Posts Tagged ‘methane hydrates’

Saudi Arabia seeks bank loans for first time in a decade

March 9, 2016

I am still of the opinion that the oil price war that Saudi Arabia has been waging against shale oil, Russia and Iran, was misguided and due primarily to a geopolitical machismo that was grossly overestimated. It was misguided because shale fracking is not a technology that is going to go away. In the short term some of the more expensive shale wells may close, but they can very soon start up again. But more importantly, shale gas and oil are available all over the world. They just haven’t been developed yet. And those that don’t have access to shale – like Japan – will have access to gas from methane hydrates within a decade. And there is more gas available from methane hydrate than from shale which, in turn, is more gas than all the natural gas resources known.

In the long run I expect the Saudis to be the losers. Their budget deficit climbed to approach $100 billion last year and now, for the first time in a decade, they are looking to borrow.

Reuters: 

Saudi Arabia is seeking a bank loan of between $6 billion and $8 billion, sources familiar with the matter told Reuters, in what would be the first significant foreign borrowing by the kingdom’s government for over a decade.

Riyadh has asked lenders to submit proposals to extend it a five-year U.S. dollar loan of that size, with an option to increase it, the sources said, to help plug a record budget deficit caused by low oil prices.

The sources declined to be named because the matter is not public. …

The kingdom’s budget deficit reached nearly $100 billion last year. The government is currently bridging the gap by drawing down its massive store of foreign assets and issuing domestic bonds. But the assets will only last a few more years at their current rate of decline, while the bond issues have started to strain liquidity in the banking system. …….. 

…… Analysts say sovereign borrowing by the six wealthy Gulf Arab oil exporters could total $20 billion or more in 2016 – a big shift from years past, when the region had a surfeit of funds and was lending to the rest of the world.

All of the six states have either launched borrowing programs in response to low oil prices or are laying plans to do so. With money becoming scarcer at home, Gulf companies are also expected to borrow more from abroad.

In mid-February, Standard & Poor’s cut Saudi Arabia’s long-term sovereign credit rating by two notches to A-minus. The world’s other two major rating agencies still have much higher assessments of Riyadh, but last week Moody’s Investors Service put Saudi Arabia on review for a possible downgrade. ……. 

The pricing of the loan is likely to be benchmarked against international loans taken out by the governments of Qatar and Oman in the last few months, according to bankers. Because of banks’ concern about the Gulf region’s ability to cope with an era of cheap oil, those two loans took considerable time to arrange and the pricing was raised during that period.

Oman’s $1 billion loan was ultimately priced at 120 basis points over the London interbank offered rate (Libor), while Qatar’s $5.5 billion loan was priced at 110 bps over, with both concluded in January.


 

Gas from methane hydrates within a decade?

October 3, 2014

Gas production from the hydraulic fracturing (fracking) of shale is already well established (even booming) in the US. Huge amounts of gas and oil bearing shale (as much as all known reserves of natural gas) around the rest of the world are yet to be exploited. But the methane hydrates on the sea beds dwarf all the known fossil fuel reserves put together.

The sheer abundance of methane hydrates around the globe and the thought that much of this gas could soon be economically extractable is almost intoxicating for those involved.

“The worldwide amounts of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth”.

 

Methane Hydrate Resources per Der-Spiegel

Methane Hydrate Resources per Der-Spiegel

Methane hydrate deposits are so widespread around the world’s coastlines that cartel formation will be almost impossible. The technology for extraction however could become a very hot property. The Japanese – who don’t have any shale but do have access to methane hydrate deposits – have been leading the charge for extraction of gas from methane hydrates and tests have been promising. The US and India and China are also active but the Japanese are probably closest to commercial production. Now 11 Japanese companies have formed a consortium to exploit the resource and conduct larger production tests following the successful extraction test carried out by the Japanese government in 2012. Japan could have commercial quantities of methane hydrate gas flowing within a decade.

Natural Gas Daily:

A group of 11 Japanese companies have formed a joint venture to conduct production tests of offshore methane hydrates – an unconventional resource seen as a potential game changer for the world’s largest LNG importer. 

Led by Japan Petroleum Exploration (Japex) and starting with a capital contribution of ¥300 million ($2.8 million), Japan Methane Hydrate Operating Co. (JMH) will provide contractor services and carry out field operations during the medium- and long-term production tests sponsored by the government. 

The JV partners will each share their expertise and technology to support the exploration and testing, JMH said in its first press release on Wednesday. 

“A substantial quantity of methane hydrate is estimated to be in the offshore areas around Japan. Serving as a new domestic energy source, with the potential to make a major contribution to a stable national energy supply for Japan, technological development is necessary for its commercialisation, including the establishment of production technologies,” the company said.

