Earthquake in Groningen: BBH warns of possible consequences for natural gas supply

The earthquake that hit the region of Groningen on 08/01/2018 could affect the process of switching market areas from L-gas to H-gas, war n BBH and the working group “Market Area Conversion” (Arbeitsgemeinschaft Erdgasumstellung – ARGE EGU).

The earthquake was caused by gas production at the significant Groningen gas field, which is also the source of the vast majority of the so-called L-gas used in many parts in the North West of Germany. The Dutch Minister for Economic Affairs announced his intention to cut the production at the Groningen gas field to prevent further earthquakes. This step, however, could have a dramatic impact on the supply situation in the North West of Germany.

“We have written to the President of the German Federal Network Agency (Bundesnetzagentur – BNetzA) asking him to clarify as soon as possible with the Dutch government how much L-gas will still be available from the Netherlands in the next few years. On this basis, a scenario framework taking account of risks such as further earthquakes is to be developed in the process of drawing up the Network Development Plan (NDP). Furthermore, the prerequisites for setting up converter plants as regulated infrastructure are to be established to ensure security of supply”, says Prof. Christian Held of the law firm Becker Büttner Held, which represents ARGE EGU. Randulph Noack, managing director of the municipal utility Stadtwerke Porta Westfalica and a spokesperson of the working group ARGE EGU adds: “We do not want to over-dramatise things, but security of supply is the most essential principle of the energy industry. The BNetzA must act now!”

In the next two decades, all L-gas grids, i.e. grids using low calorific gas, will be converted to be able to use H-gas, as the gas supplies from the Netherlands and Germany are dwindling. Actually, this is not a problem since large quantities of the high calorific natural gas will be available for a long time ahead, thus ensuring security of supply. However, it is a fairly complex matter to convert over 100 gas grids, which means that over 5.5 million gas appliances ranging from ordinary heating systems in homes to industrial gas applications need to be converted. This is the biggest infrastructure project in the German gas industry for which the affected distribution system operators are legally responsible. The problem right now is that the external service providers are still in the process of hiring and training a sufficient number of the professional personnel required to convert the gas appliances in the next few years with the overall planning being quite ambitious (as it is planned to convert up to 600,000 gas appliances per year).

The ARGE EGU, an alliance of 44 distribution system operators affected by the switching from L-gas to H-gas, has always pointed out that the project will work if “everything goes smoothly”; if, however, there is a further decline in the gas production, an acceleration of the project appears to be hardly feasible. In the view of ARGE EGU, it is the obligation of the BNetzA to ensure the necessary security of gas supply, for instance by recognising converter plants as regulated infrastructure which may be used to convert H-gas into L-gas as well as developing different risk scenarios and appropriate protective measures.

Becker Büttner Held is a leading provider of advisory services for energy and infrastructure companies and their customers. Energy and supply companies, particularly public utilities, municipalities and local authorities, industrial companies and international groups are among its core clients. BBH advises these and many other companies and organisations in all legal matters and also assists them with business and strategic advice.

Contact:

Dr. Ines Zenke
Lawyer, Partner
Tel +49 (0)30 611 28 40-179
ines.zenke(at)bbh-online.de

Prof. Christian Held
Lawyer, Partner
Tel +49 (0)30 611 28 40-48
christian.held(at)bbh-online.de

Visit Becker Büttner Held online at www.bbh-online.de, www.derenergieblog.de or twitter.com/BBH_online.