A recent technological breakthrough in Japan might soon render economically viable the large-scale exploitation of methane hydrates. The potential of this new (and global) form of unconventional natural gas is mind-blowing.
Although a number of countries have already displayed strong interest in exploring their reserves, Japan is most likely to lead this new “dash for gas”. It has already made the development of methane hydrates an important element in its long-term energy policy. If Japan is successful, East Asia’s energy situation will undergo a dramatic change over the medium term, with worldwide repercussions. But it will not be good news for climate policy and the transition to a green economy.
I. The new energy revolution
Every story of a new energy revolution begins with a new scientific term to be incorporated into our daily vocabulary. It also comes with a bunch of astonishing figures vindicating the sudden surge of interest around this new buzz-word as well as astronomical future investments. After “non-conventional hydrocarbons”, now available in different flavours (“shale oil and gas”, “coal-bed methane”, “tar sands”, etc), this time around the energy of the future bears the name of “methane hydrates”.
What is hiding behind this new scientific jargon? Put simply, it is methane, i.e. the principal component of commercial natural gas, trapped in a cage of water molecules in a frozen state. As they are highly flammable, methane hydrates are also known as “burning ice” or “fire ice”. Obviously, such a specific chemical structure can only be found in very particular environments combining very high pressure and low temperatures, namely ocean beds and sedimentary rocks in Arctic Regions. More detailed information on the chemical side of this story is available here.
As for the second ingredient for a successful energy revolution, i.e. a mouth-watering economic potential, a few figures drawn from the data of the US Geological Survey (USGS) should be enlightening enough. This highly respected institute expects “the naturally occurring gas hydrate resource to vary from 10,000 trillion cubic feet to more than 100,000 trillion cubic feet of natural gas”, which would represent “more organic carbon than the world’s coal, oil, and other forms of natural gas combined”. Admittedly, that should be sufficient to bring stars to the eyes of most market players.
The existence of this type of resource has been well-known for quite some time ̶ as a nuisance in pipelines since the 1940s and as a natural deposit since the 1960s. However, the difficulty to access the remote and extreme zones where they are locked up meant that, until recently, methane hydrates were relegated to the “found-and-dropped-until-much-later” box, along with nuclear fusion, hydrogen and the like. Exploitation was both technically hazardous and economically unjustified.
Methane hydrates may already be at the stage where shale gas was 10 years ago
But a recent series of technological breakthroughs has changed this picture. In 2002, a team of Canadian and Japanese scientists succeeded in extracting methane from the Mallik gas hydrate site ̶ in the permafrost of the Beaufort Sea ̶ using heat. Even better results were obtained in 2008 by simply lowering the reservoir’s pressure without resorting to heating, which considerably improved the energetics of the process. But the real breakthrough came early last year, in March 2013, when a Japanese drilling ship of the Japan Oil, Gas & Metals National Corporation (JOGMEC) successfully extracted methane hydrates from the seabed off Central Japan (Nankai Trough) during 6 days, using a similar technique. It produced 120,000 cubic meters in total, i.e. 20,000 cubic meters a day. This was hailed as a particularly significant development, as ocean beds are thought to be the repositories of the bulk of methane hydrates reserves worldwide.
However, extraction costs still have to be dramatically cut and adequate infrastructure developed in order to make extraction profitable under current market conditions. According to the Japanese Ministry of Economy, Trade and Industry (METI), quoted by Platts News Agency, a sustained flow rate of 55,600 cubic meters/day could be achieved around 2018/2019. At such a rate the extracted gas could be commercialized around $16/MMBtu, a level compatible with regional prices. Considering the 20,000 cubic meters/day recorded in 2013 ̶ twice higher than METI’s expectations ̶ this target seems quite achievable. But only time will tell: further drillings are scheduled in fiscal 2014-2015.
Nevertheless the announcement triggered a wave of enthusiasm in resource-deprived Japan. In the words of Ryo Minami, director of the oil and gas division at Japan’s Agency for Natural Resources, speaking to the Financial Times, methane hydrates may already be at the stage where shale gas was 10 years ago. In practical terms, that means he believes Japan can start commercialization of methane hydrates in around 10 years. That is already reflected in the Japanese official energy policy: hydrates are one of the specific measures put forward by the METI’s Strategic Energy Plan to achieve the 2030 target of raising Japan’s energy independence ratio from current 38% to about 70%.
No doubt that images of a bountiful energy future are now dancing before the eyes of corporate tycoons and government officials there and elsewhere.