When Gasunie was established as a sales organisation for Dutch gas in 1963, oil and coal were the most popular fuels, the Netherlands had approximately 150 local or regional utility companies, and gas, which took the form mainly of coal gas, coke gas and a small proportion of natural gas, only accounted for a small proportion of overall fuel consumption.
Consequences and success
The introduction of natural gas can be regarded as a marketing success of the first order. During the space of barely a decade, much of the Netherlands switched over wholesale to gas. Before this could happen, however, two major adjustments were needed: a network of main and secondary distribution lines had to be laid in record time, and domestic oil and coal-burning boilers had to be replaced by gas boilers and central heating systems. Natural gas was accepted almost overnight as a sign of the new age of prosperity. Within a mere 20 years, the Netherlands became the world’s biggest consumer of natural gas, with 98% coverage in the domestic sector and approximately 50% of the primary energy supply. No other country in the world even approaches this level of coverage.
Small fields
The rapid introduction of natural gas not only boosted its popularity but also led to an increase in demand. An energetic search therefore began for other fields. The Dutch substrate was surveyed and this revealed yet more places throughout the country where natural gas seams were likely to be found. Gas fields were subsequently discovered and tapped in Drenthe, Overijssel, Friesland and in dozens of other places under the North Sea. Although none of these other locations exceeded the capacity of the Groningen fields, taken together they accounted for hundreds of billions of cubic metres.
These small fields proved quite expensive to exploit. They required a large number of exploratory surveys, many exploratory drilling operations and the use of costly production units, especially offshore, simply to mine small quantities of natural gas. In an effort to find a more cost-effective way to bring these reserves - which together formed an incomparable asset - into production, the Dutch government came up with what came to be known as the ‘small fields policy’. This policy was as simple as it was effective. In addition to being offered attractive tax incentives, producers were given a sales guarantee. This was not necessary, but in Gasunie they were offered a guaranteed buyer who would purchase the gas at prevailing market prices. They thus had both a permanent buyer and a price that compared with what was paid elsewhere. The small fields policy proved a huge success and continues to this day. Over the years, successive Dutch governments and parliaments have endorsed and reaffirmed this policy.
