In a world awash in oil and gas, you'd think it couldn't get any worse. Well, it can: China just announced that it had extracted a record amount of what has been poetically called fire ice. It is, however, a form of natural gas trapped in frozen water.
At 861,400 cubic meters, this record might not be a whole lot of gas, but it may well be the start of something new, and gas producers may not like this 'something'.
Gas hydrates don't garner a lot of media attention as a rule, simply because they have yet to become an addition to the world's energy mix. But when they do—if they do—they may change the international oil and gas market even more than the coronavirus outbreak has changed it now by decimating demand for hydrocarbons.
First, what are gas hydrates?
Gas hydrates are molecules of natural gas, most commonly methane, trapped in a "cage" made from water molecules. They exist in cold climates, such as beneath the Arctic permafrost and Antarctic ice, but also in sedimentary deposits--the same kind of deposits where oil and gas collect along the margins of continents and also under the seabed of specific basins such as the South China Sea.
Because they only exist in cold places, research on gas hydrates has been challenging. As geologist Hobart M. King explains in an article on hydrates for Geology.com, hydrates are only stable in the environment where they formed.
To study them, researchers need to remove the samples from their environment. The change in temperature in pressure, however, melts the water cage, and the methane escapes.
Why bother with hydrates at all, then? Because they may be more abundant than all other hydrocarbons taken together: oil, gas, and coal.
According to the U.S. Department of Energy, the world's methane gas hydrates could be as vast as 250,000 to 700,000 trillion cu ft. According to the UN Environmental Programme, the world's reserves of gas hydrates could be as large as 3,000 to 30,000 trillion cubic meters. But these are just enormous figures that are difficult to digest.
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Here's an estimate that might be more palatable: the world's gas hydrate reserves could be between 100,000 and 1.1 million exajoules. For context, the world's total annual energy consumption as of 2014 when the UNEP paper was written was about 500 exajoules.
This means we might be sitting on enough gas to power the world for hundreds, if not thousands, of years.
It's packed tightly, too. According to the Department of Energy, a single cu m of hydrate can release as much as 164 cubic meters of natural gas. Talk about energy density.
China is among just a handful of countries pursuing research into gas hydrates with a focus on extraction. With its dependence on imported oil and gas, this is hardly surprising. The first extraction experiments in the South China Sea, in 2017, resulted in an output of 300,000 cubic meters extracted over a period of two months. Now, the Ministry of Natural Resources has reported an output of 287,000 cubic meters achieved in a single day. This is quite a significant progress in three years.
And that's not all.
According to the ministry, the output achieved during this phase of the gas hydrate trials provided a "solid technical foundation for commercial exploitation."
This is probably the last thing gas producers around the world need to hear right now, but it is what they need to hear. Full-scale commercial production may be years or even decades away, but China is getting there. It seems, however, that it is getting there in strides rather than baby steps. This could spur others into action or, as it were, faster action.
Back in 2012, the United States and Japan reported successful production of methane from gas hydrates in the Alaskan North Slope. Then, a year later, Japan reported successful production again, this time from an offshore deposit at home. Those tests ended sooner than expected because of technical problems. In 2017, Japan again announced the first successful longer-lasting extraction of methane from a gas hydrate deposit offshore.
Last year, the U.S. Geological Survey updated its estimate for gas hydrate reserves in Alaska to 53.8 trillion cu ft. While this is significantly lower than the initial estimate from 2008, which said there were 85 trillion cu ft of recoverable fire ice in the North Slope, it is still is substantial enough to motivate exploration. Only perhaps not right now, given the price environment.
China's announcement comes at a sensitive time for the world gas industry. Prices are severely depressed by a rare if not unprecedented combination of unusually low demand and excessive supply. Energy firms are retrenching and preparing to wait out the crisis. Exploration budgets are being slashed and plans are being revised. And now, China has announced that it is working on its self-sufficiency in gas. It is going to be an ugly year for the energy industry, but maybe a good year for research into what could be the world's most abundant fossil fuel resource.
By Irina Slav for Oilprice.com
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