Japan looks to offshore methane hydrates to cut reliance on energy imports

Japan, which imports more than 95% of its carbon-based fuel needs in the form of oil, gas or coal, has for decades looked for the means to reduce its reliance on foreign suppliers and increase its energy security.

It's one of the reasons Japan, the world's largest importer of LNG, has been so adamant in staking its claim to the possible gas reserves underneath the waters surrounding the various disputed isles of the East China Sea.

Now, fortune and technology may be smiling on the energy-poor country, with the discovery of an unconventional energy source that could possibly provide it with enough gas to meet its demand for 14 years. Japan, at least, has been working with that hope ever since it confirmed 40 trillion cubic feat of methane hydrates in the southern Sea of Kumano in 2007.

Gas hydrates, ice-like deposits of water and natural gas, are located deep under water where cold temperatures and extreme pressure causes natural gas to condense into semisolid form. As BP found to its chagrin earlier this year, methane hydrates aren't a good thing when you are trying to lower a containment cap over a runaway oil well in water nearly a mile deep.

In BP's case, gas hydrates kept clogging containment domes and forced the oil major to find other solutions to cap the Macondo well in the Gulf of Mexico. But when, like Japan, you have to import 100% of your gas needs in the form of LNG, gas hydrates might be just the thing - if you can figure out an economical, sustainable way to extract usable fuel from them.

Next month Japan takes another step toward that goal, with the start of a four-month-long site survey for a four-well drilling project that runs from October 2011 to March 2012. If all goes well, a year later the survey and the wells will result in what Japan says will be the world's first offshore production test of methane hydrates, with commercial output to start by 2018.

However, unlike technologies used in the faster-than-expected development of shale gas in the US, the technology for extracting usable fuel from Japan's methane hydrates is still in the developmental stage.

In March 2008, for six consecutive days, Japan was able to extract gas from hydrates using a decreasing pressure system to produce 2,000 cubic meters of gas a day, at the Mallik site in Canada's Beaufort Sea. That represents only a small fraction of the amount of gas Japan consumes daily.

Under current plans, Japan aims to reach a gas output level of around 10,000 cubic meters/day during next year's production test, but its priority would be given to collect data rather than reaching a certain level of production, according to government officials.

Once Japan completes the first offshore production test in fiscal 2012-2013, the government will scrutinize the collected data in the following fiscal year, with an eye to launch the second offshore output test in fiscal 2014-2015.

After that, the next challenge would be lowering production costs of methane hydrates to make it competitive against the nearly 70 million metric tons of LNG that Japan imports yearly.

If Japan can lower the methane hydrates output costs to the point of offshore production platforms, it could be made competitive against LNG by bringing it ashore via pipelines to its nearest coasts.

The four-month-long site survey, which will be ran by state-owned Japan Oil, Gas and Metals National Corporation, will determine the well-sites for the government's planned exploratory drilling in the second half the fiscal year ending in March 2012.

Jogmec is planning to drill one production well and three monitoring wells in unspecified areas between the offshore Tokai region and the southern Sea of Kumano in central Japan.

Following the completion of the four wells, the government plans to use them for the production test, over a period of between one week and one month continuously, in order to collect data.

In Japan, hydrates in the Sea of Kumano are found about 30 km (19 miles) offshore, around 200 meters below the seabed, in waters about 100 meters deep.

Creative Commons License.
To subscribe or visit go to:  http://www.platts.com
The McGraw-Hill Companies