05/07/2013 07:09 EDT | Updated 07/07/2013 05:12 EDT

Canada drops out of race to tap methane hydrates

Canada is abandoning a 15-year program that was researching ways to tap a potentially revolutionary energy source, just as Japan is starting to use the results to exploit the new fossil-fuel frontier: methane hydrates.

Methane hydrates are crystals full of methane gas found both offshore and under the permafrost. Low temperatures and high pressure cause methane and water to crystallize into ice-like deposits.

They represent an unexploited source of energy estimated to be larger than all the world's known coal, oil and gas reserves combined.

Methane is considered to be cleaner than other fossil fuels, and if methane is used instead of oil and coal, significant reductions in greenhouse gas emissions could be achieved.

Producing gas from hydrates could also avoid the water pollution issues connected with the extraction of shale gas through "fracking" techniques. The environmental impact of methane production has yet to be completely assessed, but researchers say they expect the issues would be comparable to those of offshore conventional natural gas production.

Canada and Japan have been partners in the quest to extract methane from hydrates. Since 2003, Natural Resources Canada has invested more than $10.5 million in the venture. Japan spent around $60 million between 2002 and 2008 to finance production tests in the Canadian Arctic.

On March 18 this year the Japan Oil, Gas and Metals National Corp. reached a milestone, successfully completing a test to produce methane gas from offshore hydrate formations for the first time, using extraction techniques pioneered in Canada.

Despite the success, Canadian federal funding from the Program of Energy Research and Development for methane hydrate research projects was cut as of March 31 — just a couple of weeks after the offshore production tests in Japan.

Enormous potential

Canada has confirmed reserves of methane hydrates in the Mackenzie River Delta, the Arctic Archipelago and along the Pacific and Atlantic coasts.

According to a 2012 study from the University of Alberta and the Geological Survey of Canada, the total amount of methane gas in Canada is measured in trillions of cubic metres. Estimates put methane hydrates at anywhere from two to 30 times the amount of conventional natural gas present in the country.

In spite of that potential volume, the recent technological breakthrough permitting deposits to be tapped, and a successful research record, Canada has lost interest in commercializing this vast source of energy.

Paul Duchesne, manager of media relationships for Natural Resources Canada, told CBC News in an email that growing interest in shale gas and low prices for conventional sources of natural gas make energy from methane hydrates non-competitive.

“As a result, additional research into gas hydrates … [is] not a current priority,” he wrote.

Other countries are still pursuing hydrate research. Last year, U.S. Secretary of Energy Steven Chu said that methane hydrates “could potentially yield significant new supplies of natural gas and further expand U.S. energy supplies.” He compared the current methane hydrate research to the long-term research investments that paved the way for the shale-gas boom. The U.S. conducted production tests in Alaska in 2012.

In March 2012, a German-Taiwanese venture was launched to study the methane resources in the South China Sea.

Norway, South Korea and India are also involved in ongoing hydrate research.

Lowering the pressure

A lot of research has been necessary, because harvesting energy from methane hydrates is tricky.

Michael Whiticar, a professor of biochemistry from the Earth and Ocean Science Department at the University of Victoria, says that hydrates store large amounts of gas in a relatively small area. One cubic metre of hydrate can hold around 160 cubic metres of methane and 0.8 cubic metres of water.

Even so, they're hard to get at. Whiticar explains that offshore hydrates can be formed in large white clusters, but it is more common to find them mixed in ocean sand, like “sugar mixed with the sediments.”

Canada has been involved with research to develop extraction techniques since 1998, when the Mallik Methane Hydrate Site was set up in the Mackenzie River delta, 130 km north of Inuvik in the Northwest Territories.

Scott Dallimore, a research scientist at the Geological Survey of Canada in Sydney, B.C., says the first projects involved taking core samples from the permafrost to study the characteristics, behaviour and availability of methane hydrates.

In 2002, an international test project was set up in Mallik using a technique that heated the methane hydrate layers to release the gas. It failed, but at the same time, other tests that reduced the pressure in the layers did work.

To extract the gas using this approach, it is necessary to drill until a deep layer rich in methane hydrates is found. Then water is pumped out to lower the pressure, disintegrating the crystals and releasing the methane.

A new, full-scale test using pressure reduction was done at the Mallik site in 2007 and 2008. This time, Canadian and Japanese researchers were able to successfully extract methane gas over the course of five days.

After Mallik, Natural Resources Canada continued to fund follow-up analysis of the data and technical and environmental aspects of production. Japanese researchers took that knowledge and have adapted it to their offshore conditions.

During six days of operation in March this year off the southern coast of Japan near the Mie and Aichi Prefectures, the Japanese produced 120,000 cubic metres of methane gas. That's about 10 times as much as the previous test in Canada.

“This recent success of the Japanese is actually quite a success for Canada, because together we worked hard over more than a decade to prove these techniques and to understand the science behind it,” Dallimore says.

Strategic direction

Despite the success of the program, as of April, Canada is no longer financing further research into gas recovery from methane hydrates.

Some Canadian research projects are continuing to explore the oceanographic and climatic role of methane hydrates, but none is focused on using them as an energy source.

“The course of our research had reached a natural conclusion, we demonstrated that gas hydrates could be produced,” Dallimore says.

The next step would have consisted of a long-term production test, which could last from six months to one year, and then full commercial production.

“My hope is that at some point someone might turn to Canada and evaluate the site we worked at,” Dallimore says.

While Canada has decided it isn't feasible to make further investments in the field, methane hydrate research is strategic for Japan. Exploiting the abundant methane hydrate deposits near its coast would allow Japan to end its foreign energy dependency, with enough recoverable gas to meet its power demands for 100 years.

Japanese researchers are working toward establishing commercial extraction operations for some of these deposits by 2019.