The Role of Gas Hydrate in a Global Gas Market

INTRODUCTION Gas hydrates have considerable potential to be a major energy resource owing to their apparent abundance in Arctic regions and along continental margins throughout the world (Kvenvolden, 1988). Yet, the oil and gas industry has been slow to pursue this opportunity. The primary reasons for this are the large conventional reserve base for natural gas worldwide and the perception that gas hydrate will not be a viable resource for another twenty or thirty years. Gas hydrates are thus viewed as a potential resource for the distant future, but not a valid investment for the near term. This paper addresses both global gas markets and gas hydrate technology, and shows that the commercial development of gas hydrate could proceed rapidly enough to constitute a near-term energy resource. GLOBAL GAS MARKETS The proven worldwide reserves of conventional natural gas are truly enormous, totaling over 6,000 TCF according to BP (2004). Moreover, those reserves have nearly doubled during the past two decades and now represent 67 years of consumption at the current production rates of 80 TCF per year (Fig. 1). This reserve increase has occurred even as global production of natural gas has increased by 67% during the same two decades (Fig. 2). While declining conventional gas reserves are a concern in North America, especially in regions where established infrastructure exists to bring gas to consumers, large new discoveries continue to be made elsewhere in the world. Indeed, in many parts of the world (such as the Middle East and parts of West Africa), natural gas has been regarded as an essentially worthless byproduct of oil production or exists in stranded gas fields. Given this situation, pursuing unconventional gas resources that are inherently riskier exploration targets and more expensive to produce would appear to have little rationale from a business standpoint.