Dutch go-ahead for Taqa gas project

A Dutch court has given a US$1.1 billion Abu Dhabi-backed gas project the green light, calling environmentalist concerns 'unfounded'.

Taqa's drilling permit was suspended in August as the Dutch court studied the appeals. Above, Taqa's drilling facility in the Netherlands. Eric de Vries / Taqa

A Dutch court has given a US$1.1 billion (Dh4.04bn) Abu Dhabi-backed gas project the green light, calling environmentalist concerns "unfounded".

The ruling, issued by the Council of State in the The Hague, allows Abu Dhabi National Energy Company, known as Taqa, to build Europe's biggest natural gas storage site.

Environmentalist and community groups had lodged complaints against the plan to use a depleted reservoir near Amsterdam to store the gas, saying it would disrupt wildlife and possibly increase the risk of earthquakes.

"The Council of State declared all objections to the plan and the permits unfounded," the court said. "Although experts could not give a realistic estimate of the risk of an earthquake, the chance was in any event considered no greater than that already incurred by extracting gas at the same location."

The judgement clears a cloud that has cast a shadow over the Bergermeer project since August, when the court ordered Taqa and its partner, Energie Beheer Nederland, a state-owned Dutch oil company, to halt work on the project while it weighed the appeals.

Because of the suspension of the drilling permits, Taqa pushed back Bergermeer's completion date from 2014 to 2015. Partial capacity is now expected to be ready by April 2014.

Yesterday shares of Taqa in Abu Dhabi traded marginally down, reaching Dh1.20.

In the appeal, residents and green activists expressed fears that work at the site - intended to store up to 4.1 billion cubic metres of natural gas - would increase noise levels, disrupt animal habitats and increase the risk of earth tremors. The reservoir is a depleted gasfield where production stopped in 2003.

Taqa has installed seismic meters and institutions including the Massachusetts Institute of Technology have assessed the site's risks.

"Earth tremors are very common related to gas production in the Netherlands," said Jan Willem van Hoogstraten, the managing director for Taqa's operations in the Netherlands. "Over 65 have been measured in the last 25 years and none of them have ever resulted in any personal injury or structural damage."

The company, which is majority-owned by the Abu Dhabi Water & Electricity Authority, has sought to engage the public and also tailored its work schedule around a bird breeding season that runs from February to the beginning of July.

"When we first started it was pretty high in 'nimby' - not in my back yard," said Mr van Hoogstraten. "The interaction with all local stakeholders has paid off."

Taqa is to start on civil works in the next few weeks and begin drilling the first of 14 wells by December. Gas treatment and compression plants need to be built and pipelines laid.

It also needs to secure more customers to take up the first cubic metres inside the reservoir. Norway's Statoil, the Dutch energy trader Vattenfall and a third European energy company Taqa has not named were the first customers to commit to taking space in an initial auction in December.

The total value of those contracts is $500 million to $1bn, depending on the gas price.

The price of natural gas, particularly in North America, has been pushed down because of a dramatic rise in the production of shale gas.

Low prices will not hurt Bergermeer's chances, although the United States is expected to begin exporting gas by tanker in 2015, said Mr van Hoogstraten.

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