Renewables under threat from methane hydrates

Share |

28 June 2013, Gas, Nuclear, Solar, Wind

oilandgasobserver archive

Renewables have seen major cost reductions in recent years, but the threat of energy from methane hydrates means that investors in renewables will need to continue to find ways to cut costs to remain competitive.

Technological improvements have recently allowed methane hydrates to be extracted in Japanese waters in what could lead to a commercially viable method of mining this untapped resource within five years. Methane hydrate is a form of fossil fuel that exists in frozen deposits of natural gas, either on or under the seabed. The estimated global reserves of methane hydrates are comparable to all conventional fossil fuel reserves combined. Japan currently imports all of its fossil fuels but has methane hydrate reserves that could support its domestic gas demand for at least 30 years. It is little wonder therefore that support will continue to be provided for research to drive down the cost of methane hydrate mining.

As a fossil fuel methane hydrates would be another source of CO2 emissions, but on the other hand - as with shale gas - they could replace emissions from even dirtier coal.

Methane hydrate extraction could compete on a cost basis with conventional fossil fuels before 2020, encouraging some countries that currently import fossil fuels to mine their methane hydrate reserves. However, new industries will take time to develop, and in that time renewable energy is set to experience significant cost reductions that could realign the balance of investments.

Despite fossil fuel subsidization, Tentusol's recent announcement of plans to invest in 250MW of solar power in southern Spain is proof that localized renewables can already be profitable without subsidies. However, local generation conditions and energy demand will dictate where and when renewables, conventional fossil fuels, or methane hydrates will prevail, while global warming will remain a side issue to investors. / / @DatamonitorEN

Source: MarketLine

More Gas Commentary

More Nuclear, Solar, Wind Commentary

Recent commentary