“Drill, baby, drill” is back in Europe as the gas crisis looms

By Julia Horowitz, CNN Business

The 16 km long island of Schiermonnikoog is known as one of the most beautiful places in the Netherlands, with the widest beach in Europe, 300 different species of birds and a lively tourist trade.

But after the Dutch and German governments approved the development of a new gas field about 12 miles off the coast of Schiermonnikoog, the island’s mayor worries about his future.

“We are very concerned that gas drilling will damage the area,” Mayor Ineke said. van Gent told CNN Business. “We also believe that it is not necessary to drill [for] new gas and that we should invest much more in renewable energies.

The gas project, which spans German and Dutch North Sea territories, is just one venture that has been given the green light or is being given another look in Europe and the UK. United after Russia invaded Ukraine. Europe is desperately looking securing gas supplies that cannot be cut off at Moscow’s will. Last week EU leaders set a voluntary target to cut gas consumption by 15% by March 2023 to escape a crisis once the weather turns.

An energy shortage could push prices even higher, triggering a wave of blackouts and leaving vulnerable households unable to pay their bills.

Yet scientists, activists and residents of places like Schiermonnikoog are frustrated. They believe governments are using the war in Ukraine as political cover for projects that won’t get in place in time to help this winter, and which could ultimately make it harder to bring global warming under control.

The gas field near Schiermonnikoog is not expected to start supplying gas to Dutch and German households until 2024. Once lit, it could operate for decades, with licenses valid until 2042.

“In principle, we need to get rid of all fossil fuels, and we need to get rid of them very quickly,” said Han Dolman, director of the Royal Netherlands Institute for Marine Research, who opposes the project. “It’s not an immediate solution to anything. [related to] the Russian gas crisis.

ONE-Dyas, the Dutch company managing the development, said it has been in frequent contact with local stakeholders since 2018 and produced an in-depth environmental impact report which was reviewed by regulators. Locally produced gas also has a lower carbon footprint than natural gas imported from other countries, he added.

The Great Gas Rush

Europe’s rush to secure gas supplies comes as Russia signals its willingness to punish the bloc for its support of Ukraine. State-owned Gazprom recently reduced flows through the crucial Nord Stream 1 pipeline to 20% of daily capacity.

The situation in Europe is “perilous” and the region must prepare for a “long and harsh winter”, according to Fatih Birol, executive director of the International Energy Agency.

Even if European countries manage to fill their gas reservoirs to 90% capacity, the region still risks facing supply disruptions early next year if Russia decides to cut off gas supplies from October, the IEA said.

The risk has prompted countries to find alternative fuel sources and conserve what they can.

It has also empowered politicians to support an expansion of the gas sector with a conviction that would have been unthinkable just a year ago due to climate concerns. Since February, government officials have lifted production caps and approved new drilling sites, often citing the need to be pragmatic during a time of high stress.

Denmark, which in 2020 announced plans to phase out fossil fuel production, is boosting extraction from North Sea fields that already have licenses. Hungary has announced that it will increase its domestic natural gas production from 1.5 billion cubic meters to 2 billion cubic meters. Shell is proceeding with a new natural gas development in the North Sea after the UK government gave the green light in June, reversing a previous decision to block the project on environmental grounds.

“We power renewables and nuclear, but we are also realistic about our current energy needs,” said Kwasi Kwarteng, UK Business and Energy Secretary. tweeted after the decision. Average UK energy bills could top £500 ($613) in January alone, according to a new report from consultancy BFY Group.

Meanwhile, governments are racing to expand their ability to receive liquefied natural gas, or LNG, which is an attractive alternative to gas from Russia because it can be shipped by allies on tankers instead of delivered by pipelines from Russia. Global Energy Monitor, a US think tank, counts at least 25 LNG terminal construction or expansion projects in Europe and the UK that have been newly proposed or revived since the outbreak of war in Ukraine.

“You just see this 180 degree turn around the world,” said Oswald Clint, an analyst at Sanford Bernstein who covers the energy sector.

A long-term vision

Some of these gas projects could boost Europe’s energy supply this winter in case Russian President Vladimir Putin stops flows from Russia.

Canadian company Zenith Energy, which said last month it would reactivate a well in northeastern Italy that will produce 1,300 cubic meters of gas per day, expects production to begin between October and december.

Luca Benedetto, the chief financial officer, said in a statement that the decision was taken “in the context of the growing need for European internal energy security and a very encouraging price climate”.

Others won’t launch for a while. Shell estimates that the Jackdaw gas field in the British North Sea will be commissioned “in the mid-2020s”. A floating terminal capable of storing and regasifying LNG, which was recently purchased by Italian gas infrastructure operator Snam and will be installed near the coast of Ravenna, will not start operations until the second half of 2024.

Tara Connolly, a gas campaigner at Global Witness based in Brussels, said one of her concerns is that the projects will not be needed once they are actually completed.

“Right before Ukraine, there was a real feeling that Europe had enough gas infrastructure, even in the event of a major disruption,” Connolly said. “Now it’s really a different picture.”

In addition, given the timing, renewables could fill the gap instead of natural gas, which has a lower carbon footprint than oil and coal but still contributes to global warming, according to Connolly.

The ecological risk

This is an opinion shared by the mayor of Schiermonnikoog. She is also concerned about the protection of a sensitive UNESCO World Heritage Site.

“My main concern is [the] subsidence, which means we also have problems with living on the water,” van Gent said.

Not far away, the onshore Groningen gas field – a joint venture between Shell and Exxon that was once one of Europe’s biggest sources of gas supply – is shutting down due to earthquakes. A 2016 report found that there were 271 seismic events with a magnitude of 1.5 or greater.

It’s less of a problem for the field near Schiermonnikoog, which will be in the open sea. But the ecological impact must also be considered, according to Dolman, the scientist who, along with 432 others, signed a letter opposing the new Dutch development.

“It’s in a nature reserve area, so it doubles in impact,” he said. “You have to be careful in those areas to do anything, let alone start new gas production platforms.”

Carsten Mühlenmeier, president of the German regulatory agency in charge of North Sea permits, said that “the territorial sea is a sensitive area where undisturbed use must be prioritized over mining and private interests”, especially given the need to reduce demand for fossil fuels. Yet he agreed once the Netherlands signed and the political winds turned in Berlin.

“Russia’s war of aggression against Ukraine has proven that securing an energy supply is a challenge, which outweighs certain security measures, especially environmental concerns,” Mühlenmeier told CNN Business.

Greenpeace sued the UK government over its approval of Jackdaw, saying its environmental assessment of the project was flawed because it failed to look at emissions from burning natural gas.

“It is completely irrational for the government to endorse – and heavily subsidize – a project like Jackdaw that does nothing to solve the energy price crisis while contributing to climate change,” said climate activist Lauren MacDonald. “Our dependence on fossil fuels is the root of both crises, but the government continues to try to move forward with new oil and gas projects.”

— Rosanne Roobeek and Anna Cooban contributed reporting.

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