(Repeats MARCH 1 story, no change to text)
By Toby Sterling
WESTERWIJTWERD, Netherlands, March 1 (Reuters) - Dutchchurch bells that for centuries have tolled to warn of floodsacross the low-lying countryside are sounding the alarm for anew threat: earthquakes linked to Europe's largest natural gasfield.
"Money can buy a lot of things, but a building like thiscannot be replaced," said Jur Bekooy, a civil engineer with theGroningen Old Churches Association, pointing to cracks in theceiling and walls of the 13th-century Maria Church in thevillage of Westerwijtwerd.
Long ignored, voices like Bekooy's are being heard aselections loom this month and following a damning report fromthe independent Dutch Safety Board.
It accused the government and the field's operators, RoyalDutch Shell and Exxon Mobil Corp, of ignoringthe threat of earthquakes linked to the massive Groningen gasfield for years.
There are now questions about the future exploitation of thefield that lies under the northern province of Groningen, withimplications that reach well beyond its significance for Dutchstate coffers.
Lessons from Groningen, which lies far from any naturalfault line, feed into a debate over the threat posed byhydraulic fracturing in the United States, China, Britain andelsewhere.
The world's 10th largest gas field, Groningen is expected tosupply the bulk of the Netherlands' annual gas needs of 20-30billion cubic metres (bcm) until the mid-2020s.
The Dutch also have contracts to sell 40-60 bcm annually tobuyers in Germany, Britain, Italy, Belgium and France. In all,Groningen and a few smaller Dutch fields supply 15 percent ofEurope's gas consumption, providing one alternative to Russiansupply.
When Economic Affairs Minister Henk Kamp recently orderedproduction at Groningen cut by 16 percent, gas prices jumpedacross Western Europe.
RAMPED UP
Groningen has been in continuous production since 1963. Asfar back as 1993 small quakes were definitively linked to itsoutput. But in the late 2000s, they suddenly became morefrequent and stronger.
With government finances under pressure from the 2008financial crisis, production at Groningen had been ramped upfrom around 30 bcm in 2007 to more than 50 bcm by 2010.
The money generated helped the Dutch cushion the blow ofausterity policies championed by the Cabinet.
As Prime Minister Mark Rutte publicly pressed southernEuropean governments to bring their spending under control,Dutch government gas revenues of 15 billion euros by 2013 wereabout the size of the national deficit.
Without gas, the deficit that year would have doubled from2.5 percent to 5 percent, violating eurozone budget rules.
But on Aug. 16, 2012, an earthquake with its epicentre underthe town of Huizinge marked the beginning of the end foraggressive output from Groningen.
It registered 3.6 on the Richter scale, larger than anypredicted by engineers at NAM, the joint venture field operatorbetween Shell and Exxon.
"Until the Huizinge earthquake, we had 1,100 damage claimsin 20 years," said NAM spokesman Sander van Rootselaar. "Afterthe quake we had more than 30,000."
Earthquakes caused by gas production are usually small,unless they happen near a fault line and can trigger a largernatural quake.
But in Groningen they occur close to the surface, damagingstone and brick buildings never designed to withstand shaking.
Of the 50 churches located above the field, some 40 havebeen affected, said Bekooy.
BELLS TOLL
When parliament gathered in The Hague to debate gas policyin early February, church bells all across Groningen provincewere rung in protest.
NAM has so far put aside 1.2 billion euros ($1.34 billion)to compensate damage claims.
More claims are rolling in, including after a 2.6 quakeregistered in the town of Appingedam last week.
But safety is the bigger issue.
In January 2013, the regulatory agency tasked withoverseeing gas production warned the government of a "linearrelationship" between the rate of production and the chance ofearthquakes at Groningen.
It said it could not rule out quakes measuring 4 or even 5on the Richter scale, with risk to human life.
The State Supervision of Mines advised production be cut "asquickly and as much as is possible and realistic."
But that year, with the Dutch economy in recession, theGroningen field produced 53.4 bcm, its most in decades.
"In 2013, when it was very cold in Europe, there was enoughgas in Groningen to really run it hard," said Thomson ReutersPoint Carbon analyst Oliver Sanderson.
The earthquakes continued. As the Dutch economy showed signsof recovery, Kamp ordered production temporarily lowered, to42.5 bcm for 2014 and 39.5 bcm for 2015.
PRICES SURGE
Then, in February, the Safety Board issued its finding thatNAM and the government had put profits first and "failed to actwith due care for the safety of citizens in Groningen".
After previewing the conclusions, Kamp on Feb. 9 orderedGroningen production cut to 16.5 bcm for the first half of 2015,implying a cut to 33 bcm for the year. Prices in NorthwestEurope surged as much as 20 percent in response.
GasTerra, the Netherlands' national trading company, wasforced to purchase gas on the open market to meet itsobligations.
The immediate impact of the Kamp output cut on prices hassince faded, helped by mild weather across Europe and LNGdeliveries.
"The underlying drivers are still bearish," analystSanderson said, citing new LNG supply coming on line in Qatarand Trinidad, and prospects for more gas from Russia in thefall.
"But Groningen has helped at least put a question mark overhow bearish they will be," he said.
What is clear is the market is no longer counting on areturn to higher production levels from the Netherlands. Andwithout the Dutch acting as swing producers in a supply pinch,increased price volatility is likely.
GasTerra has said it will sign no new contracts, nor extendcurrent ones as they expire.
With Dutch provincial elections set for March 18, partiesacross the political spectrum are demanding production be keptat current levels or reduced.
Kamp has delayed any decision until July 1, saying he awaitsmore expert advice.
KEEP DRILLING
In the journal Science last month, U.S. scientists said aglobal increase in gas-related earthquakes appears mostly linkedto modern exploitation techniques - not only hydraulicfracturing, but also underground waste-water disposal andinjecting carbon dioxide into depleted reservoirs to improveproduction.
"Although the United States is our focus here, Canada,China, the UK and others confront similar problems," they wrote.
The threat "can be reduced" with a combination of betterseismic tracking and access to industrial data on injections,said Art McGarr of the U.S. Geological Survey, lead author ofthe Science article.
That would "allow us to detect induced earthquake problemsat an early stage, when seismic events are typically very small,so as to avoid larger and potentially more damaging earthquakeslater on," he said.
With bans on fracking in several European countries alreadyin place, the concern about earthquakes will give gas opponentsfurther ammunition. Public attitudes against gas production havequickly hardened in the Netherlands.
On the North Sea island of Terschelling, members of the citycouncil voted unanimously last week against exploitation of agas field with estimated reserves of 2.5 to 4.5 bcm.
In Groningen, activist Pi van Weert, whose home was damagedby quakes, says he wants the province to declare independencefrom the Netherlands to halt gas production completely.
"If I'm honest, there is no hope" for that, he said. "Aslong as the benefits outweigh the costs, they're going to keepdrilling."
($1 = 0.8930 euros) (Additional reporting by Nina Chestney in London; editing byJason Neely)
