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  • zimmerbros@rocketmail.com zimmerbros Mar 13, 2013 11:10 PM Flag

    BREAKING: JAPAN TO DEVELOP METHANE HYDRATES - THREAT TO VIABILITY OF PNG LNG EXPORTS

    Threat to LNG exports as Japan unlocks gas

    BY: RICK WALLACE March 14, 2013 12:00AM -- The Australian

    AUSTRALIA'S multi-billion-dollar a year liquefied natural gas export industry faces a new threat after its top customer - Japan - used groundbreaking technology to potentially unlock vast new subsea gas deposits just off its coast.

    Japan announced this week that it had successfully extracted gas from a deposit of methane hydrates - or fire ice - buried 1km beneath the sea in what's believed to be a world first.

    The Ministry of Economy, Trade and Industry said it hoped to begin commercial extraction from the country's huge methane hydrate fields within five years.

    Achieving that goal would be a global game-changer in the eyes of commodity forecasters and would threaten the viability of projects in Australia's $175 billion LNG development pipeline.

    Amid soaring trade deficits, Japan is desperate to reduce its reliance on imports of LNG, including from Australia, which became the largest supply of gas to Japanese utilities last year.

    Japan buys 70 per cent of Australia's entire LNG exports, which totalled $11bn in 2010-11, but are foreshadowed to hit $30bn in 2016-17.

    The Japan Oil, Gas and Metals National Corporation, or JOGMEC, announced on Monday that trial extraction had begun successfully. JOGMEC hopes to continue extracting gas until the end of March through a subsea well connected via a pipeline to a research vessel.

    Extracting the gas is not expected to be cheap but forecaster Wood Mackenzie raised methane hydrates as a threat to the Australian LNG industry in its Horizons 2013 outlook, published in December last year.

    It warned that if production could be achieved by 2018 it would "reposition Japan on the world energy stage, potentially turning it from a gas importer, to a self-sufficient province".

    "The resulting fall in gas imports would severely disrupt the global LNG market, and question the viability of projects in Australia, Malaysia and Papua

    Sentiment: Strong Sell

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