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By 2020, British Energy Secretary Chris Huhne routinely insists, families and businesses in the United Kingdom will be better off – despite his plan to shift the country towards expensive renewable energy. His claim is based on the assumption that the price of fossil fuels can only go up as we “run out” of oil and gas supplies. As a result, energy prices will inevitably shoot into the stratosphere, making very costly renewables competitive in the future.

I am afraid Huhne’s assumptions are misguided. In reality, we are in the middle of a global natural gas revolution. The abundance of natural gas and of ever more abundant shale gas, in particular, has prompted a global rush to explore for the new gas resources. The International Energy Agency estimates that supplies of natural gas are likely to last more than 250 years. Indeed, gas prices have dropped by half in the United States in the last two years as a result of a glut in cheap shale gas.

Now, another energy revolution may be underway. Methane hydrate is natural gas that is locked in ice. Huge amounts of this unconventional form of natural gas are potentially available for utilisation as soon as technologies to produce them become economically viable. Methane hydrates represent by far the largest source for hydrocarbons on earth. They are said to contain more energy than all other fossil fuels combined and are much cleaner than oil and coal. Global estimates “range from merely jaw-dropping to the truly staggering”, according to the American Department of Energy.

Once clean and economic technologies are developed to exploit this massive new resource, there will be enough energy to fuel the global economy for many hundreds of years. Methane hydrates are widely present around the globe – particularly, under the deep seafloor. But they are also found in the Arctic and Antarctic regions. The US is now partnering with Japan to test technologies for producing methane hydrates in Alaska. The tests include injecting carbon dioxide into methane-hydrate-bearing layers, the release of methane gas and the storage of carbon dioxide underground.

But getting the gas out is tricky and expensive. The biggest challenge is how to bring down production costs of methane hydrates given the competition cheap shale gas. There are growing expectations that methane hydrate will become a reliable and long-term energy resource of the future. The US, China, Canada and Japan are among the countries seeking to develop economically feasible extraction. But the economics of production from gas hydrate remains challenging. The geographic remoteness of the resource and costly infrastructure for transportation pose economic obstacles.

For countries that have extensive shale gas and other natural gas reserves, methane hydrates are unlikely to be of high priority for decades to come. But Japan and other energy-poor nations, methane hydrates have much more significance and economic potential. No wonder Japan is keenly probing to exploit economically the abundant methane hydrates in its waters. In light of ever increasing shale gas supplies, it remains questionable if we will see full-scale commercial extraction of methane hydrates any time soon. But we are certainly not running out of cheap fossil fuels for a long time.

Public Service Europe, 19 January 2012