JAPAN TO STEP UP METHANE HYDRATE RESEARCH

UNCLAS SECTION 01 OF 02 TOKYO 002426

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TAGS: ENRG SENV JA
SUBJECT: JAPAN TO STEP UP METHANE HYDRATE RESEARCH

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1. (U) SUMMARY: Japan has stepped-up its focus on extracting
methane hydrate, an alternative gas energy source, with a
target date of 2012 for trial methane production, according
to Ministry of Economy, Trade and Industry (METI) officials
and media reports. Reserves of deep-sea methane hydrate (a
sherbet-like compound of methane and frozen water molecules
that becomes methane gas when heated) near Japan are
relatively abundant, elevating the resource's potential as an
alternative to imported fuel stocks in Japan's energy mix.
However, the economics of extracting methane from methane
hydrate remain unknown, and researchers must overcome several
technical and environmental obstacles before the resource can
become commercially viable. END SUMMARY.


2. (U) A panel convened by METI in late August identified a
2012 date for experimental production of methane from methane
hydrate, followed by private-sector led commercial
development from 2019. However, an official in METI's Agency
for Natural Resources and Energy (ANRE) reported it is
difficult to say how feasible this target is given many
technological unknowns, while both the Prime Minister's
office and METI Minister Nikai seek to accelerate methane
hydrate development. The Methane Hydrate 21 Research
Consortium that includes the Japan Oil, Gas and Metals
National Corporation, the National Institute of Advanced
Industrial Science and Technology, and the Engineering
Advancement Association of Japan (all GOJ-funded) is
coordinating the GOJ's efforts under the oversight of ANRE's
Petroleum and Natural Gas Division. This division is also
responsible for other non-conventional fossil fuel resources,
such as oil sand technology. Research will focus on the
Nankai Trough, about 30 miles off Japan's coast between
Wakayama and Shizuoka Prefectures, where confirmed reserves
of deep-sea methane hydrate amount to 40 trillion cubic feet
or about 14 years' total Japanese demand equivalent for
natural gas. Research by Tokyo University estimates that
methane hydrate reserves around Japan amount to 100 years
worth of Japan's current natural gas demand.


3. (U) Media reports identify Modec Inc., a subsidiary of
Mitsui Engineering and Shipbuilding and a major manufacturer
of Floating Production, Storage Offloading (FPSO) systems, as
a leading industry player due to its expertise in building
off-shore oil and natural gas platforms. Inpex Holdings and
Japan Petroleum Exploration Co. also hold resource
development rights in the targeted area and are cooperating
with the research consortium.


4. (U) Japan reportedly has spent USD263 million since 2001
on methane hydrate technology research and development.
Japan allocated 2.5 billion yen to methane hydrate research
in ANRE's FY2008 budget. The latest focus on methane hydrate
conforms to the GOJ's March 2008 Basic Maritime Plan, which
emphasizes developing marine resources. Japan conducted a
joint six-day experiment with Canada in March that achieved
the first successful extraction of methane from decomposing
methane hydrate underground. At the June 2008 G8 Energy
Ministerial, Japan and the U.S. published a joint "statement
of intent" to cooperate on methane hydrate information
exchange, collaborative research and environmental
assessment. Japan and the U.S. are also collaborating on a
three-year joint experiment to produce methane from methane
hydrate in the seas near Japan and offshore Alaska.


5. (SBU) The GOJ's focus on methane hydrate research and
development reflects the resource's attractiveness as an
indigenous energy source. However, the price per cubic foot
to produce, store and transport methane hydrate relative to
existing natural gas resources remains unknown, and experts
note it is far to early to assess commercial viability.
Meanwhile, ANRE officials identify several technological
obstacles to underwater methane hydrate production.
Experiments to date have succeeded in producing methane from
methane hydrate in the frozen tundra, but the process is yet
untested in a high-pressure, deep-water environment. In
addition, the MH21 Research Consortium has prioritized
research and development of technology to detect and prevent
leakage of methane, a greenhouse gas, during production. END
COMMENT.



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