METHANE HYDRATES:

U.S. reports huge potential for 'fire in the ice' as Japan hurries to production

The international scientific world has been buzzing over two separate milestones on methane hydrates, a little-known form of natural gas found in ice formations under Arctic permafrost and in deepwater coastal regions.

Last Tuesday, Japan announced it had successfully produced natural gas from an offshore methane hydrates test well. A day later, the United States published significant new data outlining massive methane hydrate reserves along the Atlantic and Pacific shores.

The Japanese production test is considered the first in the world to produce a continuous flow of natural gas from an undersea hydrate formation. If all goes well, Japan plans to begin commercial production of natural gas at the site by 2018, according to the state-owned energy company Japan Oil, Gas and Metals National Corp., known as Jogmec.

The tests are being conducted in a methane hydrates formation located along the Nankai Trough off Japan's south-central coast. Jogmec estimates that the site holds about 40 trillion cubic feet (tcf) of methane -- enough to replace 11 years of LNG imports. Early estimates suggest that all of Japan's offshore methane hydrates formations could hold enough natural gas to supply the country for 100 years.

While Japan was celebrating its success, a less-noticed assessment on America's methane hydrate potential was published in a National Energy Technology Laboratory newsletter. The report by the Bureau of Ocean Energy Management estimated that methane hydrate formations along the U.S. East Coast contain 21,702 tcf of natural gas.

The greatest concentrations lie along the outer continental shelf from Rhode Island to North Carolina.

America's Pacific coast could hold methane hydrates formations with an additional 8,192 tcf of natural gas, according to the report. An earlier analysis estimated that hydrate fields in the Gulf of Mexico could contain 21,444 tcf of natural gas.

That's a total of 51,338 tcf of gas -- a huge resource considering that the United States consumed 24.4 tcf of natural gas in 2011. Researchers are now analyzing data on the methane hydrates potential off Alaska's Arctic shores.

None of the studies considers how much of the resource could be recovered with today's technologies.

Worldwide, the energy potential of methane hydrates is staggering. The U.S. Geological Survey estimates that global gas hydrate formations contain more organic carbon than the all of the coal, oil and other forms of natural gas combined.

But tapping into the frozen hydrate resources is tricky.

Methane hydrates are an ice-bound form of natural gas that is found under Arctic permafrost and in deepwater coastal regions. The hydrates consist of tiny cages of frozen water molecules that encase a methane molecule.

A slushy sherbet-like mixture of methane hydrates forms spontaneously when water and methane mix in cold temperatures or under high-pressure conditions deep under the ocean floor.

That has produced major headaches for energy companies drilling in the cold, deepwater regions of the Gulf of Mexico. If moisture seeped into a cold pipeline, the natural gas and water would quickly convert into icy hydrate chunks, clogging the system and blocking the flow of fuel.

Gas has never been commercially produced from methane hydrates. But Japan's technical advances and a successful 2012 test on Alaska's North Slope provide proof that natural gas can be safely extracted from hydrate formations, according to Ray Boswell, technical manager on methane hydrates at the Energy Department's National Energy Technology Laboratory.

"The technology definitely exists, there's no doubt about it," Boswell said. "There are no black boxes that have to be solved be able to do it."

"What needs to be understood," he added, "is can it be done in a way that is viable economically? Can we produce it at the rates that will make it a feasible venture?"

Action moves overseas

Despite the high cost of developing methane hydrates, Japan, the world's largest importer of natural gas, has been focused on domestic hydrates research for almost 20 years. Over the years, the state energy company has also joined forces with scientists on hydrate experiments in Alaska, the Gulf of Mexico and Canada.

Japanese officials are hoping that domestic methane hydrates can help the nation cut LNG imports and fill the energy gap created when local nuclear power plants were shut down after the Fukushima Daiichi nuclear disaster two years ago.

Other natural gas importing countries, notably China, India and South Korea, are also mapping out their offshore methane hydrates formations in hopes of tapping into their most promising domestic methane hydrate reservoirs.

Despite the United States' promising methane hydrate fields along the outer continental shelf and on Alaska's North Slope, the U.S. government has dedicated little money to hydrate development.

In May, the Energy Department targeted $6.5 million for new hydrates research. The administration also asked Congress for an additional $5 million for fiscal 2013. Industry advocates immediately criticized the funding proposal as too meager to make much progress in advancing U.S. hydrates extraction technology (EnergyWire, May 3, 2012).

