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It's a dawn start after an all-too-short night. The sun is just rising as you get the Chopper to LP GasBase near Belem, providing you with a one-hour panoramic tour of the Amazon delta. From here, it's a short drive to Val-de-Caes airport where the pilot is warming up the company plane for an 0730 take-off.
Soon you are flying South-East, over dense forest with occasional villages. "Para province" says your companion passenger. After half an hour the villages thin out and there is no sign of human impact on the forest.
Your companion turns out to be the Financial Director of BHD (Brazil Hydrate Development), and putting aside his paperwork, he is happy to give you some of his time.

"Going to see the HP mining operation?" He asks.

Yes, I've just spent a day with the LP miners - it's quite a set-up!

"It is indeed, and very good for the Amazon basin, don't you think? Not only does it benefit the Greenhouse Gas situation but also provides local employment, clean power and perhaps most importantly, the idea that by working together you CAN do something to conserve your environment, both on a local and global level."

Obviously something of a politician, this gentleman! I was surprised at how globally aware the 'locals' were.

"Well, you should be equally impressed with the HP miners - OK, it's just technology, but the downstream application of that technology is really transforming lifestyles"

Forgive me, I don't know much about the HP miners or the hydrate mining operation.

"OK, let me summarise for you.
At high pressures and low temperatures, methane gas and water react together to form a crystalline substance, Methane Hydrate. It forms on the seabed; the deeper and colder the water, the more stable its structure. The Global Warming dilemma is that warmer seas destabilise hydrate, which then liberates methane, which is a powerful Greenhouse gas and so on, in a positive feedback scenario. So our aim is to locate and remove hydrate in the vulnerable strip along the edge of the continental shelf. For the temperature gradients found in the waters off Brazil, that equates to an equilibrium depth of approx. 500 metres, so it is no easy task!"

How does the hydrate form?

"The geologists tell us that methane originates deep within the earth's crust, almost everywhere, some from organic deposits and some from inorganic processes. Gas makes its way slowly to the surface, through cracks in the rock… where the rock is impervious, gas 'fields' form.
In coastal zones, methane emerging in shallow, warm water dissolves and dissipates into the surface layers and thus into the atmosphere. However, gas emerging into deeper, colder water forms crystal deposits which mix with the seabed mud to form vast, loose beds of methane hydrate. These beds become unstable as ocean temperatures rise, and studies of the hydrate off our coasts has shown that quite a bit of it is ready to dissociate in the event of a disturbance, like a modest tsunami, for example."

So it's really a race against time!

"Indeed, the technology has been developed in a remarkably short period."

and is all the CO₂ produced by burning this methane really recaptured?

"99%, I would say:- officially 100%. Don't forget that we meter the methane delivered and the CO₂ returned, and only deliver to major enterprises, over which we theoretically have legal recourse. It's more complicated than just burning raw methane, of course, but when you allow for clean technology from the start, the figures still add up."

Looking at the man, you can believe it; undeniably prosperous, Antonio Costa is clearly a man who understands economics.
What happens to the CO₂, exactly?

"Oh, it's collected in pipelines and sequestered in the deep ocean, same as the LP miners."

and is the project still evolving, like the LP miners?

"We currently have two teams of miners working their way up and down the coastline, starting from a base we call 'HP central' which is located 600kms south of the Amazon basin. Within ten years, we expect to construct another team of miners to start work in the south of the country. Within 80 years, we plan to mine all the volatile methane in Brazil's 6000km coastal zone."

I don’t know much about the High Pressure Miners.

“Well, BHD activities have to be seen jointly with Brazil Coastal Gas Co. which handles the onshore activities, but together we run what is referred to as the “Brazil Coastal Ladder”. Broadly it comprises two pipetracks parallel with the coast, one offshore and one onshore (the legs) joined every 50 kilometres or so by a crosslink (the rungs). The offshore side is production and the onshore side the consumers.. processing is carried out by plants located on the rungs.”

OK, that seems clear enough. What does the offshore side produce?

“We have two products, Methane Hydrate (MHS) which is a crystal comprising one methane molecule combined with four water molecules, and Compressed Natural Gas (CNG) which is basically Methane. The MHS can be dissociated into methane and water, so to some extent the two products are interchangeable.”

And how are the products collected?

“We have two ‘families’ of miners which make their way down the coast harvesting the methane hydrate which occurs naturally on the continental shelf in about 500m of water. In the course of mining, a fair amount of methane is liberated which is, of course, collected. However most hydrate beds have a source of methane below them (which is why they are there in the first place) and if the source is still active, it is connected to our offshore Medium-Pressure Gas (MPG) Gathering Line. We have been pleasantly surprised at how much gas is still being produced.”

What would happen to the gas if you were not collecting it?

