Executive Summary

INTRODUCTION

Methane hydrate is a natural form of clathrate—a chemical substance in which one molecule forms a lattice around a “guest” molecule without chemical bonding. In this clathrate, the guest molecule is methane and the lattice is formed by water. Methane hydrate is formed naturally under conditions of low temperature and high pressure wherever sufficient gas exists in porewater. It has been found in Arctic regions and in marine sediment on the slopes flanking every continent (Plate 1).

Many countries, intrigued by the widespread occurrence of natural methane hydrate and by the promising results of recent test wells in Japan and Canada, are looking toward gas hydrate as a potential source of energy. The U.S. in-place hydrated methane gas resource may exceed the recoverable natural gas resources of the nation (Kvenvolden and Lorenson, 2001). If methane can be produced from hydrate deposits, the nation’s natural gas energy supply could be extended for many years to come. However, many uncertainties must be addressed before anyone will know whether gas hydrate can be produced safely and profitably.

There is uncertainty in the distribution of concentrated hydrate deposits and the possibility that hydrate production could lead to pipeline and borehole instability. Uncertainties are also associated with the effect of gas hydrate on the environment. Gas hydrate may play a role in global climate change because methane is a powerful greenhouse gas and has been postulated to have caused past episodes of global warming. Other uncertainties include the importance of methane hydrate in the global carbon cycle, seafloor stability, and biological communities near sub-marine outcrops.

Currently, there are few industry research efforts relating to gas hydrate. Despite this situation, interest in gas hydrate has stimulated



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Charting the Future of Methane Hydrate Research in the United States Executive Summary INTRODUCTION Methane hydrate is a natural form of clathrate—a chemical substance in which one molecule forms a lattice around a “guest” molecule without chemical bonding. In this clathrate, the guest molecule is methane and the lattice is formed by water. Methane hydrate is formed naturally under conditions of low temperature and high pressure wherever sufficient gas exists in porewater. It has been found in Arctic regions and in marine sediment on the slopes flanking every continent (Plate 1). Many countries, intrigued by the widespread occurrence of natural methane hydrate and by the promising results of recent test wells in Japan and Canada, are looking toward gas hydrate as a potential source of energy. The U.S. in-place hydrated methane gas resource may exceed the recoverable natural gas resources of the nation (Kvenvolden and Lorenson, 2001). If methane can be produced from hydrate deposits, the nation’s natural gas energy supply could be extended for many years to come. However, many uncertainties must be addressed before anyone will know whether gas hydrate can be produced safely and profitably. There is uncertainty in the distribution of concentrated hydrate deposits and the possibility that hydrate production could lead to pipeline and borehole instability. Uncertainties are also associated with the effect of gas hydrate on the environment. Gas hydrate may play a role in global climate change because methane is a powerful greenhouse gas and has been postulated to have caused past episodes of global warming. Other uncertainties include the importance of methane hydrate in the global carbon cycle, seafloor stability, and biological communities near sub-marine outcrops. Currently, there are few industry research efforts relating to gas hydrate. Despite this situation, interest in gas hydrate has stimulated

