Methane hydrate economics

Japan cheers world-first gas from methane hydrates

News Wires

12 March 2013

Japan has achieved the world’s first gas extraction from offshore methane hydrate deposits, said energy explorer Japan Oil, Gas and Metals National Corp (JOGMEC), who is targeting commercial production within six years.
A Reuters report on Tuesday stated that since 2001, several hundred million dollars have been invested in developing technology to tap methane hydrate reserves, estimated to equate to about 11 years of gas consumption, off Japan’s coast.

State-run JOGMEC said the gas was tapped from deposits of methane hydrate, a frozen gas known as “flammable ice”, near Japan’s central coast.

Japan imports almost all of its energy needs and is the world’s top importer of liquefied natural gas. The lure of domestic gas resources has intensified following the Fukushima nuclear crisis two years ago, which triggered a shake-up of the country’s energy sector.

According to Reuters, Japan’s trade ministry said the production tests would continue for about two weeks, followed by analysis on how much gas was produced.

[…]

Upstream Online

Based on this economic analysis, methane hydrate production would be uneconomic…

42-174 JPY/m^3 works out to about $12-$45/mcf… Equivalent to oil prices of $71 to $269/boe.

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