A recent technological breakthrough in Japan might soon render economically viable the large-scale exploitation of methane hydrates. The potential of this new (and global) form of unconventional natural gas is mind-blowing. Although a number of countries have already displayed strong interest in exploring their reserves, Japan is most likely to lead this new “dash for gas”. It has already made the development of methane hydrates an important element in its long-term energy policy. If Japan is successful, East Asia’s energy situation will undergo a dramatic change over the medium term, with worldwide repercussions. But it will not be good news for climate policy and the transition to a green economy.
I. The new energy revolution
Every story of a new energy revolution begins with a new scientific term to be incorporated into our daily vocabulary. It also comes with a bunch of astonishing figures vindicating the sudden surge of interest around this new buzz-word as well as astronomical future investments. After “non-conventional hydrocarbons”, now available in different flavours (“shale oil and gas”, “coal-bed methane”, “tar sands”, etc), this time around the energy of the future bears the name of “methane hydrates”.
What is hiding behind this new scientific jargon? Put simply, it is methane, i.e. the principal component of commercial natural gas, trapped in a cage of water molecules in a frozen state. As they are highly flammable, methane hydrates are also known as “burning ice” or “fire ice”. Obviously, such a specific chemical structure can only be found in very particular environments combining very high pressure and low temperatures, namely ocean beds and sedimentary rocks in Arctic Regions. More detailed information on the chemical side of this story is available here.
As for the second ingredient for a successful energy revolution, i.e. a mouth-watering economic potential, a few figures drawn from the data of the US Geological Survey (USGS) should be enlightening enough. This highly respected institute expects “the naturally occurring gas hydrate resource to vary from 10,000 trillion cubic feet to more than 100,000 trillion cubic feet of natural gas”, which would represent “more organic carbon than the world’s coal, oil, and other forms of natural gas combined”. Admittedly, that should be sufficient to bring stars to the eyes of most market players.
The existence of this type of resource has been well-known for quite some time ̶ as a nuisance in pipelines since the 1940s and as a natural deposit since the 1960s. However, the difficulty to access the remote and extreme zones where they are locked up meant that, until recently, methane hydrates were relegated to the “found-and-dropped-until-much-later” box, along with nuclear fusion, hydrogen and the like. Exploitation was both technically hazardous and economically unjustified.
Methane hydrates may already be at the stage where shale gas was 10 years ago
But a recent series of technological breakthroughs has changed this picture. In 2002, a team of Canadian and Japanese scientists succeeded in extracting methane from the Mallik gas hydrate site ̶ in the permafrost of the Beaufort Sea ̶ using heat. Even better results were obtained in 2008 by simply lowering the reservoir’s pressure without resorting to heating, which considerably improved the energetics of the process. But the real breakthrough came early last year, in March 2013, when a Japanese drilling ship of the Japan Oil, Gas & Metals National Corporation (JOGMEC) successfully extracted methane hydrates from the seabed off Central Japan (Nankai Trough) during 6 days, using a similar technique. It produced 120,000 cubic meters in total, i.e. 20,000 cubic meters a day. This was hailed as a particularly significant development, as ocean beds are thought to be the repositories of the bulk of methane hydrates reserves worldwide.
However, extraction costs still have to be dramatically cut and adequate infrastructure developed in order to make extraction profitable under current market conditions. According to the Japanese Ministry of Economy, Trade and Industry (METI), quoted by Platts News Agency, a sustained flow rate of 55,600 cubic meters/day could be achieved around 2018/2019. At such a rate the extracted gas could be commercialized around $16/MMBtu, a level compatible with regional prices. Considering the 20,000 cubic meters/day recorded in 2013 ̶ twice higher than METI’s expectations ̶ this target seems quite achievable. But only time will tell: further drillings are scheduled in fiscal 2014-2015.
Nevertheless the announcement triggered a wave of enthusiasm in resource-deprived Japan. In the words of Ryo Minami, director of the oil and gas division at Japan’s Agency for Natural Resources, speaking to the Financial Times, methane hydrates may already be at the stage where shale gas was 10 years ago. In practical terms, that means he believes Japan can start commercialization of methane hydrates in around 10 years. That is already reflected in the Japanese official energy policy: hydrates are one of the specific measures put forward by the METI’s Strategic Energy Plan to achieve the 2030 target of raising Japan’s energy independence ratio from current 38% to about 70%.
No doubt that images of a bountiful energy future are now dancing before the eyes of corporate tycoons and government officials there and elsewhere.
II. The shape of things to come: Japan as front-runner
So how will this revolution in the making likely unfold and what will be the market and environmental consequences?
