Resources & Climate
Commentary

The Geopolitics of Natural Gas Hydrates, the Other Unconventional

in Program

By Owen McAleer: 

There is an emerging possibility that hydrates will take on a greater role in the coming years as a valuable natural resource. Unlike shallower gas reserves in the Arctic, methane hydrates are relatively stable and not at risk of thawing out into the atmosphere.  Field tests have shown that this gas can be extracted using conventional drilling technology, and while their cost-effectiveness has not reached that of conventional gas, they may very well overtake other developing technologies. Compared to renewables and other energy alternatives, the extractive energy industries have a good track record of bringing new fuels from R&D to the commercial stage. In fact, not so many years ago, shale gas, the resource extracted from fracking, was being talked about in the same manner as hydrates are now.

But with shale gas continuing to expand in the near term, and renewables potentially increasing in the long term, why tout a fossil fuel that hasn’t even been commercialized? It is true that hydrates are not currently cost-competitive with conventional or shale gas. And since they are extracted using similar technology, they are not likely to become significantly cheaper than other gas options. So what do hydrates bring to the table that makes them worthy of attention? The answer lies in their global abundance.

Methane hydrates are present under the seabed on continental margins nearly everywhere in the world.  Estimated global reserves contain a volume more than all other sources of natural gas combined.  While not all harvestable, this means that deposits of this gas line the coasts of many states that have few other domestic coal or gas options.  If commercialized, these hydrates could make energy security attainable in relatively gas-poor countries. Japan, Korea, and India are among the major importers of natural gas with significant offshore hydrate reserves, and would benefit greatly if they could use these resources to meet their domestic energy needs.  Even though India is rich in coal, another electricity-generating fuel, there has been a recent push to diversify. In keeping with the country’s Look East policy, Indian natural gas firms placed a huge bid for conventional gas deposits at Myanmar’s first offshore licensing auction in late 2013, while the Indian government has initiated a Gas Hydrate research program of its own.

The most extreme need is in Japan, which, because of its limited domestic supply, is the largest importer of liquefied natural gas in the world. In 2002 Japan exhausted its domestic coal supply and began importing 100% of its coal needs, accounting for a quarter of its total energy generation. In 2011 Japan’s energy security was dealt another blow as nuclear generation stopped in the wake of the Fukushima disaster. The Japanese government initially shut down all of its nuclear facilities for safety review, and even now, nuclear generation capacity remains constrained. Suffice it to say, Japan is hungry for domestic energy sources, and the large Nankai Trough methane hydrate deposit off Japan’s southwest coast hasn’t escaped notice. The Japanese government has already spent about US $700 million on a comprehensive hydrate R&D program, and has set an aggressive timeline for commercialization of the resource.

Japan’s approach suggests that although hydrates can’t compete with existing natural gas resources globally, their abundance in otherwise gas-poor locations may eventually endow them with national and regional importance. With the majority of these gas-poor, hydrate-rich countries located in the Indo-Pacific, a hydrate boom could have significant geopolitical implications. For example: Japan and Russia are engaged in a territorial dispute over the Kuril Islands located between Japan’s north coast and the Pacific coast of Russia. Russia is currently Japan’s fourth-largest supplier of natural gas, and Japan has been reluctant to pressure Russia on the territory in recent years. Newfound energy security could potentially change Japan’s approach to this dispute. Even Japan’s relationship with China, as complex and multi-faceted as it is, could potentially be affected by a bumper crop of hydrate deposits in the East China Sea. Other impacts of a hydrate boom in the Indo-Pacific would be similarly unpredictable, but would assuredly be many as supplies are extracted.

True awareness about methane hydrates is mostly limited to geologists and energy specialists, and misperceptions about this fascinating resource are rampant. Hydrates do not represent an immediate answer to climate change woes, nor will they likely dominate the global energy profile as a new fuel source. Hydrates could, however, become the domestic resource of choice for some crucial natural gas importers, and may already be on the path to commercialization. Just as the fracking boom shifted the global energy focus westward from the Middle East, a hydrate boom could shift that focus toward the Indo-Pacific as home of the energy avant-garde.


MIT Energy Review, http://www.technologyreview.com/news/512506/will-methane-hydrates-fuel-another-gas-boom/

http://blogs.platts.com/2013/12/03/burma-oil/

 

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