Late last summer, DOE awarded funding for 14 new research projects focused on increasing the nation's understanding of methane hydrates' potential as a future energy supply.

Meanwhile, the large energy companies that have underwritten past methane hydrates research are shifting their focus to cheaper, less risky and more promising unconventional natural gas fields, notably the shale gas boom in the lower 48 states.

The United States continues to play an active role in international efforts to understand and develop gas hydrate resources, noted Timothy Collett, a research geologist with the U.S. Geological Survey. But today's cutting-edge methane hydrates research and development projects have moved overseas.

"Most of the interesting gas hydrate activities we've seen have been coming from Asian countries," Collett said. "They have the largest programs."

"To use a sports analogy, we seem to be in a rebuilding year right now in the United States and looking for new opportunities," he said.

Eyes on Japan's breakthrough

Scientists from around the world flocked to Houston earlier this month for a first look at field data collected during a 2011-2012 methane hydrates research project conducted just near Prudhoe Bay, 250 miles north of the Arctic Circle (EnergyWire, March 8).

Sponsored by ConocoPhillips, the Energy Department and Jogmec, the $24 million field trial produced natural gas for 30 days from hydrate formations located under the Arctic permafrost. Scientists named the field site Ignik Sikumi, meaning "fire in the ice" in Inupiaq.

"It was the first extended test of hydrates that showed continuous production," explained Bob Swenson, director of Alaska's Division of Geological and Geophysical Surveys. "In fact, they had increasing production from the hydrates reserve, which was very promising."

The researchers also tested whether the hydrate fields could be used to sequester carbon dioxide while simultaneously extracting methane molecules from the ice. Experts said that the researchers were able to inject CO2 into the hydrates reserve. However, the jury is still out on whether the CO2 molecules replaced the methane in the hydrate formation.

The Houston meeting marked the first major release of the data from the Ignik Sikumi and drew scientists and industry researchers from Japan, Norway, China, Germany, India, South Korea and Canada.

"There's a lot of interest in understanding exactly what occurred at the test, what data is available and how people can use those data sets to further their research," said Boswell of NETL.

American scientists are also keeping a close eye on Japan's recent breakthrough in offshore methane hydrate development. Data from that project could be critical to pave the way for future U.S. hydrates projects.

USGS's Collett noted that, thus far, methane hydrates researchers around the world have collaborated and openly shared their scientific findings. "We've been very successful in keeping the world of gas hydrates as a noncompetitive world," he said. "It's very much a research science project.

"And even right now, with advances the Japanese are making, they've always reported all the results within a couple of years of their project. There have been a number of cooperative projects throughout the world."

Alaska eyed for long-term studies

While the international energy giants are concentrating their investments on deepwater drilling, shale oil and gas projects and other conventional fields, most are also keeping a watchful eye on methane hydrate breakthroughs throughout the world.

"When you talk with Exxon or BP or other companies at the corporate level, they all have working hydrate groups or people identified to monitor these issues," Collett noted.

"When you see the emergence of the Japanese and others, it's bound to stir some interest in these companies," he said. "After all, Japan is a major market for many of these companies."

U.S. researchers are eager to conduct longer-term methane hydrates studies on Alaska's North Slope. "It's hypothetical," NETL's Boswell said. "But our preference would be to have a research site where we can spend a significant amount of time to evaluate various approaches" to methane hydrates extraction.

Alaska officials say they will roll out the red carpet for such research. "There are no wells planned at the current moment," Swenson said. "But there's a lot of discussion about where the tests would be held. There's a lot of interest from the Norwegians, from the Japanese and from other countries to move forward."

So far, however, BP PLC, ConocoPhillips and Chevron Corp., which have helped underwrite past American methane hydrates studies in Alaska and the Gulf of Mexico, are more focused on projects that can provide an immediate return on their investments.

"Commercialize means different things to different people," Boswell said. "It depends on who you're talking to and where you are on the planet. To a company like Exxon, commercial means the project has to provide a rate of return that's greater than the other options that they have."

"It's different if you're looking at it from a national perspective and you have other issues that you need to consider -- national security, economic growth and those sorts of things," he explained.

Japan has set an ambitious schedule for commercial production on its methane hydrates wells. But most experts say that full-scale international development of methane hydrates development will not begin for decades.

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