As always in the energy business, a map of resources merely reflects available knowledge, which is bound to change dramatically as investments flow in and exploratory wells sprout in new areas. An educated look at the map of the US Geological Survey ̶ available here ̶ nonetheless brings some interesting insights. (Note that the open circles represent recovered hydrate samples and the closed circles inferred occurrences.)
The first conclusion is that the new resource is, by and large, present all over the planet, both in traditional areas of fossil fuel extraction and in resource-poor countries. The prospects of these methane hydrates deposits are therefore just as diversified as their geographical localisation. What will the consequences of this geographical distribution on the looming revolution be?
Besides Japan and Canada, some countries have started exploratory drilling programmes, most notably the US, India, China, Korea and to some extent Malaysia. Japan is nevertheless poised to be the leader of this revolution. Beyond its clear technological edge, it has indeed expressed strong political will to pursue this path, pushed by a number of factors.
In the wake of the Fukushima disaster and the resulting shut-down of its considerable nuclear generation capacity (its contribution to national power production fell from 26% in 2011 to less than 2% in 2012), Japan’s already extreme dependence on energy imports has been notably worsened. Japan is today the world’s biggest importer of LNG (its share in the electricity mix leapt from 27% to 48% between 2011 and 2012). It also comes second for coal and third for oil. Gas spot prices in Japan ̶ and East Asia more generally ̶ are today twice those in Europe and three times those in Northern America. A new energy resource that Japan could call its own would therefore bring badly needed relief to a country that fears for its energy security and rapidly degrading trade balance.
On the strategic side of the story, it is essential to keep in mind that the bulk of Japan’s fossil fuel imports comes from the Middle East (Saudi Arabia, Qatar, and United Arab Emirates) and South East Asia (Malaysia, Brunei, Indonesia). Before reaching Japanese ports, the tankers transit through the Malacca straits and the South and East China seas, i.e. within arm’s reach of China. In this context, three factors have brought Japan’s energy security worries to an all-time peak: first, the flaring-up of tensions between China and its neighbours over the South and East China Seas, which threatened to turn into full-blown regional confrontation following China’s unilateral announcement of a new Air Defence Identification Zone in November 2013; second, the extremely strained relations between Tokyo and Beijing over the Diaoyu-Senkaku Islands; and third, the periodical surge of nationalistic and hawkish rhetoric that has characterized the Japan-China relationship over the last decades, against the background of the bad blood left by Japan’s refusal to apologize for (or even recognize, for that matter) large-scale abuses during the Second World War.
Conversely, most other countries with strong methane hydrates potentials are, for various reasons, less likely to take the lead in developing them.
The United States and Canada have been engaged in methane hydrates research programmes since the 1990s (sometimes even in cooperation with JOGMEC, as in the Prudhoe Bay in Alaska). But these two energy giants presently have little incentive to rush ahead as they are still reaping the enormous benefits of the shale gas revolution. Their proven reserves and output have been considerably increased over the last few years, while the North American gas market is currently characterised by very low prices (around $4.30 per Million Btu). According to energy consultancy IHS, this is unlikely to change before 2035. Canada even recently decided to abandon its methane hydrates programme.
East Asia’s emergence as a world-leading gas producer would have tremendous market ramifications
Similarly, Russia, whose reserves of hydrates in Northern Siberia are deemed to be titanic in size, is currently busy investing on another front: developing its conventional reserves in the Arctic zone. Given the flagging financial situation of the country, Russia can ill afford to open up another front that would require huge investments for at best medium-term benefits. Even if Russia were able to direct large investments towards the exploitation of new resources, it would most likely prioritise its untapped shale gas reserves, which are believed to be enormous, as technology is more mature.
Note, incidentally, that Russia’s methane hydrates will probably have partially disappeared when it decides to start exploiting them. As a matter of fact, they are already slowly being released from the thawing Siberian permafrost into the atmosphere because of rising temperatures. Besides a probably catastrophic effect on global warming itself, it means that the days of Russian reserves are numbered.
India, like Japan, is facing a situation of worrying energy scarcity and burdensome energy imports. It has expressed interest in pursuing the development of its methane hydrates potential in the future, but lacks the technical capability to do so now. Moreover, its gas market remains tiny in size, marred by corruption and red tape. Recent disasters in the upstream sector (KG6 Basin) have also chilled the enthusiasm of investors.
China, for its part, is confronted with similar technological hurdles and has not expressed strong political interest in exploiting these new reserves so far, mainly because it is endowed with the largest shale gas resources on the planet, according to the International Energy Agency (IEA). 
