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.