Wealth of 'flammable ice' untapped under the sea

Locked within frozen rock under the Qinghai-Tibet plateau and deep beneath the South China Sea, methane hydrate, also known as "flammable ice", is called the king of all energies.

With its potential reserves twice as much as fossil fuel, this new source of natural gas, often trapped in ice-like crystals under high pressure in permafrost or under the seabed, can make China's sizable shale gas prospects look small.

Research data showed that one cubic meter of pure methane hydrate can be depressurized and warmed to produce about 160 cubic meters of methane gas.

China identified in December a major gas hydrate deposit in an area of 55 square kilometers under the Pearl River Delta in the northern part of the South China Sea that holds about 150 billion cubic meters of natural gas hydrates, according to China's Ministry of Land and Resources.

Data from Beijing Gas Group Co Ltd showed the capital used 8.4 billion cu m of natural gas in 2012, meaning the potential reserves could supply the capital's natural gas for nearly 18 years at that rate.

The huge potential of methane gas and a determination to transform the domestic energy supply have pushed China to spend billions of dollars on a research program to explore flammable ice.

Samples of "high purity" gas hydrates collected by Guangzhou Marine Geological Survey Bureau, part of the ministry, were inspected early this month after a more than four-month survey and the drilling of 23 wells in the waters off South China's Guangdong province.

Yet, some energy authorities warn they can hardly become a game-changer for China, especially when its commercialization phase appears so far away.

"The reserves of methane gas have the potential to dwarf any other fossil fuel, but it is still at a nascent phase of exploration since currently there is no technology to unlock the energy on a large scale," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"China might as well focus on the development and exploration of shale gas," he said. "Although its development is being hampered by a number of factors - existing technologies and water scarcity - it is more within reach compared with methane hydrate."

Che Changbo, the deputy director of the geological exploration division of the ministry said China needs to collect more samples to tap the potential of the hydrate gas.

"There is no experience in the world that we can learn from because each country has its own geographical characteristics," he said. "With no mature technology, it is too early to talk about how to commercialize it."

Analysts said little interest from State-owned companies to join the hunt is an important factor that is deterring the development of the energy resource.

Shenhua Energy, a subsidiary of the State-owned Shenhua Group, China's largest coal miner, leads the way in pursuing onshore hydrate gas.

In 2012, Shenhua Energy signed a contract with Qinghai China Coal Geological Engineering, planning to invest about 66 million yuan ($11 million) to explore for hydrate gas in a coalfield in China's far northwest Qinghua province.

It is the second time that Shenhua has ventured into Qinghai to try to exploit hydrate gas. The first time was in 2011 when the company partnered with the local government of Qinghai and carried out preliminary tests. But nothing much happened after the initial move, reports said.

Lin said economics is the biggest reason for the lukewarm interest shown by State-owned companies because hydrate gas development and production cost more than any other unconventional gas and suffer from a longer period of profit return.

"In addition, there is a huge environmental risk from commercializing the methane hydrates, which contain extremely high volumes of CO2. If it leaks into the air during collection and processing, it can cause not only an explosion but add to the greenhouse effect," he said.

Han Xiaoping, chief executive officer and founder of china5e.com, a major online portal for energy companies, forecast that by as early as 2040s, China could realize the commercial development of the methane hydrates.

"Clearly, these are only the early days in the exploration of methane hydrates, but China is already advancing in the race against other countries as the nation pushes very hard to put the compound in the country's future energy picture," he said.

China formally started studying gas hydrates 15 years ago, when the country listed them as part of a national research program.

Japan, which has few large energy resources, is probably the only country that has extracted gas from hydrate deposits, according to Reuters.

The State-owned Japan Oil, Gas and Metals National Corp last year completed a test to produce methane gas from offshore hydrate formations for the first time, using extraction techniques pioneered in Canada.

Other countries involved in ongoing hydrate research include South Korea and India. Methane hydrate, also called methane ice or methane clathrate, consists of methane enclosed in frozen water.