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Charting the Future of Methane Hydrate Research in the United States significant policy activity. For example, the Department of Energy (DOE) has released both A Strategy for Methane Hydrates Research and Development (DOE, 1998) and a National Methane Hydrate Multi-Year R&D Program Plan (DOE, 1999). Furthermore, in 2000, Congress passed the Methane Hydrate Research and Development Act (P.L. 106-193, May 2, 2000; Appendix B) authorizing the DOE, in consultation with the U.S. Geological Survey (USGS), the Minerals Management Service (MMS), the National Oceanic and Atmospheric Administration, the National Science Foundation (NSF), and the Naval Research Laboratory, to conduct methane hydrate research and development to meet the goals of the act (Box ES.1). The act also mandates that the National Research Council (NRC) conduct a study, to be completed no later than September 30, 2004, of the progress made under the Methane Hydrate Research and Development (R&D) Program administered by the DOE (Box ES.2). Following guidance provided by the act and the statement of task above, the NRC Committee to Review the Activities Authorized Under the Methane Hydrate Research and Development Act of 2000 attempted to provide a fair and balanced review of the program. To do so, it was necessary to consider all of the research goals in Box ES.1. Therefore information was sought from DOE, collaborating agencies, members of the Methane Hydrate Advisory Committee (convened as mandated by the act), and recipients of funding from the DOE program. In addition to reviewing documents provided by DOE and other agencies, the committee held three open meetings in Washington, District of Columbia; Houston, Texas; and La Jolla, California (Appendix C). In order to evaluate the effectiveness of the program, participants were invited to address topics on the role and activities of the federal government in the realm of methane hydrate research, the role of the Methane Hydrate Advisory Committee in the DOE Methane Hydrate R&D Program, the experience to date with industry-managed, targeted research projects, and other topics of interest and relevance (Appendix F). The timing of this review was mandated to occur after the funding decisions affecting implementation of the Methane Hydrate Research and Development Act of 2000 (P.L. 106-193) had been made but before most of the technical results of the projects funded by the act were available. In only a few cases were the projects funded mature enough for detailed evaluation of their outcome. Therefore the focus of this report is on recommendations for how to implement a continuation of the Methane Hydrate Research and Development Act of 2000 based on an evaluation of the DOE Methane Hydrate R&D Program since its inception.

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Charting the Future of Methane Hydrate Research in the United States Box ES.1 Research Goals of the Methane Hydrate Research and Development Act of 2000 (Public Law 106-193, Section 3b) In carrying out the program of methane hydrate research and development authorized by this section, the Secretary may award grants or contracts to, or enter into cooperative agreements with, institutions of higher education and industrial enterprises to— (A) conduct basic and applied research to identify, explore, assess, and develop methane hydrate as a source of energy; (B) assist in developing technologies required for efficient and environmentally sound development of methane hydrate resources; (C) undertake research programs to provide safe means of transport and storage of methane produced from methane hydrates; (D) promote education and training in methane hydrate resource research and resource development; (E) conduct basic and applied research to assess and mitigate the environmental impacts of hydrate degassing (including both natural degassing and degassing associated with commercial development); (F) develop technologies to reduce the risks of drilling through methane hydrates; and (G) conduct exploratory drilling in support of the activities authorized by this paragraph. FINDINGS AND RECOMMENDATIONS The following findings and recommendations are based on detailed consideration of the issues discussed above and the statement of task. These findings and recommendations are discussed in greater detail throughout the report and particularly in Chapter 6. The Methane Hydrate Research and Development Act of 2000 will cease to be effective at the end of fiscal year 2005. The findings and recommendations are therefore intended to be considered with the reauthorization of the act.

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Charting the Future of Methane Hydrate Research in the United States Box ES.2 NRC Statement of Task This study will review the Methane Hydrate R&D Program administered by the DOE. In particular the committee was tasked to: provide advice on program emphasis to ensure that significant contributions are made towards understanding methane hydrate as a source of energy and as a potential contributor to climate change by advancing basic and applied research; make recommendations for future methane hydrate research and development needs; and assess whether the DOE program is meeting the goals of developing technologies for the efficient and environmentally sound development of methane hydrate resources, reducing the risks of drilling through methane hydrate, and mitigating the environmental impacts of hydrate degassing. Progress towards Meeting the Goals of the Methane Hydrate Research and Development Act of 2000 The DOE was authorized to conduct studies in several areas as mandated by the act. The Methane Hydrate R&D Program places projects in categories based on the program goals described above (Box ES.1). There are currently several ongoing projects with the following primary targets (Appendix G, Table G.2): characterizing hydrate properties, hydrate distribution, hazard mitigation, global climate and seafloor stability, improved tools for use in the field and in the laboratory, and production potential. Findings With respect to the research areas described in the act, the DOE Methane Hydrate R&D Program funded research on identifying, exploring, assessing, and developing methane hydrate as a source of energy (research area A); assisting in developing technologies for

