Explained | How is the energy crisis in Europe shaping up?

Source: The post is based on the article “Explained | How is the energy crisis in Europe shaping up?” published in The Hindu on 20th October 2022.

What is the News?

The gas field in Groningen, the Netherlands, has again come under the spotlight amid concerns over energy supplies.

The Dutch government announced that the field would be shut down by the end of 2024 due to the stress and suffering caused by earthquakes and tremors connected to gas extraction in the area.

About Groningen Gas Field

The Groningen gas field is a natural gas field in Groningen province in the northeastern part of the Netherlands. It is the largest natural gas field in Europe

The region saw multiple earthquakes throughout the 1980s. The Dutch government said it would close the field in response to protests by locals. The closing date was moved up from 2030 to 2022.

However, the unsure geopolitical developments have prompted the Dutch government to refrain from permanently closing any wells this year.

Significance of the field: Bloomberg reported earlier this month that if allowed, the additional supply from the gas field could go up to a level that would make up for what Germany imported from Russia.

Can oil or gas exploration cause earthquakes?

The damming of rivers to build reservoirs, the extraction of oil and gas, and mining are some examples of human activities that could lead to ‘induced seismicity’.

For instance, to enhance energy extraction, wastewater, sand and chemicals are injected into the earth at high pressure to create fractures in the rocks. This process is called “hydraulic Fracturing”.

This process helps improve the interconnectivity of the pores in order to enhance oil and gas extraction. In some cases, fluid is injected into pores connected to the fault which may substantially increase the pore pressure within the fault to counteract the effective frictional forces. This may trigger earthquakes.

Note: Earthquakes caused by fluid extraction need not happen at every place that sees extraction. The geomechanical properties of the rock in question determine outcomes.The reaction of rocks to stresses can be different.

Should India be concerned about the energy crisis in Europe?

India’s domestic gas price is determined from the average of four global indices viz U.S.’s Henry Hub, the U.K.’s National Balancing point, Canada’s Alberta and Russian gas. 

Compared with pre-pandemic times, the average domestic price of gas has more than doubled.

Imports alone accounted for close to 50% of consumption.

Global production is estimated to decline further. The situation would become challenging for the government unless the formula for determining domestic gas prices is reviewed.

Till then, the government has to bear the higher subsidy burden on fertilizer — in the manufacture of which natural gas is used — as well as for the LPG sector.