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This Government Is Drilling A NatGas Project Unlike We’ve Ever Seen

Japan gas flaring

Quick update to my recent story on Libya’s largest oil field shutting down— with reports yesterday suggesting that the Sharara field has once again gone offline following possible rebel activity along connecting pipelines.

That’s a critical development for global crude markets. And upcoming events in another part of the world may be equally important for the natural gas space.

Commercial testing of a completely new natgas source, in the key market of Japan.

The target here is methane hydrates — massive accumulations of natural gas that occur around the world on the seafloor. Which the Japanese government has been investigating for nearly 15 years as a potential new source of energy supply.

Up until now, production of natgas from methane hydrate has been completely theoretical. But it’s about to get real — with Japanese officials saying that a drill ship is poised to begin commercial testing of a big deposit in the Pacific Ocean off south-central Japan.

Representatives of Japan’s Ministry of Economy, Trade and Industry told a press conference yesterday that the drill ship will immediately proceed with deepening two wells previously sunk at the methane hydrate deposit by about 50 or 60 meters.

After that, the ship will begin extracting natgas for a commercial flow test. With officials saying this “crucial” step will be completed in April or May.

All told, the Japanese government hopes to flow natgas from hydrates here for three to four weeks. Which should give the strongest indications yet on whether this unconventional energy source is a go. Related: “Grassoline” The Jet Fuel Of The Future?

The test is far from a lock — with a previous flow test of the same Japan project in 2013 having yielded flows of just 700,000 cubic feet per day. Far from commercial for this kind of project.

But Japanese authorities say they have now addressed several problems from that test — most notably controlling inflows of sand into production wells. If so, a solid flow rate from the upcoming test could signal a massive new natgas source rising — with Japan alone holding an estimated 40 trillion cubic feet of methane hydrate reserves.

Watch for results of the test over the next few months — this is a trend that could reshape energy over the coming decade.

Here’s to going deep.

By Dave Forest

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