“Indeed, this is the whole point… it would be liberated into the coastal water and eventually into the atmosphere. Methane is a powerful greenhouse gas, some twenty times more than CO₂, and Carbon Credits make it economic to collect both the hydrate and the low-pressure gas. Historically Oil Companies wasted this resource because it is far more profitable to drill a hole into the ground and tap high pressure reservoirs which need little processing other than transportation to the user.”

But your users are local?

“Correct! Although we spend more in compressing and cleaning our gas, we do save on transmission costs. But that means we have to build the onshore user infrastructure to match the offshore gas production. In contrast, MHS (Methane Hydrate Slurry) is not all consumed locally and is a valuable export product, although building a market for this product has taken considerable effort.”

He glows with pride; you suspect he has been closely involved in this facet.
So how do you develop the onshore infrastructure?

“There is a coastal Compressed Natural Gas (CNG) pipeline being continuously extended to mirror the offshore progress. Each major town along the route has a Combined Power Station built to handle incoming gas and convert it using the Oxycell process into a combination of electricity and hydrogen. The CO₂ produced is piped back offshore via the local ‘rung station’. It is a great occasion when the pipeline arrives at a town and people can stop burning wood, bottled gas & kerosene and pay less for a clean power source.”

It sounds idyllic now, but how did it start?

"Well, the provision of CNG to the coastal zone was originally just another energy supply project. However, the fact that it was financed by the World Carbon Trading Bank (WCTB) meant that there were strings attached to the way the methane could be used. At first this caused resentment in the industrial sector, but as the advantages of the Clean Development Mechanism, and Oxycell in particular, became apparent, there suddenly was a rush to become a member of the club."

Yes, I have heard great things about Oxycell! You are glad to show some knowledge of the subject.

"The model which has emerged in the land pipeline distribution is interesting. Firstly we supplied gas to the new city of Timonha, and removed the waste CO₂. OK, we had to lay two pipelines (methane supply, CO₂ return) instead of one, but then you consider the costs of buying the Right-of-Way and mobilising contractors, etc. you find that this is not a huge cost increase..
Then, of course, you have Timonha itself. It's a beautiful situation in the highlands, and there was considerable opposition to any development at all. However, once the first few city blocks were built, such enthusiasm was created in this all-Brazilian venture, that it was difficult to limit the expansion."

Why was that?

"Well the BHD concept was simple. We supplied low-cost methane to major power users, provided we got all the CO₂ back, and provided they used the Oxycell process to burn it. This meant that they became producers of mechanical, electrical and hydrogen power, as well as a fair amount of 'waste' heat, of course…. and they could sell any of this power to their neighbours; in fact we made it a major economic element for them to do so. Results:

• - New factories springing up near the rung stations, or rungs installed near existing industry.


• - Clusters of minor power users around each major one."

Which industries were the main users?

“Oh, it's not just industry - a large office block can be a major user, what with aircon loading, lighting, utilities, etc. We leant particularly heavily on all major public services to become a hub for local energy supply, so you'll find that subway stations, railway stations, sewage works, hospitals, libraries, fuel stations, garbage depots, all produce considerably more energy than they use themselves…. but the income from energy sales covers their extra investment, and their neighbours get pollution-free power."

But how about villages?

“They are supplied as satellites from the towns. The whole development has brought prosperity wherever it is implemented, and the people are prepared to work hard to buy into a system which will give them and their grandchildren a reliable source of energy.”

Tell me more about the ‘Rung Stations’…

“Well, the big picture is… Here is the Coastal Ladder”, he produces a piece of paper and draws two pairs of parallel lines, regularly cross-connected by ‘rungs’, down the centre of the ladder runs a wiggly line which represents the coastline. “Offshore are two pipelines, one for hydrate and one for medium-pressure natural gas. Onshore again two pipelines, one for high-pressure natural gas and one CO₂ return line. These form the ‘legs’ of the Ladder. Each rung comprises two or maybe four pipelines, incoming Gas, outgoing CO₂ plus on thick rungs, two hydrate lines.
On each rung is a process plant, powered by MP gas, whose function is to:

• - Clean and compress incoming MP gas to feed the onshore CNG pipeline
• - Compress outgoing CO₂ to Ocean disposal points
• - Provide local power in the form of H₂ and electricity.

Thick rungs also have facilities for:

• - Cleaning and exporting MHS
  

but I suppose you will be going to see our facilities at RS5?”

Yes, Rung Station 5 is on your agenda for the day after tomorrow

“OK, that was our first ‘thick rung’ plant and the most complex so far… Very impressive, on the way to paying for itself within 10 years of start-up:- not very Brazilian; way ahead of schedule!”

He almost sounds disapproving, obviously the Financial Director’s idea of a joke!
What was behind this financial achievement?

“Well, you have to get this in perspective… The whole Ladder concept is a WCT Bank Sustainable Energy Project, the idea being that it has to be ecologically beneficial (or at worst neutral) and pay for itself over a 200 year lifetime. This is in contrast to the traditional ‘Oil Company’ approach where the project ‘pays for itself’ in less than 10 years but produces undesirable (and un-priced) side effects, like CO₂ emissions or environmental degradation.”

