Unlocking the secrets of a game changer

By Eric Watkins

LOS ANGELES, May 3 – Are methane hydrates going to become a game changer for America’s energy future? That’s the view of one US Senator following the successful completion of a field test of technology capable of extracting natural gas from methane hydrates.

“The success of this test is wonderful news for Alaska and America,” said US Sen. Lisa Murkowski, R-Alaska, a longtime proponent of methane hydrates research. “If we can bring this technology to commercialization, it would truly be a game changer for America.”

That’s also the view of analyst IHS Global Insight, which earlier reported that methane hydrates could be a “game changer” and potentially even bigger than the US unconventional oil and gas plays.

The analyst last year said that the US Department of Energy has been working since the early 1990s to find a way to exploit these resources and that “pioneering the technology will surely add to the new-found US leadership position in the energy realm.”

SUCCESSFUL TEST

That view advanced this week as DOE said it partnered with ConocoPhillips and the Japan Oil, Gas and Metals National Corp (Jogmec) to successfully test natural gas extraction from methane hydrates using a unique production technology developed by the University of Bergen, Norway, and ConocoPhillips.

“While this is just the beginning, this research could potentially yield significant new supplies of natural gas,” said US Energy Secretary Steven Chu who compared the advance to improvements to hydraulic fracturing made with the help of the DOE decades ago.

“The Energy Department’s long-term investments in shale gas research during the 70s and 80s helped pave the way for today’s boom in domestic natural gas production that is projected to cut the cost of natural gas by 30% by 2025,” Chu said.

Based on this initial small-scale test, Chu said the DOE is launching new research on a long-term production test in the Arctic in addition to research aimed at testing other technologies to locate, characterize and safely extract methane hydrates on a larger scale in the US Gulf Coast.

NEARLY INEXHAUSTIBLE SUPPLY

Murkowski acknowledged the need for further research, but said that the results announced by Chu represent “a major step toward unlocking America’s, and especially Alaska’s, nearly inexhaustible supply of methane hydrate energy.”

According to the US Geological Survey, Alaska is likely to contain up to 600 trillion cubic feet (tcf) of methane hydrates onshore, while the Alaska Division of Geological and Geophysical Surveys, claims Alaska contains as much as 200,000 tcf of methane hydrates offshore.

Taken together, US lands and waters contain a quarter of the world’s methane hydrates – enough to power America for 1,000 years at current rates of energy consumption.

The successful completion of the test will be especially welcome news in Japan, usually described as resource-poor, which has seen its consumption of liquefied natural gas soar in the wake of last year’s nuclear meltdown in Fukushima.

JAPAN’S PROGRAM

In February, JOGMEC announced it would start the world’s first offshore production test of methane hydrates off the Pacific coast of Aichi prefecture under the second phase of Japan’s Methane Hydrate R&D Program at a cost of $220 million.

Japan’s Ministry of Economy, Trade and Industry (METI) officially started its offshore methane hydrate exploration program on February 2, drilling a total of four wells with a view to starting commercial production by 2018.

Japan Drilling Co, a drilling contractor hired by operator Japex, was scheduled to start drilling three monitoring wells and one production well for about 40 days from mid-February.

Using the deepsea drilling ship Chikyu, JDC planned to drill the four wells about 300 meters from the sea level to a water depth of around 1,000 m, 70-80 km south of the Atsumi Peninsula in Aichi Prefecture.

FURTHER PLANS ANNOUNCED

After the four wells have been drilled, METI plans to carry out production tests over a period of one month, and collect data over January-March 2013. The ministry will then evaluate the collected data with the aim of launching the second offshore output test in fiscal 2014-2015.

Methane hydrates deposits underneath the seabed in waters south of central Japan are estimated at around 1 trillion cubic meters, enough for more than 10 years’ supply of natural gas consumed in Japan.

Japan’s efforts to secure further domestic supplies of methane hydrate received a boost late last month when the UN Commission on the Limits of the Continental Shelf recognized some 310,000 sq. km of seabed, including the area north of Okinotori Island, as part of Japan’s continental shelf.

The ruling means that Japan can explore and develop resources in the area, even though it is not part of the country’s 200 nautical mile exclusive economic zone. Japanese authorities believe the newly recognized continental shelf could contain deposits of rare metals as well as methane hydrates.

For resource-poor Japan, methane hydrates could indeed be a game changer.

© Glamma Productions Inc. 2012

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About Eric Watkins

Eric Watkins is a consultant specializing in oil diplomacy. A former journalist, Mr. Watkins's work has appeared in numerous leading publications including The Wall Street Journal, The Economist, The Financial Times, and specialist media such as Oil & Gas Journal, Middle East Economic Survey (MEES), and Lloyd's List.
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