Methane Hydrates: Is ‘Fire-Ice’ The Next Energy Revolution?

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Record breaking

Recent news of China’s success in producing gas from sub-sea methane hydrates has re-ignited the emergence of these deposits as a possible alternative energy source, which could usher in a new energy revolution. On 9 July 2017, China announced that it had achieved continuous gas production from hydrates during a 60-day trial, located ~300km SE of Hong Kong, and at depths of 203m-277m beneath the seafloor (1,266m water depth), in Shenhu Area of the South China Sea. Using the CNPC-owned Bluewhale 1, a semi-submersible which was domestically designed and constructed, China set a new world record producing a total of 309,000 cubic metres (cm) of gas (~10.9 million cubic feet of gas (MMcfg)). The average production during the trial was 5,151cm per day (~181 thousand cubic feet of gas per day (Mcfg/d)) and the gas was reported to have had a methane content of up to 99.5%. The trial has been heralded as a breakthrough in the search for alternative, cleaner energy sources; however, China isn’t the only country pursuing the colloquially named ‘fire-ice’, as countries including Japan, India, South Korea, and the United States are all actively investing into research and development of the unconventional resource.

Methane Hydrates: Is ‘Fire-Ice’ The Next Energy Revolution?

What is ‘fire-ice’?

Methane hydrates or ‘fire-ice’ is a globally distributed fossil fuel. It is composed of methane trapped inside a lattice of water molecules, which forms a white, energy-dense substance that can be easily ignited, like solid ethanol. The hydrates form at relatively shallow sub-surface depths, in high pressure and low temperature environments, typical of outer continental margins and permafrost areas. Once the substance is heated and depressurised to normal conditions, 1cm of hydrates equates to ~164cm of regular natural gas. The gas consists of 80-99.9% methane and produces much less pollution than coal and oil when burned – estimates suggest that natural gas emits just 60% of the carbon emissions generated by coal, and 80% of the emissions generated by oil.

Methane Hydrates: Is ‘Fire-Ice’ The Next Energy Revolution?

Previous exploration

Methane hydrates were first discovered by Russia in the 1960s, but research into them has only expanded in the last 10-15 years. China, Japan and India are among the most recent pioneers. In total, China has completed four tests since 2007, although Japan was the first country to successfully produce gas from deep water hydrates back in 2013. On 19 March 2013, Japan Oil, Gas, and Metals National Corporation (JOGMEC) announced that it had successfully produced a total of ~120,000cm of methane gas (~4.2 MMcfg) in the eastern Nankai Trough, after lowering the bottom-hole pressure in the production well from 13.5MPa to 4.5MPa. The trial continued for six days until sand infiltrated the well and production was terminated; the country began its second production trial in May 2017. During this second trial, two wells have been drilled using Chikyu, a deep-sea drilling vessel, to reach methane hydrates located ~300m beneath the seafloor, in water depths of ~1,000m. It has been reported that the first well produced ~35,000cm of gas (~1.2 MMcfg) over a 12-day period, until sand once again intruded and ceased production. The second well was completed on 28 June 2017 and produced ~200,000cm (~7 MMcfg) in 24 days. India has also recently completed its second expedition. Between 3 March 2015 and 28 July 2015, the country drilled 42 holes in the Krishna-Godavari and Mahanadi Basins, in water depths ranging from 1,519m-2,815m, with sub-seafloor depths ranging from 239m-567m. The research confirmed the presence of large, highly-saturated gas hydrate accumulations in sand-rich depositional systems, and has highlighted areas for further research.

Methane Hydrates: Is ‘Fire-Ice’ The Next Energy Revolution?

Commercial viability

As unconventional gas is taking on a more prominent role in the total gas mix, questions are raised about the commercial viability of methane hydrates. Following recent tests, Japan is anticipating commercialising hydrate-extracting technology as early as 2023, and China is planning to begin commercial production of hydrates by 2030.
Commercial-scale production of the resource could be revolutionary for some countries. Japan has a large industrial sector but is heavily reliant on LNG imports, following the mothballing of its nuclear power plants, after the 2011 tsunami disaster. For the country, this new resource offers an opportunity to reduce its dependence on imported fuels (estimated to be as high as 90% of its energy needs) and access domestic reserves off the coastline. Furthermore, with the battle against climate change in full swing, ‘fire-ice’ may become a welcomed alternative for countries, like China seeking to ease the pressure on reducing its carbon emissions, and remedy its drastic air pollution problems in urban areas, particularly Beijing.

Methane Hydrates: Is ‘Fire-Ice’ The Next Energy Revolution?

However, to-date only small-scale pilot projects have been completed and a number of factors are currently contributing to making the resource uneconomical. Firstly, dissociating the methane from the hydrates is technologically-challenging, and expensive as a result. It has been estimated that the present cost of producing gas from the hydrates is ~US$ 200/cm. Current daily production rates from each well is also low. The highest daily output from China’s latest trial was 35,000cm (~1.2 MMcfg). These comparatively low production rates coupled with high costs are unsustainable at current gas prices. Additionally, the U.S. Energy Information Administration has noted that estimates of worldwide reserves range from 280 trillion cubic metres (tcm) to 2,800 tcm. However, unlike conventional hydrocarbon resources, hydrates are typically found in low concentrations and are distributed over vast areas, therefore resource-density may also be an additional contributing factor in determining their commerciality.

Additional considerations

Simultaneous to the commercial threshold, environmental and political factors may play an important role in determining whether this resource results in a new energy revolution. The environmental impact of commercial drilling is currently unknown; however, until recently methane hydrates have presented more problems than solutions to the energy industry. Previously, preventing their formation around deep water drilling equipment has been a key component of well design and planning; this is because ‘fire-ice’ disintegrates when removed from its stability zone, allowing methane to be released from the hydrate chemical structure. Unburned methane is a potent greenhouse gas which is estimated to have 20-30 times the heat trapping potential of carbon dioxide, and may contribute significantly to climate change if unchecked, and/or potentially damage fragile seafloor ecosystems. Improper drilling may also destabilise seabed structures, increasing the risk of geological disasters like earthquakes and tsunamis. Another consideration which may need to be addressed is the distribution of the resource. Methane hydrates are widely distributed over deep-water environments. Inevitably, this means that the resources may straddle economic boundaries, and much like conventional accumulations, this may aggravate existing political tensions and provoke sovereignty claims between neighbouring countries.

Food for thought

It seems that, if an economically-feasible production method can be identified, methane hydrates offer great potential. The United Nations Environmental Programme has estimated that the resource could potentially satisfy up to 53% of gas demand, which could result in them being considered as a strategic alternative to coal and oil in the future. Nevertheless, in the lower commodity price environment, companies are tending to favour shorter-cycle projects with faster returns, such as shale gas. This emphasises the need for political bodies to consider the longer-term security of supply by improving pricing mechanisms, and providing regulations on exploitation management of the resource. Other challenges involved in realising this potential will be addressing the environmental factors and identifying areas of high-resource concentration; both of which can be improved through further exploration. Multiple countries have ongoing research initiatives to help determine the potential impacts of commercial production, and to advance industry understanding of the physical properties of hydrates.

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Toya Latham

Toya Latham joined Drillinginfo in October 2015, as an E&P Analyst for East and South Africa. Since then she has moved into the Commercial Team which provides global coverage of fiscal, commercial and economic changes. Prior to Drillinginfo, she was an Exploration Geoscientist at P.D.F. Limited focussing on assets in Africa and Eastern Europe. She holds an MSc degree in Petroleum Geoscience from Royal Holloway and an MSci degree in Geology from Durham University.