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This Week in Energy: Japan Burns with ‘Fire Ice’ Momentum

Japan, desperate for new domestic energy sources, is where we now look for research and development that no one else has the patience for—like last week’s news of a Japanese construction company’s plans to build a massive belt of solar panels around the moon’s equator, or this week’s revival of talk about “fire ice”, otherwise known as methane hydrates.

Methane hydrates represent the frozen form of natural gas trapped in crystal lattices underwater—and the news this week is that Tokyo has now discovered another source of fire ice in the Sea of Japan.  

Elsewhere, particularly in North America, the shale boom means that no one is paying too much attention to fire ice, though it is being researched, but in Japan, where there is no shale to speak of—fire ice could be at least a longer-term answer to domestic energy problems. After all, methane hydrates—if we are to believe the experts—could be more plentiful than all known reserves of natural gas, while one cubic foot of solid methane hydrate yields about 164 cubic feet of gas. However, there is some disagreement over the actual volume of commercially viable methane hydrate deposits.

In March, Japan Oil, Gas & Metals National Corp successfully extracted the first gas from deposits of methane hydrate from the ocean, producing 120,000 cubic meters of gas in six days of testing in the Pacific Ocean, off central Japan.

Last week, Japan stumbled upon another source of fire ice in the Sea of Japan, and now the game is on to predict when Japan will start producing commercial quantities of gas from methane hydrates. Those estimations range from two years to 15 years, so we don’t have much to go on.

In a November report, the International Energy Agency (IEA) noted that the viability of methane hydrates as a source of gas will depend largely on technological advancements and climate change regulations—the latter because methane is a potent greenhouse gas when leaked into the atmosphere so extracting it requires great care.

So, while there is talk of fire ice eventually sidelining shale gas due to the enormity of the resources, there are also some cautionary notes, both technologically and economically.

In terms of technology, it exists, but is prohibitively expensive to use in most cases.

For those of you who haven’t had the opportunity please take a moment to read our latest presentation which analyzes various developments taking place within oil & gas and predicts 5 areas that could see huge booms in the coming years. These could be some of the biggest opportunities available to investors today. You can read it here: 5 Giant Game-Changing Energy Trends

The existing technology being used, as we detailed in an earlier report in Oil & Energy Insider, is depressurization—which is what has been used in Canada and is currently being used in Japan. The process is to drill a well bore into the hydrate and remove the water from the formation to reduce the pressure on the methane hydrate. Typically this requires destabilizing the hydrate using a chemical mixture, which breaks the hydrate down into water and gas that is pumped out of the formation. The intention is to spark a chain reaction with the low pressure causing adjacent hydrates to decompose into water and gas and thus cause a “flow” throughout the formation.

The future technology everyone seems to be eyeing is CO2 injection, which involves injecting warm, pressurized CO2 into the methane hydrate formation in an exchange that would form a stable lattice and liberate the methane to pump it to the surface. What makes this technology more promising is that it sequesters unwanted industrial CO2 while at the same time maintaining the integrity of the methane hydrate formations during the extraction process. We’re not there yet, however: the technology is still being tested.

For those of you interested in Oilprice.com premium, we have a great letter lined up for subscribers. Dan Dicker our expert trader and legend in the oil markets gives premium subscribers a roadmap to follow in 2014. His report: The Most Important Energy Trend in 2014 – is something all Oilprice subscribers should take a look at. (click here to read the report for free.)

The executive report updates readers on a potential new oil and gas venue in the Balkans and the latest on the continuing crisis in Egypt and the oil skirmish between the Kurds and the Iraqi central authorities.

This is another must read issue and you can do so completely free. We offer a 30 day free trial to readers in which time you will receive 30 reports that look at trading opportunities, unique investments, industry developments, geopolitical updates and much more. You can cancel at any time during these 30 days if you think our research isn’t for you.

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That’s it from us this week.

James Stafford
Editor, Oilprice.com




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