Commercial potential for methane hydrates

Methane hydrates - a form of natural gas bound up in an ice-like structure - are yet to be drilled commercially, but GNS Science Section Manager for Oceans Exploration Vaughan Stagpoole says research into this energy resource has come a long way in the last five years.

"It's particularly being driven by the Japanese and American research programmes. They've now got to the point where they have been drilling into gas hydrate deposits and been producing gas - not in commercial quantities yet, but they have started to map out a future where they can see that it can be produced," he says.

Potential for huge recoveries

This research is increasingly relevant as New Zealand looks to find a  replacement for its dwindling, conventional natural gas resource. GNS Science gas hydrates specialist Ingo Pecher describes the research as "very promising" for New Zealand's Hikurangi Margin found off the east coast of the North Island.

"We have a similar geologic setting to Japan - at least from a gas hydrates perspective - and we have a similar area which makes the Hikurangi Margin a very interesting region internationally," he says.

Pecher estimates that gas volumes in highly concentrated deposits of methane hydrates in the Hikurangi Margin could lead to recoveries in the range of 5-50 trillion cubic feet (tcf) depending on the recovery technologies and further understanding of the deposits. In comparison, the Maui gas field off the North Island's west coast had over 4 tcf recoverable gas at the time of discovery - globally one of the largest fields at the time - and has been supplying the domestic and export market for 30 years.

Given this, gas hydrates on the Hikurangi Margin could potentially meet local demand and also be exported well into the next century, though Pecher says more surveys are needed to better identify the locations of the margin's methane hydrates reservoirs and the quality of these reservoirs in terms of potential gas production, as well as the volumes of gas stored in hydrate deposits. These will be some of the objectives of an international research survey planned for March / April 2011.

While research continues to ascertain the breadth and depth of the resource, the Hikurangi Margin remains commercially encouraging over and above its geographical size and estimated volume. It is close to land, starting just 20 kilometers from the coast, and is around 80 kilometers directly from New Zealand's capital city, Wellington.

Methane hydrates may also offer a processing advantage over conventional  forms of natural gas as they could potentially be produced in a purer form and therefore need less input to bring them up to sales standard. They do, however, require different methods of recovery and production from conventional sources of natural gas. Technologies suitable for methane hydrates are yet to be tried and tested on a commercial scale, but technological development is advancing rapidly.

Kevin Chong, Gas Hydrates Programme Manager at the New Zealand Centre for Advanced Engineering, says that New Zealand - with the help of international expertise and investment - is capable of pioneering the necessary technologies for the commercialization of New Zealand gas hydrates, as it did successfully with the Maui gas field in the early 1970s.

"The rise of coal bed methane internationally provides an analogy for the development of New Zealand's methane hydrates resource. Coal bed methane has shifted from being a scientific curiosity 20 years ago to now accounting for almost 10 percent of US natural gas production. Methane hydrates may well be in the midst of a similar pathway" says Chong.

Furthermore, the Hikurangi Margin is currently excluded from Priority in Time permits.

"It's a real advantage that nobody else has got the ground, whereas in a lot of places around the world, gas hydrates ground is already being taken up. From a commercial point of view, that's quite an opportunity," says Stagpoole.

New Zealand's agency for managing the country's oil, gas, minerals and coal resources, Crown Minerals, is currently reviewing the Crown Minerals Act. Part of this review will consider whether to issue separate permits for commercial gas hydrates activity.