NZ Methane Hydrates May Soon Be Developed

A gas industry using frozen gas hydrates below the seabed off the East Coast could be developed in the near future thanks to rapid global technical developments.

George Hooper, executive director of the Centre for Advanced Engineering, told a recent Oil and Gas conference in Wellington that exploitation of methane hydrates could transform New Zealand's energy market.

Hooper is lead author in a recent CAE report on an options analysis for commercial development of energy from offshore methane hydrates in New Zealand.

He said 'sweet spots' containing high concentrations (about 4-10%) of methane hydrate found in sheets under the seabed off the East Coast may contain about 8.5 - 21 trillion cubic feet (TCF) of recoverable gas.

He said New Zealand's methane hydrates endowment is very likely the largest in the world on a per capita basis and potentially one of the largest resources in the world.

Inferred resources of hydrates in New Zealand are 813 TCF with 40 TCF identified as potentially economically recoverable. Inferred world resources of hydrates are 20,000 TCF.

The ice-like crystals of water and methane molecules intermixed with sediments are found over 50,000 sq km from offshore Marlborough to offshore Gisborne, as well as off Fiordland.

A number of countries were now working on developing commercial gas production from hydrates including Japan, India, the US and South Korea. Japan was talking of a 2015 timeline for first production, though this might be optimistic, Hooper said.

He anticipates rapid progress in the engineering geology and production technologies required for hydrates extraction, both internationally and in New Zealand.

This demanded a considerable ramp-up of hydrate research and development effort here to ensure New Zealand has the earliest possible opportunity to develop its hydrate resources and associated skills.

A conceptual well development plan for a known Wairarapa hydrates 'sweet spot' site offshore Wairarapa, east of Wellington, was prepared for the study.

Costings for a small scale 10 petajoule a year 'proving' project indicated this option would require capital expenditure of $370 million.

To produce 150 PJ of gas, equal to the entire New Zealand gas market, the capital expenditure would be about $4 billion, about twice the $2 billion capital spending required to produce a similar volume of conventional natural gas.

The cost of building a 300 PJ project both for domestic gas use and for the export of LNG, would cost about $8 billion.

Hooper said gas hydrate development in New Zealand could be preferable to LNG imports as a "backstop" provider of gas for electricity generation and direct use, should conventional gas exploration fall short of supplying domestic demand.