Discovery of Huge
Gas Hydrate Deposits

KNOC estimates the layer contains 600 mln tons of "burning ice"to fully meet Korea's LNG demands for 30 years

Korea has discovered a large-scale gas hydrate structure in the Ulleung Island basin in the East Sea, some 135 km northeast of the port city of Pohang, North Gyeongsang Province, the Korea National Oil Corp. (KNOC) said on Nov. 21.
Korea has become the fifth country in the world to locate the natural resource through offshore drilling following the United States, Japan, India and China.
According to the Ministry of Commerce, Industry and Energy, the gas hydrate deposit was found in deep waters and is about 130 meters thick, much larger than those found by other countries including Japan, India and China.
During the 54-day search and exploratory drillings in three locations, sometimes 1,800 meters deep, the ministry also found a deposit with a thickness of 100 meters at a point about nine kilometers north of the 130-meter-thick deposit.
Gas hydrates are usually found deep under water where cold temperatures and extreme pressure cause natural gas to condense into semi-solid form. When brought to the surface, it can be used as liquefied natural gas (LNG).
Dubbed "Burning Ice,亮 gas hydrates have become more popular due to soaring crude oil prices and growing concerns over climate change since they emit only 24 percent of the carbon dioxide given off by fossil fuels such as coal and oil when burned.
Experts estimate that about 600 million tons of gas hydrates might be found in the East Sea, an amount sufficient enough to meet the country's LNG needs for 30 years. In 2005, South Korea imported 2.7 million tons of LNG to meet domestic demand.
"We cannot tell the exact amount of the newly-found deposit at the moment,"a ministry official said. "But our latest discovery has raised the chances that total deposits in the East Sea will be much higher than our previous estimate of 600 million tons."Experts from KNOC, the Korea Institute of Geoscience & Mineral Resources and the Korea Gas Corp. took part in the exploration project with Fugro NV of the Netherlands, which provided a specialized drilling vessel.
Officials said the country has invested about 66.7 billion won ($71.2 million) in the past two years to conduct initial studies to find and determine the size of gas hydrate deposits.
Korea plans to spend another 85 billion won until 2011 to collect additional data on the location of potential deposits and to develop the necessary technology to use the energy resource.
In the third phase, scheduled from 2012 to 2014, the country will develop efficient methods to extract and use gas hydrates. According to energy experts, there might be up to 10 trillion tons of the resource worldwide in deep oceans and permafrost areas.
In the meantime, a consortium led by KNOC signed a product sharing contract (PSC) with the Kurdish Regional government for the Bazian oil exploration block in the Kurdish district in Northeastern Iraq on Nov. 10. The Korean consortium includes SK Energy, Daesung Industry, GS Holdings and KNOC, among others.
KNOC signed an MOU with the Kurdish autonomous government to explore oil in over 10 mining blocks in the Kurdish region, recommended by the regional authority in January this year, and has been making technical evaluations on the blocks.
Based on the result of the evaluation, KNOC picked out Bazian as the most promising block and the consortium held talks to sign a PSC with the Kurdish government to explore the block for oil.
The PSC signed with the Kurdish ruling authorities would enable the Korean oil consortium to set up a beachhead to advance into Iraq for exploration of oil, KNOC officials said. Iraq has the second largest oil reserves in the world.
KNOC plans to sign a contract among consortium member companies for operation of the oil block by the end of the year and set up an office in Iraq to officially launch its oil exploration project on the mining block.
The Kurdish government signed seven PSCs with countries like the United States, Austria, Hungary and India. The Kurdish rulers have also approved five additional PSCs.
KNOC finalized its takeover of a 20 percent stake in the Inam offshore mining block in Azerbaijan from Shell Oil on Oct. 10.
The state-run oil company has been negotiating with Shell on the takeover of the stake since August 2006, after forming a consortium that includes GS Caltex, Daewoo International, STX and Keangnam Enterprise.
In addition to KNOC's 20 percent, BP will have 25 percent, Shell 5 percent and SOCAR, a state-run oil company in the host country, will retain a 50 percent share. nw

Huge gas hydrate deposits discovered by the Korea National Oil Corp. KNOC CEO Hwang Doo-yul