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Charting the Future of Methane Hydrate Research in the United States efficient and environmentally sound development (research area B); developing technologies to reduce the risk of drilling (research area F); and conducting exploratory drilling (research area G). No projects have been funded in the area of transportation and storage. None of the projects emphasized education and training. Research projects only minimally addressed the area of environmental impacts of degassing (decomposition as the solid-state hydrate transforms to gaseous methane and liquid water), and its potential for affecting climate. Better estimates of the amount of hydrate in diffuse hydrate reservoirs (as opposed to focused deposits) are now available and the estimates are lower than previously thought. Ground-truthing of geophysics requires an analysis of geophysical data taken from sites where samples are available for testing the geophysical models. The DOE Methane Hydrate R&D Program supported very little of this type of analysis. For example, postcruise research from Ocean Drilling Program (ODP) Leg 204 is supported by NSF but not by DOE. However, the MMS is updating their assessment of hydrate and the ChevronTexaco joint industry project (JIP), discussed in Chapter 3, will address the correlation of geophysical measurements with the occurrence of hydrate. Recommendation The DOE Methane Hydrate R&D Program should strengthen its contribution to education and training through funding of postdoctoral fellowships and should increase efforts in basic research to address the relationship between gas hydrate and climate change. It is, however, appropriate that some research areas mentioned in the act (e.g., transportation) receive no support since they are peripheral to the primary objectives of the act. Chapter 3 summarizes the process by which projects are selected for funding within the DOE Methane Hydrate R&D Program and reviews projects falling into four major categories: (1) international collaborative projects, (2) industry-managed targeted research projects, (3) USGS projects, and (4) smaller-scale projects. These projects were chosen based on their potential to meet the goals of the DOE Methane Hydrate

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Charting the Future of Methane Hydrate Research in the United States R&D Program and the proportion of program funds they consume. The findings and recommendations below are based on a review of projects within these categories, which comprise more than 90 percent of the funded work. International Collaborative Projects Gas hydrate research is international. Canada, Japan, and India, for example, are investing significant financial resources in hydrate research. The Methane Hydrate R&D Program has made modest investments in international projects such as the Mallik 2002 Production Research Well Program and ODP Leg 204. These projects represent significant achievements with relatively small investment. Together with the United States, the international community can make substantial progress toward developing the potential of gas hydrate as an energy resource. However, the DOE Methane Hydrate R&D Program is currently not funded at a level sufficient to allow a major role in large-scale international research efforts, such as proposed for continuing studies at Mallik. Findings By effectively leveraging funding, the DOE Methane Hydrate R&D Program made wise investments of relatively small resources in support of major international research efforts. Relative to the United States, other countries (e.g., Japan) are spending significantly more money on hydrate research. Recommendations It will be to the benefit of all nations, including the United States, to foster further collaboration with groups conducting methane hydrate research. Where appropriate, the DOE Methane Hydrate R&D Program should be encouraged to lead such endeavors. Unless substantially greater resources are devoted to the DOE Methane Hydrate R&D Program, the United States may fall behind other nations in leading hydrate development technology.

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Charting the Future of Methane Hydrate Research in the United States Targeted Research Projects Targeted research projects are designed to be specific to a research area (e.g., Gulf of Mexico, Alaska, transportation, modeling). Targeted research projects account for over 60 percent of planned DOE Methane Hydrate R&D Program funding through 2005. Three industry-managed projects that fall into this category (reviewed in Chapter 3) were funded with considerable cost shares from industry (Appendix G, Table G.1): BP Exploration (Alaska): Alaska North Slope Gas Hydrate Reservoir Characterization; Maurer/Anadarko: Methane Hydrate Production from Alaskan Permafrost; and ChevronTexaco Joint Industry Project (JIP): Characterizing Natural Gas Hydrates in the Deep Water Gulf of Mexico: Applications for Safe Exploration. The BP Exploration (Alaska) project and the Maurer/Anadarko project are both dedicated to energy-related research goals in the Arctic. The ChevronTexaco JIP is geared toward reducing the risk that gas hydrate deposits pose to conventional oil and gas exploration and development in the Gulf of Mexico. These projects provide opportunities to advance gas hydrate science and engineering techniques. However, in some cases, they have had difficulty in meeting their respective objectives due to a project assessment and evaluation process unsuited to recognize, evaluate, and select science-based investigations that would successfully meet the objectives of the program. In addition, the results of these projects have not been made publicly available. Finding Although the issues vary, the committee’s review of the industry-managed, targeted research projects raises concerns about each that could limit the ability of these projects to contribute to the goals of the program.

