Japan set to tap hydrates

Japan is about to embark on the world’s first experiment in producing gas from hydrates, starting a two-week long flow test in late February.

The Ministry of Economy, Trade and Industry, METI, said it will analyze the results in fiscal 2013-14 before attempting to set up the necessary technology for commercial production by 2019.

Japan Petroleum Exploration is operator of the test offshore central Japan and has hired contractor Japan Drilling Co. to run the test.

The test will include drilling a well to about 1,000 feet from the seabed in a water depth of about 3,300 feet, about 50 miles south of the Atsumi Peninsula.

The plan involves generating gas from hydrates using a decreasing pressure system which was successfully tested in the Canadian Arctic in 2008.

METI has its sights set on achieving a sustained flow rate of around 1.9 billion cubic feet per day, although the production test is expected to reach only 180 million cubic feet per day.

It emphasized that the initial objective is not volume, but the accumulation of data.

METI has estimated Japan’s known hydrate resources at 40 trillion cubic feet, sufficient to meet its total gas needs for about 14 years.

Nobuo Tanaka, former executive director of the International Energy Agency and now a special adviser to Japan’s Institute of Energy Economics, said methane hydrates could be a “game-changer” for Japan, affecting its role in the LNG market.

Currently the world’s largest buyer of LNG, it imported 78.5 million metric tons in 2011, up 12 percent from 2010, with its import prices averaging US$14.61 per million British thermal units in 2011, up 35 percent from the previous year — one of the reasons Japanese LNG buyers are attempting to drive a hard bargain to shift LNG from oil-priced contracts to Henry Hub prices.

—Gary Park