Earthquakes should “become a normal part of gas production again,” Shell wrote in a statement seven years ago. “This is annoying, but acceptable given the low risk and high benefit to the region.”

The document was discussed this morning at the parliamentary inquiry into natural gas production in Groningen, where Shell chief executive Ben van Beurden was heard. He said he was unaware of the earthquake segment but acknowledged that all mining activities can have negative impacts. In retrospect, Shell was “probably naïve” about this.

Shell worried about the cost

The memorandum was written ahead of a meeting between Shell and top Commerce Department officials. Van Beurden explained how Shell was becoming increasingly concerned about Groningen Gas’s falling revenues. Gradually, these returns have become too low and the costs too high. Shell has tried several times to make this clear to the cabinet.

Prime Minister Rutte was sensitive to this argument and therefore assured Van Beurden in 2015 that gas production would not fall below 27 billion cubic meters. The rising costs of handling claims and reinforcement measures became increasingly problematic for Shell and NAM, which Shell owns half.

During the interrogation it was discussed at length where the turning point for Shell was. In other words, the level of gas production at which it was no longer profitable for Shell to produce gas in Groningen. The state wanted gas to be produced gradually less and less, while, according to Shell, the production level should not fall below 27 billion. Van Beurden already called this amount “painful”, but it didn’t stop there.

More and more people are looking for the minimum that is necessary to be able to continue to guarantee security of supply. But “a production philosophy based solely on security of supply was considered disastrous,” Shell said in 2015. According to Van Beurden, this would mean that the state and multinationals would lose a lot of revenue and more gas would have to be bought abroad.

Constant tension between Shell and NAM

It also became clear that there were constant tensions between Shell and NAM. NAM was responsible for inflating the gas and Shell was more distant as a shareholder. Van Beurden has repeatedly made it clear to the company that Shell really needs to keep its distance. “As a shareholder, you shouldn’t be in the driver’s seat.”

At the same time, Van Beurden had a good idea of ​​the problems at NAM and he also got involved in them. “At one point, NAM employed more people on claims than on geology,” said Van Beurden. “We didn’t have to, we had to get rid of it.”

The interrogation also revealed that Ben van Beurden and Prime Minister Rutte are good friends. They have met formally at least once in recent years at an annual dinner, along with the CEO of America’s ExxonMobil. But in addition to formal contacts, there were also informal contacts. “I consider the prime minister a friend,” said Van Beurden.