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Charting the Future of Methane Hydrate Research in the United States Recommendation To ensure the future success of large, industry-managed targeted research projects, the DOE Methane Hydrate R&D Program should implement the following: science-based proposal review; science-based assessments of project progress and milestones; expert consultation with a diverse project team; data made publicly available; and peer-reviewed publication of results. USGS Projects The USGS has developed an extensive knowledge base on the geological occurrence of gas hydrate that has been instrumental for several aspects of the DOE Methane Hydrate R&D Program. First, the USGS has been the primary agency providing evaluations of gas hydrate reserves in the Arctic. Second, the USGS has been a close collaborator with the ChevronTexaco JIP in the Gulf of Mexico. Finally, the USGS conducts laboratory experiments on natural and man-made gas hydrate. Finding The USGS has a long history of gas hydrate research (in both the laboratory and the field) and collaboration, which has provided basic and essential information on the chemistry and occurrence of gas hydrate. Recommendation The USGS should continue to play a major role in gas hydrate research as a collaborator in the DOE Methane Hydrate R&D Program.

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Charting the Future of Methane Hydrate Research in the United States Smaller-Scale Projects Smaller-scale projects funded by the DOE Methane Hydrate R&D Program are evaluated in three general categories: (1) seafloor observatory in the Gulf of Mexico, (2) other university-based studies, and (3) laboratory studies. Typically, budgets for these projects have amounted to only a small percentage of the total program budget, but they are expected to yield valuable results. Smaller-scale university based projects are designed to answer specific questions related to other parts of the program. Research conducted at national laboratories includes modeling studies, characterization of microbes, tool development, and so forth. Some are clearly integrated with overall program objectives; others are difficult to evaluate because no data are publicly available. Finding The DOE Methane Hydrate R&D Program has funded a number of small-scale R&D projects through its proposal process. Some of these have had a major technological impact. It is important to note, however, that the results of many of these projects have not been published, and therefore, they could not be thoroughly evaluated. Recommendations A summary of DOE Methane Hydrate R&D Program-sponsored projects should be developed annually and posted on the program Web site. A set of instructions and guidelines outlining the requirement for timely and full disclosure of project results should be provided to project applicants. As much as practical, these instructions should include the consequences of noncompliance. Current Program Breadth and Future Emphasis, Research, and Resource Development The overarching goal of the DOE Methane Hydrate R&D Program is to conduct applied research to identify, assess, and develop methane

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Charting the Future of Methane Hydrate Research in the United States hydrate as a source of energy. The Methane Hydrate R&D Act of 2000 specified broad research goals and areas of study (Box ES.1). The recommendations for future research are discussed in depth and prioritized in Chapter 4. These include increased efforts to discover focused gas hydrate deposits (“sweet spots”) near the seafloor and deeper in the subsurface, initiation of efforts at long-term monitoring of the evolution of these deposits as part of the Ocean Observatories Initiative (OOI), and perturbation experiments to calibrate and test models of the response of gas hydrate to changes in temperature, pressure, and porewater composition. Recommendations The overriding focus of the DOE Methane Hydrate R&D Program in the future should be on the potential importance of hydrate as a future energy resource for the nation and the world. To optimize the potential impact of the available hydrate research funding (approximately $9 million per year), such a focused program should systematically address the following research areas that are poorly or only partly understood. Future field experiments, drilling, and production testing with consideration of testing offshore hydrate that might be of sufficiently large quantity for potential commercial extraction Hydrate deposit identification and characterization Reservoir modeling Technology recovery methods and production Understanding the natural system and climate change potential Geological hazards Transportation and storage Collaboration between the DOE Methane Hydrate R&D Program and other agencies, to augment infrastructure, will facilitate the achievement of program goals. For example, collaboration with NSF, especially with the OOI and the Ocean Research Interactive Observatory Network (ORION), would be useful to implement studies geared toward understanding the temporal evolution of gas hydrate systems using long-term

