 200mcm on Wednesday, data from grid operator GTS showed.

On Thursday, a total of 163mcm was nominated to enter the Dutch grid from all domestic production sites combined. This was equal to the nomination figure for 11 February when physical output totalled 200mcm.

News of the half-year cap and the steep drop in production in recent sessions has been cited by market participants as the key bullish driver affecting prompt delivery contracts at the Dutch TTF trading hub.

On Wednesday, the drop in domestic Dutch production also appeared to have a knock-on impact on exports from the Netherlands to bordering markets. Proportionally, Britain was impacted the most with flows on the BBL falling 61% from the February average to 12mcm. Flows to Belgium (75mcm) and Germany (61mcm) were down 12% and 11% from their month-to-date averages.

Source: ICIS Energy