The Japanese government successfully produced the world’s first methane hydrates in March 2012, after drilling an experimental well in the offshore Nankai Trough and carrying out a production test that exceeded expectations (see Japan flows hydrates in landmark offshore test, 12 March 2013). 

That was followed two months later by a steady flow of gas from methane hydrates in Alaska’s North Slope, which a partnership between the United States Department of Energy (DOE), ConocoPhillips and Japan’s state-run JOGMEC called a “successful, unprecedented test of technology”.  ……. 

The government has said it expects to develop the technology needed to produce gas from methane hydrates by about 2018, although it remains to be proven whether the resource will be commercial (see Methane hydrates seen as the next big unconventional gas, 22 April 2013). 

Methane hydrates appear in Arctic sediments and below continental shelves as far apart as India and New Zealand. Worldwide deposits are estimated at up to 20,000 trillion cubic metres of gas – compared with 185.7 tcm of proven gas reserves in the world at the end of 2013, according to BP statistics. …… 

The JMH JV includes Japex (operator, 33%), Japan Drilling Co. (18%), Inpex (13%), Idemitsu Oil & Gas (5%), JX Nippon Oil & Gas Exploration (5%), Nippon Steel & Sumikin Engineering Co. (5%), Chiyoda Corp. (5%), Toyo Engineering Corp. (5%), JGC Corp. (5%), Mitsui Oil Exploration (5%) and Mitsubishi Gas Chemical Co. (1%). 

With new natural gas reserves being found in the Arctic and with all the shale gas yet to be extracted and, now, with the vast amount of methane hydrates available, “peak gas” is at least 1,000 years away.

Earthquakes release methane from methane hydrates

July 29, 2013

“Natural” release of methane from methane hydrates by earthquakes is more common and more significant than has been thought or accounted for in climate models.

The inescapable conclusion is that effects  being attributed by the demonisation of carbon to man made carbon dioxide emissions (even if real) may well be partly due to the natural release of such methane.  The global temperature pause for the last 17 years or so and the clear but small decline in global temperatures for the last 5 years is quite clear. At the same time emissions from fossil fuel combustion have been steadily increasing. These are a clear indication that the supposed linkage between carbon dioxide concentration and man-made carbon dioxide emissions on climate is very suspect if not completely broken.

It is also becoming increasingly clear that climate models – even though very complicated – are far too simplistic and just don’t (can’t) take all factors into account. Clouds, aerosols, particulates, solar effects, lunar cycle effects through the tides, ocean cycles and now earthquakes are all poorly understood and largely ignored in climate models. There is far more in the realms of the unknown about the climate than is known. We don’t even know what we don’t know.

David Fischer, José M. Mogollón, Michael Strasser, Thomas Pape, Gerhard Bohrmann, Noemi Fekete, Volkhard Spiess & Sabine Kasten, Subduction zone earthquake as potential trigger of submarine hydrocarbon seepage, Nature Geoscience (2013) doi:10.1038/ngeo1886

Here we present geochemical analyses of sediment cores retrieved from the convergent margin off Pakistan. We find that a substantial increase in the upward flux of gas occurred within a few decades of a Mw 8.1 earthquake in 1945—the strongest earthquake reported for the Arabian Sea. Our seismic reflection data suggest that co-seismic shaking fractured gas-hydrate-bearing sediments, creating pathways for the free gas to migrate from a shallow reservoir within the gas hydrate stability zone into the water column. We conservatively estimate that 3.26×108 mol of methane have been discharged from the seep site since the earthquake. We therefore suggest that hydrocarbon seepage triggered by earthquakes needs to be considered in local and global carbon budgets at active continental margins.

New York Times:

Dr. Fischer and his colleagues analyzed sediment cores taken in 2007 from two locations in the northern Arabian Sea where hydrates were present and seepage was occurring. They found chemical signatures in the cores suggesting that the methane flow greatly increased sometime in the mid-20th century. Looking through seismic records, Dr. Fischer found that a magnitude 8.1 quake occurred in the area in 1945. The quake, which was centered less than 15 miles from where the cores were taken, and a resulting tsunami, killed up to 4,000 people.

The conclusion was inescapable, Dr. Fischer said. “The quake broke open gas-hydrate sediments and the free gas underneath migrated to the surface.” The hydrates themselves did not dissolve. “They remain there,” he said.

Dr. Fischer said the researchers chose the core locations in the Arabian Sea because they wanted to get a better understanding of how methane seepage was related to tectonics, and the area is in an active zone where one of the earth’s tectonic plates slides beneath another. But they were not thinking about the effect of individual earthquakes, and his discovery of the 1945 quake in the records “was probably a moment I’ll never forget,” he said.

The upward flow of methane is continuing today, and the researchers do not know when it might stop. All told, they estimate that nearly 10 million cubic yards of methane have been released from the core sites over the years. But that is a conservative figure, Dr. Fischer said, because immediately following the quake the flow would have been much higher.

 


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