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Charting the Future of Methane Hydrate Research in the United States observatories on and beneath the seafloor (NRC, 2003). (More information is available at http://www.coreocean.org/orion.) The DOE Methane Hydrate R&D Program should sponsor a workshop focused on specific aspects of required research, for example, finding sweet spots or monitoring the evolution of gas hydrate deposits over time in the context of the OOI. Scientific Oversight of the DOE Methane Hydrate R&D Program A key requirement for meeting the goals and priorities of any science-based program is scientific oversight (Chapter 5). Such oversight includes external reviews of projects and proposals to ensure that the goals of the program can be met. The DOE Methane Hydrate R&D Act of 2000 mandated the establishment of two committees to help oversee the scientific aspects of the program. The Methane Hydrate Advisory Committee (MHAC) with members from industry, academia, and government was established to advise the Secretary of Energy on potential applications of methane hydrate, to help develop research priorities, and to produce a report on the global climate impacts of methane hydrate formation, decomposition, and consumption. The members of the first MHAC were unclear about their role in the program. The program would benefit from the scientific advice of the MHAC, but members should follow an accepted conflict-of-interest protocol to ensure that they do not participate in funding decisions directly related to their own research or institutions. The Interagency Coordinating Committee (ICC), consisting of individuals designated by the heads of all agencies engaged in hydrate research, was charged with reviewing the progress of the program and making recommendations for future research. The ICC, in turn, established the Technical Coordinating Team (TCT) consisting of the administrative program managers of the hydrate research group within each agency to aid the committee in its charge. The TCT has not played a role in reviewing the progress of the Methane Hydrate R&D Program nor provided advice on future directions. To select projects for funding, the program used a merit-based review of proposals performed internally by DOE staff. Although such merit-based reviews are consistent with the language of the act, the additional use of external peer reviewers would help ensure the quality of

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Charting the Future of Methane Hydrate Research in the United States the program. See Chapter 5 for an in-depth discussion of the scientific oversight of the Methane Hydrate R&D Program. Findings The advisory committees established by the Methane Hydrate R&D Act of 2000 (the MHAC and ICC) have not played a major role in evaluating the progress and priorities of the program as mandated by the act. The internal, merit-based DOE review process used to select projects for funding is not as effective as it could be in examining the program as a whole and ensuring that overall program goals are met. Recommendations The purview and responsibilities of the MHAC, ICC, and TCT should be clearly defined with respect to each other, and their efforts should be clearly aligned to eliminate any confusion in how proposed projects are received, evaluated, authorized, monitored, and assessed. All projects above a defined dollar level should be submitted to external review following appropriate guidelines and procedures (e.g., those of NSF), and the comments and recommendations received should be evaluated by the MHAC or similar body in compliance with the conflict-of-interest protocol. The DOE Methane Hydrate R&D Program should implement a mechanism to incorporate greater scientific oversight to assess progress toward program goals, evaluate program balance, and enhance the quality of the program over time. This could be accomplished by initiating external proposal and program reviews. Conclusion Although the total amount of methane trapped in gas hydrate is not well known, it is generally believed that gas hydrate has the potential to become a fossil fuel resource and a possible factor in climate change and submarine slope stability. The possible magnitude of this resource has

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Charting the Future of Methane Hydrate Research in the United States motivated national research programs in the United States, Canada, Japan, Korea, and India to investigate methods to quantify the amount of hydrate present in the subsurface through geological and geophysical remote sensing methods, to develop efficient recovery techniques, and to evaluate its dynamic forcing of and response to climate change. At this time, commercial interest in drilling and producing methane hydrate is low. Therefore, the DOE Methane Hydrate R&D Program’s continued support of research is a key component of evaluating the nation’s ability to produce energy from gas hydrate in the future. Findings The DOE Methane Hydrate R&D Program provides a significant incentive and valued role in developing this nation’s ability to produce energy from gas hydrate and to understand the potential geological constraints on drilling hydrate. Given sufficient in-place reserves, there are no obvious technical or engineering roadblocks to prevent commercial production of gas from hydrate in the future. However, there are some technical and engineering challenges that have to be solved before commercial production could begin.

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