JAPAN TO STEP UP METHANE HYDRATE RESEARCH

UNCLAS SECTION 01 OF 02 TOKYO 002426 SENSITIVE SIPDIS SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE APPROPRIATELY. E.O. 12958: N/A TAGS: ENRG SENV JA SUBJECT: JAPAN TO STEP UP METHANE HYDRATE RESEARCH TOKYO 00002426 001.2 OF 002 ¶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. TOKYO 00002426 002.2 OF 002 ZUMWALT