Thus, Japan ̶ and perhaps, for similar reasons, South Korea ̶ seems bound to be the flag-bearer of this revolution in the making. Others will certainly follow if Japan is successful (Japanese-Indian and Japanese-American cooperation programmes have already been initiated). Clearly, East Asia’s emergence as a world-leading gas producer would have tremendous market ramifications. It is not, however, the object of this article to depict them in detail. No doubt that the IEA and other energy world-class energy institutions are re-evaluating their forecasts in this new light as we speak. As a foretaste, think diversion of massive amounts of LNG away from Asia, doubts over the EU’s ability (and willingness) to absorb them, drops in prices and heightened tensions over territorial disputes in the hydrates-rich South and East China seas (involving not only China and Japan, but also certainly South Korea, the Philippines, Vietnam and Taiwan), not to mention the impact on the US and Russian global export strategies (America’s intention to become an LNG exporter and Russia’s long-term plan to re-orient its exports from Europe to East Asia).
III Should we look forward to this revolution? A non-market perspective
Now, in the context of the upcoming global negotiations on climate change (COP21) in Paris next year and of a European energy and climate package for 2030 that has already been watered down to almost nothing, should we welcome this looming revolution? I think not.
The recovery of enormous amounts of gas from beneath the seabed or from deep layers under the Arctic permafrost will require large-scale and long-term investments in the upstream gas sector. The advocates of gas as the panacea for a clean energy future will brandish the usual arguments to defend such a considerable influx of funding into new drilling platforms, pipelines and ships, which will only be amortized over long decades of intense utilization. The most important among these are: the twice lower carbon footprint of natural gas compared to coal and the role of Carbon Capture and Storage (CCS) facilities to reduce the remaining emissions.
The truth of the matter is however that, while gas is indeed better than coal, it remains a fossil fuel. A rush into methane hydrates reserves could therefore hardly be considered a positive signal for the development of the carbon-free economy that the EU and the UN champion. Methane hydrates would simply reveal once again that our economies favour sailing further and drilling deeper over developing alternatives. A methane hydrates frenzy would be further evidence that inertia and path dependency are still predominant and that the easier road is still the one that our growth-oriented economies invariably opt for, despite the well-known long-term consequences. This certainly applies to countries whose wealth is already largely based on the exploitation of their fossil fuel resources (such as the US, Canada, Russia and Norway). Turning to this new godsend after conventional and shale reserves are exhausted would merely mean the continuation of their deeply entrenched economic model.
Methane hydrates would drain the momentum from the construction of green economies and lead to significant steps backwards
But, as demonstrated earlier in this article, those countries would probably be latecomers as far as methane hydrates are concerned. The hydrate revolution would have an even more detrimental effect on those countries that will lead the way, i.e. the resource-poor ones, such as Japan, Korea and even India (whose coal mines do not suffice, by far, to quench its thirst for energy). Well aware of the danger of energy dependency, these countries have all engaged in extensive support programmes for the only domestic energy sources they have at their disposal: renewable and nuclear energy (at least until recently in the case of Japan). The sudden availability of large amounts of natural gas on their territory, which, unlike renewable, would not require an overhaul of their power systems, would most certainly draw politicians’ and investors’ attention away from renewable energy. Thus, methane hydrates would drain the momentum from the construction of green economies and lead to significant steps backwards. In addition, it would undoubtedly have a negative impact on these countries’ so far rather progressive approach to the international negotiations on climate change. That cannot be good news for anyone who cares about the future of this planet.
Regarding CCS, the hopes that it could play a meaningful role in “greening” gas and coal-fired power plants seem increasingly far-fetched. The example of the United Kingdom shows that even technologically-advanced countries struggle to bring projects to fruition, despite grand-sounding announcements. In light of this, it is hard to believe that CCS could play a meaningful role at the global scale in the foreseeable future. Therefore fossil-fuel-fired power plants will keep on polluting as long as we keep feeding them with new reserves.
Finally, even apart from the inevitable increase in greenhouse gas emissions (methane is a 20-time more potent heat-trapping agent than CO2), exploitation of these hidden resources would entail the usual range of environmental risks: gas leakages directly into the ocean, increased acidification of seawater, depletion of the ocean’s oxygen, etc. Plenty of reasons, each one of them sufficient in itself, to stay away from methane hydrates.
Gabriel Camus (email@example.com) is an independent energy consultant and free-lance journalist based in Paris, France.
 Takeo Kumagai, Unconventional Japan, Platts News Agency, Insight, December 2012: http://www.platts.com/IM.Platts.Content%5Caboutplatts%5Cmediacenter%5Cpdf%5Cinsight12_japan.pdf
 Japan warms to « fire ice » potential, The Financial Times, March 12th 2013
 The Strategic Energy Plan of Japan [Summary], June 2010, METI: http://www.meti.go.jp/english/press/data/pdf/20100618_08a.pdf