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INPEX, Osaka Gas set for world's largest-scale methanation plant, eye LNG production

Highlights

Procuring liquefied hydrogen for Nagaoka methanation project

Synthetic methane will be fed into INPEX's 1,500 km gas pipeline

INPEX's gas fields in Australia candidate for synthetic methanation

Japan's INPEX and Osaka Gas will launch the world's largest-scale synthetic methanation plant at Nagaoka by the second half of fiscal year 2024-25 (April-March), the companies said Oct. 15, with an eye to commercialize the technology to be used for producing LNG in Australia among others.

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The move will come as part of a joint effort by INPEX and Osaka Gas with a subsidy from the state-owned New Energy and Industrial Technology Development Organization, or NEDO, under which the companies will startup a 400 normal cu m/hour CO2 methanation facility at the former's Minami Nagaoka gas field in the northwestern Japan by the second half of FY 2024-25.

The companies will demonstrate by the end of FY 2025-26 production of synthetic methane with the 400 normal cu m/hour capacity, which would be the world's largest scale, from methanation by reacting CO2 with hydrogen through a catalyst at a newly built location connected to INPEX's Koshijihara plant.

INPEX, which has already been conducting basic technical development on CO2 methanation with a 8 normal cu m/hour synthetic methane output capacity at its Minami Nagaoka gas field since 2017, and Osaka Gas aim to reduce costs of synthetic methane, which is a main component of city gas, by scaling up the production capacity.

Through this project, INPEX and Osaka Gas aim to reduce the Yen 350/normal cu m production cost of synthetic methane from the 8 normal cu m/hour plant to Yen 200/normal cu m cost from the 400 normal cu m/hour plant.

"We are considering procuring clean hydrogen in the form of liquefied hydrogen and transport it to Nagaoka," Yoshiro Ishii, INPEX's senior vice president of renewable energy & new business told a joint press conference.

"We have a few options and will decide after our consideration henceforth," Ishii said, declining to elaborate when asked about hydrogen supply sources.

Produced synthetic methane at Nagaoka will be supplied as city gas in INPEX's 1,500 km pipeline from the Niigata prefecture in the northwest to the Kanto region in the eastern Japan, as far away as to Tokyo.

INPEX's wholly-owned Minami-Nagaoka gas field is the largest gas field in Japan, producing 5.2 million cu m/day of natural gas, which contains 6% of CO2.

The synthetic methanation project comes as the Ministry of Economy, Trade and Industry has called on Japan to start injecting more than 1% of synthetic methane produced from using hydrogen into city gas by 2030 and expand it to 90% by 2050 in a bid to implement methanation.

METI sees methanation as one of promising means of decarbonizing city gas, which are mostly regasified LNG, by 2050 as part of the country's aim for carbon neutrality.

Commercializing output

Looking ahead, INPEX and Osaka Gas will also look at developing a 10,000 normal cu m/hour synthetic methane project abroad and a commercial 60,000 normal cu m/hour synthetic methane plant.

Decisions for the 10,000 normal cu m/hour and 60,000 cu m/hour synthetic methane plants are expected in around 2025 and 2030, respectively, said Ishii, adding that INPEX's gas fields in Australia are among prospective locations.

Once achieving these production scales, INPEX and Osaka Gas see synthetic methane production costs could be reduced to Yen 100/normal cu m at the 10,000 normal cu m/hour capacity and Yen 50/normal cu m at the 60,000 normal cu m/hour capacity -- a level competitive to the current domestic city gas sales price.

INPEX and Osaka Gas are also exploring possibilities of producing synthetic methane and producing LNG from the methane in countries such as Australia as among options, an INPEX official said.

INPEX has estimated it would be able to produce an equivalent of 59,000 mt/year of LNG from 10,000 normal cu m/hour synthetic methane production and 350,000 mt/year of LNG from the 60,000 normal cu m/hour synthetic methane output, the official said.

In Australia, INPEX is stepping up its sales of carbon neutral products such as LNG and LPG from its operated Ichthys project, where it also intends to start selling carbon neutral condensate as part of its efforts towards carbon neutrality.

INPEX launched its 2050 net zero strategy in January, under which it aims to cut by 30%, or more, its scope 1 and 2 net-carbon intensity by 2030, from 2019 levels.

Greenhouse gas emissions from the Ichthys project, which it operates with a 66.245% stake, accounts for roughly 60% of INPEX's GHG emissions of around 7.5 million mt on an equity basis in 2020.

The Ichthys project, in which Osaka Gas also has a 1.2% stake, has the capacity to produce about 8.9 million mt/year of LNG, 1.65 million mt/year of LPG and 100,000 b/d of condensate.