Dutch small field policy
Producers, including the Nederlandse Aardolie Maatschappij (NAM), conducted large-scale gas exploration activities up until 1974 without this resulting in any additional gas production. A combination of relatively high extraction costs and a lack of certainty concerning sales meant that large investment risks existed. The first oil crisis in 1973 in which Middle Eastern oil-producing nations imposed an oil boycott against several countries including the Netherlands prompted the Dutch government to promote domestic natural gas production.
Dutch reserves were mapped out in greater detail and it was revealed that more reserves existed in the Netherlands where natural gas might be expected. Gas fields were discovered and put into production in Drenthe, Overijssel, Friesland and at several dozen locations beneath the North Sea. The Groningen gas field was still by far the largest reserve, but all these additional sources combined nonetheless accounted for several hundred billion m³ of natural gas beneath Dutch soil.
These smaller fields were relatively expensive to exploit and often unviable. The costs incurred for more intensive exploration, more frequent drilling and production were high in relation to the relatively low volumes that these fields produced. Nonetheless, the Dutch government wanted to deploy this gas to allow Dutch society to capitalise on its own natural gas reserves to the maximum extent possible and to preserve the Groningen gas field as a strategic reserve. The Dutch government therefore introduced its Small Field Policy in 1974.
An essential component of the Dutch Small Field Policy is that it guarantees a buyer for gas produced from these small fields. To achieve this the NV Nederlandse Gasunie was obliged to procure this gas at competitive prices in preference to gas from other sources. This requirement was subsequently passed onto GasTerra following Gasunie's division into a transmission system operator and a trading company, Gasunie and GasTerra respectively, in 2005. The obligation to transmit this gas has since been passed onto the transmission system operator – Gasunie Transport Services (GTS).
Over the years, this policy has resulted in dozens of gas fields being added to Dutch gas reserves. The small fields have since produced a larger share of the Netherlands' gas requirements than the far larger Groningen gas field. The peak in small field production came in 2000. Since this time, there has been a gradual drop in output. It is anticipated that this decline will continue in the years to come.