Tokyo Gas, Santos explore up to 300,000 mt/year e-methane output in Australia

Japan's Tokyo Gas has started together with Santos exploring up to 300,000 mt/year e-methane output in central eastern Australia in the early 2030s, with an eye to export it from GLNG or Darwin LNG terminals, the Tokyo Gas representative corporate executive officer told S&P Global Commodity Insights July 1.

"We are currently examining about when we will enter pre-FEED (front-end engineering design) after having finished our FS (feasibility study)," said Kentaro Kimoto, who is also vice president, CTO and chief executive of Green Transformation Company.

"We are in the midst of talks with relevant parties. Either way, we hope to be able to start up the project in the early 2030s," Kimoto said, adding that Tokyo Gas would not be a single offtaker of the 300,000 mt/year e-methane production.

"Most likely, we would offtake it jointly with other Japanese gas companies," Kimoto told Commodity Insights on the sidelines of a media briefing at its pilot e-methane plant in Yokohama.

Tokyo Gas' updated outlook on e-methane production in Australia comes after it said Nov. 21 that it has agreed with Australia's Santos(opens in a new tab) to explore producing 60,000 mt/year of e-methane in the Cooper Basin in central eastern Australia by 2030 and to export it to Japan.

Tokyo Gas said then it will jointly develop with Santos an international supply chain for e-methane, in addition to advocating for the design of a CO2 emissions counting system for e-methane.

Meanwhile, Tokyo Gas expects the ReaCH4 project with Mitsubishi, Osaka Gas, Toho Gas and Sempra Infrastructure to make a final investment decision in fiscal year 2025-26 (April-March) and produce 130,000 mt/year of e-methane near the Cameron LNG project in the US in 2030.

"Actually, the production is expected to start in FY 2029-30, but we are looking at conservatively, longer-than-usual for commissioning schedules as the first project," Kimoto said.

The 130,000 mt/year of e-methane production at the ReaCH4 project is equivalent to 1% of the total combined annual city gas demand at Tokyo Gas, Osaka Gas, and Toho Gas, a target introduction volume of e-methane for 2030.

The Japanese city gas utilities aim to introduce a target of introducing 1% e-methane, or synthetic methane into city gas sales in 2030, part of the country's target to start injecting more than 1% of synthetic methane produced from using green hydrogen into city gas by 2030 and expanding it to 90% by 2050 in a bid to implement methanation.

E-methane plant

While developing its e-methane supply chain abroad, Tokyo Gas has also been working to develop and operate a 12.5 normal cubic meters/day of e-methane pilot plant in Yokohama since March 2022.

E-methane plant at the Tokyo Gas Yokohama Techno Station July 1, 2024. Source: Takeo Kumagai, S&P Global Commodity Insights

Starting this month, Tokyo Gas plans to start up a water electrolyzer to produce green hydrogen that will be used at the 12.5 normal cu m/day pilot e-methane plant, company officials told reporters during a visit to the plant.

This will follow the start of using CO2 captured and transported from a nearby Yokohama municipal garbage incineration plant in July 2023, the officials said.

Tokyo Gas next plans to install a Direct Air Capture (DAC) unit in 2024 or 2025 near the e-methane pilot plant to capture CO2 from the atmosphere, the officials said.

To commercialize e-methane production, Tokyo Gas sees the need of scaling up the e-methane production capacity to 20,000 normal cu m/h in comparison to the scale of the ReaCH4 project, the officials added.

Tokyo Gas also said July 1 that its 12.5 normal cu m/h pilot e-methane plant has received the country's first "clean gas certificate" for e-methane production, following the introduction of the new certificate in April.

"E-methane being produced here in a trial will be net zero as a result of receiving the certification," Kimoto said. "Since this is a pilot plant using a gas engine that emits CO2, this clean gas certificate will be helpful to make emissions net zero."

"Should there be any customers using e-methane in the future, this framework would allow us to provide certificate for the customers' usage," Kimoto added.

Tokyo Gas said March 22 it plans to displace at least about 600,000 mt of LNG(opens in a new tab) with e-methane in 2040 as part of its decarbonization steps, aiming for 50% carbon neutrality in its domestic gas supply by 2040.

The plan is part of the 2050 carbon neutrality roadmap, under which Tokyo Gas aims to slash its scope 1, scope 2 and scope 3 CO2 emissions by 60% from FY 2022-23 in 2040.

Tokyo Gas, which aims to introduce 1% blending of e-methane into its gas supply in 2030, equating 60,000 mt, expects a ten-fold rise in it in 2040 as part of the decarbonization measures along with hydrogen and carbon offsets to reach 50% carbon neutrality.

Tokyo Gas imported a total of 12.90 million mt/year of LNG in FY 2022-23.