As previously discussed in this paper, significant if not insurmountable technical issues need to be resolved before gas hydrates can be counted as a viable option for future supplies of natural gas.  In most cases, the viability of an energy resource is based almost solely on economics.  It is important to note, however, that in some cases the viability of a particular hydrocarbon resource can be controlled by unique local economic and non-technical factors.  For example, countries with little domestic energy production usually pay considerably more for their energy needs since they rely more on imported hydrocarbons, which often come with additional tariffs and transportation expenses.  Energy security is often a concern to resource poor countries, which in comparison to energy rich countries will often invest more money in relatively expensive unconventional domestic energy resources.  In some cases the uniqueness of a particular location, such as distance to a conventional energy resource, may lead to the development of otherwise non-economic unconventional resource.  In the following section, the economic and non-economic motivations that may eventually lead to sustained production of gas from hydrates will be discussed.

Economic Motivations

Because of uncertainties about the geologic settings and feasible production technology, few economic studies have been published on gas hydrates.  The National Petroleum Council, in its major 1992 study of gas (National Petroleum Council, 1992), published one of the few available economic assessments of gas hydrate production (Table 3).  This information, extracted from MacDonald (1990), assessed the relative economics of gas recovery from hydrates using thermal injection and depressurization.  It also benchmarks the cost of gas hydrate production with the costs of conventional gas production on Alaska’s North Slope.  Since the 1992 NPC report, the costs of conventional gas production on the North Slope and elsewhere have declined.  However, within countries with considerable production of cheaper conventional natural gas, hydrates appear not to be an economically viable energy resource in a competitive energy market.

Japan, India, and South Korea, like many other countries with little indigenous energy resources, pay a very high price for imported liquid natural gas (LNG) and oil.  The high cost of imported hydrocarbon resources is one reason why in the last two years government agencies in Japan, India, and South Korea have begun to develop hydrate research programs to recover gas from oceanic hydrates.  One of the most notable gas hydrate projects is underway in Japan, where the Japan National Oil Corporation (JNOC), with funding from the Ministry of International Trade and Industry (MITI), has launched a five year study to assess the domestic resource potential of natural gas hydrates.  In numerous press releases, MITI has indicated that "methane hydrates could be the next generation’s source of producible domestic energy".  JNOC is scheduled to drill a gas hydrate test well in the Nankai Trough area, near Tokyo, in the later part of 1999.  As much as 50 trillion cubic meters of gas may be stored within the gas hydrates of the Nankai Trough.  In 1998, JNOC also drilled the Mallik 2L-38 gas hydrate research well with the Geological Survey of Canada in the Mackenzie Delta of northern Canada (Dallimore et al., 1999).

India, like Japan, has also initiated a very ambitious national gas hydrate research program.  In March of 1997, the government of India announced new exploration licensing policies which included the release of several deep water (>400m) lease blocks along the east coast of India between Madras and Calcutta.  Recently acquired seismic data have revealed possible evidence of widespread gas hydrate occurrences throughout the proposed lease blocks.  Also announced was a large gas hydrate prospect in the Andaman Sea, between India and Myanmar, which is estimated to contain as much as six trillion cubic meters of gas.  The government of India has indicated that gas hydrates are of "utmost importance to meet their growing domestic energy needs".  The National Gas Hydrate Program of India calls for drilling as many as five gas hydrate test wells.

Most recently the United States, through the U.S. Department of Energy, has launched a national level research program to assess the resource potential of both marine and permafrost-associated gas hydrates.

Political Motivations

The world will consume increasing volumes of natural gas well into the 21st century if reliable, low cost supplies can be discovered and exploited.  In the near term, natural gas is expected to take on a greater role in power generation and transportation because of increasing pressure for cleaner fuels and reduced carbon dioxide emissions.  Gas demand is also expected to grow throughout the first half of the next century because of the expanding role of gas as a competitive transportation fuel due to the commercial development of gas-to-liquids technology.  The drive to increased reliance on natural gas will only be in part based on economics.  Government regulatory and taxation policy may also dictate the viability of a particular energy commodity such as gas hydrate.  In the recent past, government subsidies for unconventional gas resources such as coalbed methane contributed to their technical and economic viability.  Similar forms of government support may have a significant impact on the resource viability of gas hydrates.  Another non-economic factor that may affect the resource potential of gas hydrates in a particular country is the concerns dealing with national security and dependence on foreign energy resources.  The governments of many countries, including the United States, often express concerns over reliance on imported energy resources.  Most certainly the international gas hydrate research programs of Japan, India, and South Korea have been established in part to address concerns over their reliance on foreign energy resources.

Unique Motivations

The first gas hydrate accumulations to be produced may have unique characteristics, such as location, that may make them technically and economically viable.  For example, gas associated with conventional oil fields on the North Slope of Alaska is used to generate electricity in support of local field operations, for miscible gas floods, gas lift operations in producing oil wells, and is reinjected to maintain reservoir pressures in producing fields.  In the future, gas may be used to generate steam that may be needed to produce the known vast quantities of heavy oil on the North Slope.  Existing and emerging operational needs for natural gas on the North Slope are outpacing the discovery of new conventional resources and at least one of the operators in Alaska is looking at gas hydrates as a potential source of gas for field operations.  The North Slope of Alaska contains vast, highly concentrated, gas hydrate accumulations that may be exploited because of a unique local need for natural gas.

Natural Gas Hydrates: Resource of the 21st Century?