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Japan says methane hydrate output test crucial for commercial production

Highlights

Japan is set to conduct what will be a "crucial" offshore output test ofgas from methane hydrate as its results will decide the future of commercialproduction, a senior official at the Ministry of Economy, Trade and Industrysaid Monday.

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The Chikyu drilling ship arrived at the Daini-Atsumi Knoll in Nankaitrough, 80 kilometers (49.6 miles) south of the Atsumi Peninsula in Aichiprefecture and will start finishing the two production wells already drilledat the site, Yuki Sadamitsu, METI's director of oil and gas division, said ata press briefing.

The test would mark a crucial step in the path to commercialization ofmethane hydrate production, Sadamitsu said.

Once the production wells are drilled another 50-60 meters to reachmethane hydrate layers about 300 meters below the seabed at a water depth ofaround 1,000 meters, the Chikyu will start extracting gas from methane hydrateusing the decreased pressure system for a flare test in late April or earlyMay, he added.

This will be the second offshore methane hydrate production test globallyafter Japan produced 120,000 cubic meters, or 20,000 cu m/day, of gas frommethane hydrate in a six-day offshore production test at the Daini-AtsumiKnoll in March 2013. This followed more than a decade of field research aswell as testing of various technologies.

Although there are a number of technical barriers to methane hydrateproduction, such as achieving sufficient flow rates to reduce output costs,known resources could be large enough to meet Japan's demand for about 10years, based on its confirmation of 40 Tcf of methane hydrate resources inplace in the southern Sea of Kumano in 2007.

Commercialization of methane hydrates would involve deposits of water andmethane gas from solid, ice-like hydrates, located deep underwater where coldtemperatures and extreme pressure causes the gas to condense and solidify.

LESSONS FROM THE FIRST TEST

The first output test, which was stopped in six days though it had beenplanned for two weeks due to inflow of sand into the sole production well,Japan was testing two different sand control measures, using shape memorypolymers in the two production wells in the upcoming test, Sadamitsu said.

This time Japan aims to produce gas non-stop for about three to fourweeks from one of the two wells and test another well with different sandcontrol measures to produce gas for about a week, he said.

In addition, two monitoring wells are being drilled to record changes in temperatures and pressures in different seabed layers during the upcomingproduction test.

The Japanese government is currently reviewing its five-year Basic Planon Ocean Policy that will expire at the end of March 2018. It aims to startanother commercial methane hydrate project around 2023.

"As part of this process, we are drawing our roadmap for commercializingmethane hydrate in the next five to 10 years," Sadamitsu said.

"Based on the upcoming test results, we will proceed to draw our roadmapspend throughout this fiscal year [2017-2018]," he added.

Even if Japan could produce gas from methane hydrate non-stop as planned,it might not mean commercial production soon unless it could produce for fiveor eight years without stopping output, he said.

Stabilizing output for a longer period and lowering production costscould be "major hurdles" to commercializing gas production from methanehydrate, he said.

Noting that natural gas prices could stay low amid considerable shale gasreserves in the US, Sadamitsu said that "we have recognized that there arebigger hurdles to considerably lowering costs for commercialization."

State-owned Japan Oil, Gas and Metals National Corp., or Jogmec, isleading the methane hydrate output test for METI. Operator Japan MethaneHydrate Operating Co. chartered the Chikyu drilling ship.

JMH was formed in October 2014 as a joint venture by 11 Japanesecompanies, to take part in the planned next round of testing of pore-fillingtype methane hydrate.

JMH stakeholders are Japan Petroleum Exploration (33%), Japan DrillingCo. (18%), Inpex (13%), Idemitsu Kosan (5%), JX Nippon Oil & GasExploration(5%), Nippon Steel & Sumikin Engineering (5%), Chiyoda (5%), ToyoEngineering (5%), JGC (5%), Mitsui Oil Exploration Co. (5%), and MitsubishiGas Chemical (1%).

--Takeo Kumagai, takeo.kumagai@spglobal.com

--Edited by E Shailaja Nair, shailaja.nair@spglobal.com