Japan to explore 1.4 Tcf of recoverable gas reserves for 46.7 Bcf/year output

Japan intends to explore 1.4 Tcf of estimated recoverable natural gas reserves offshore Shimane and Yamaguchi prefectures in the west that could produce 46.7 Bcf/year of gas after starting output in 2032, an official at the Ministry of Economy, Trade and Industry told S&P Global Platts Jan. 17.

The move follows "considerable gas shows" in a series of Japan's funded drilling operations conducted by INPEX until the fiscal year 2019-20 (April-March), marking the first domestic project, which enters an exploration phase with the government's support from initial geological structure surveys, the official said.

INPEX, which has obtained prospecting rights, will start exploratory drilling works in March offshore Shimane and Yamaguchi prefectures at a block at a water depth of about 240 meters, about 130 km from Hamada city in the Shimane prefecture and around 150 km from Hagi city in the Yamaguchi prefecture, the official said.

INPEX separately said Jan. 17 that its exploratory drilling works offshore Shimane and Yamaguchi prefectures will last over March-July.

Initial findings show that the exploration block is estimated to hold about 1.4 Tcf of recoverable gas reserves, which could potentially boost Japan's recoverable gas reserves from the current 1 Tcf, the METI official said.

The exploration project, which is operated 100% by INPEX, will last until FY 2027-28, when the state-owned Japan Oil, Gas and Metals National Corp. will provide a total of Yen 16.5 billion ($144.2 million) equity investment, the official said, adding that production is expected to start in 2032 if the project begins the development phase as planned around 2027.

After entering the development phase, this will be Japan's first project since its only offshore field -- the Iwafune oil and gas field in the Niigata prefecture in the northwest -- started production in 1990, the official said.

Enhancing energy security

The gas production, which will be piped to the Honshu island, is expected at 46.7 Bcf/year, accounting for 1.2% of Japan's current natural gas consumption volumes, according to the official. It is also estimated to boost Japan's domestic gas self-sufficiency rate to 3.4%, from 2.2% currently.

Japan's latest exploration works come at a time when it expects natural gas to play "a significantly important role" as the country aims for carbon neutrality by 2050 as outlined in its Strategic Energy Plan approved by the cabinet in October, the official said.

"This domestic upstream project is among our top priority for the energy security," said the official, referring to the offshore exploration project, while citing Japan's natural gas needs in 2050, with implemented decarbonization measures, in the cabinet approved plan.

"Considering stable energy security and energy security, this is the project we hope to see it succeed most by all means," the official said.

Japan aims to boost its equity liftings in its total oil and gas imports to more than 50% in 2030 and over 60% in 2040 under its new Strategic Energy Plan, up from a prior target of more than 40% in 2030.

The country's equity liftings in its total oil and gas imports stood at 40.6% in FY 2020-21, up from 34.7% in the previous fiscal year, according to the latest METI data.