Are methane hydrates a game changer?

03 June 2014

Shale gas has been labelled a ‘game changer’ in energy markets but it may in fact be only the  tip of the hydrocarbon reserve iceberg. For instance, in 2013 Japan became the first country successfully to release methane gas from hydrate deposits found offshore.

Methane hydrates are egg shaped, ice-like structures consisting of pure methane gas caged by surrounding water molecules. They are found mostly along the ocean floor or in the arctic tundra regions. Global reserves are believed to be several times that of conventional gas and there may be significant deposits off Scotland’s coast. 

Methane has long been viewed as a climate-change threat since it is estimated to be 15–20 times more powerful than carbon dioxide as a ‘global warmer’. But climate and sea current changes are causing methane to be increasingly released from methane hydrates deposits. So some suggest that the extraction and burning of methane together with carbon capture would actually help to reduce the warming effect. 

Japan, and now other nations, notably China, India and the US are exploring whether methane hydrates might be a viable alternative fuel source that would reduce their dependence on foreign gas imports, and also provide a boost for national manufacturing and engineering industries.  

Initially extraction will be expensive, but economies of scale and efficiencies will reduce costs and increase margins. One idea for the future extraction of methane hydrates is the use of a floating production storage and offloading (FPSO) vessel to extract the hydrates. This will offload onto a natural gas ship to process the methane to LNG. However there are some concerns over the aggregated risks if an incident were to occur. A sudden unsettling of the reserves could lead to an underwater landslide and potentially a methane gas bubble rising from the ocean floor. 

Extraction by onshore drilling is being considered in locations such as under the ice in the Alaska North Slope region. Alternatively, underwater deposits might be accessed either by drilling through layers of seabed sediment or by harvesting nodules of the ‘fire ice’ lying on  the sea bed in mounds covering large areas. The harvesting approach will need to be specifically adapted to allow safe and economic recovery of the gas and avoid a subsea landslide.  

There is also the potential long-term impact to consider. A large reserve of ‘clean fuel’ could for instance divert funds from renewable energy technological innovation. On the plus side, however, methane hydrate extraction in certain areas may be an effective pre-emption to reduce the potential for greater naturally occurring events resulting in a large-scale release of methane into the atmosphere.  

The commercial viability of extraction as well as the environmental exposures will, of course, ultimately be the deciding factors. The future of methane hydrates as an energy and chemical resource is not yet clear. But its importance will undoubtedly grow. 

For further information, please contact Paul Clarke, Partner, Energy on +44 (0)20 7459 5641

contact Paul Clarke
Head of Risk Engineering