You have heard all this before, but he continues:

“But the big unknown was methane hydrate. We knew we could mine it at a rate which exceeds our internal needs, and although it was always envisaged that the excess would be exported, the revenue generated was an question mark in the financial equation.”

But no longer, can we assume?

“Indeed, MHS export has exceeded all expectations. As you may know, it has proved to be a considerably cheaper option than LNG (Liquefied Natural Gas) and easier to handle for developing nations. It could have been even bigger business if the WCTB had not made it a condition of export that receiving countries have to demonstrate a carbon neutral technology for handling the stuff. At first that seemed restrictive, but of course it is necessary to have some controls which in the end resulted in a wonderful export opportunity for Brazilian technology”

He glows..

So this all means a positive balance sheet?

“Certainly. WCTB provides long-term finance at affordable rates as long as you can demonstrate ecological benefits. Then, of course, there’s the Carbon Trading income. We get Greenhouse Gas Abatement allowance for mining the vulnerable coastal hydrate and underlying Methane fields which would otherwise lead to big Carbon releases. We also get a tradeable emission allowance for our onshore carbon capture power plants. In practice the Ladder produces over three times the income required to finance the investment, which means money to spend on Brazilian ventures, for example, the Titanium plant”

Yes, you have seen this.

“and to pay off the investment made by the Brazilian Government, and to reward shareholders who put their money into this venture”

But despite making money, the project is still ‘Green’?

“Yes, the Ladder more than fulfills the requirements of the WCTB because:

• - It produces carbon-neutral energy
• - It replaces carbon-emitting usage
• - Environmental impact is zero (the minuses are balanced out by the pluses)
• - It is sustainable (at least while hydrate stocks last, lets say 1000 years)

But most of all…
It vastly reduces methane emissions into the biosphere”

and are people prepared to pay for this conversion?

"Well again, the WCTB supports all these schemes, and with the increased efficiency of Oxycell (up to 80%, if you can use the 'waste heat'), communities were looking at a 15-year payback for their investment coupled with a vastly cleaner environment within 5 years. So it has been a way for even the most unpopular local government to win back local support. So 'yes' is the answer to your question, the political will has been there ever since Timonha proved the principle. Furthermore, because the power station is local, it employs local people and is seen as an integral part of the community.”

So, universal acceptance?

“Indeed, as long as there are zero emissions, everybody benefits from a distributed power system; transmission costs are down and reliability is up. BHD was just trying to develop markets for our reclaimed methane. Initially Timonha was the 'base load', so we offered very competitive prices…. and you have to keep in mind that our own financing from the WCTB was contingent on the Clean Development Mechanism. However, once the CDM idea caught on, we've been besieged by communities wanting to convert their power base."

So what is the future?

"The coastal pipeline system will extend, and of course most of Brazil’s population is more-or-less ‘coastal’. Hydrate mining is possible almost everywhere off the Brazilian coastline, and reserves are effectively infinite. The WCTB is, of course, primarily concerned with harvesting the metastable hydrate deposits, but once the infrastructure is in place, it will be in Brazil's interests to continue to mine the stable hydrate deposits in deeper waters; but here we are talking 50 years time. As the onshore coastal pipeline extends, so does gas use. To a degree this is satisfied by more subsea wells being hooked in, but it will also mean that the miners have to increase production. It is anticipated that:

• Output from the original 3 miners will ramp as experience builds and process is improved.
• The number of miners will increase from 3 to 5, going into deeper water.

This, of course, is no different from coal mining where production is tailored to suit power station consumption.”

Obviously well thought out! What does that mean for the investors?

“BHD (Brazil Hydrate Development) company policy, as declared in our annual report, is”

• To extend hydrate mining to other parts of Brazil, thus increasing both internal sales and boosting exports.
• To improve mining technology and the export of such, in particular to move to deeper water.
• To invest in energy-intensive industry, particularly where it reduces costly imports, eg aluminium

And hand-in-hand with that, BCG (Brazil Coastal Gas Co) has stated that they will, within 20 years:

• Intensify gas use, up to 100% in areas which are burning other fuels damaging to the environment. This implies a major investment in distribution.
• Extend carbon-neutral technology to 90% of Brazilian gas users.
• Be supplying 45% of Brazilian electricity.”

These are huge statements for a country the size of Brazil!
What makes him think these are achievable?

This is all about development, sustainable development! The elements you need are:

• The political will, both from the top and from the people.
• The availability of money at a reasonable interest rate.
• The technology.
• The manpower.

Brazil currently has all four of these elements, and has every reason to engage them.
As an example, look at the offshore industry, where we always excelled in subsea technology. By applying ‘long-term think’ to the same problem, there is no reason why Brazil should not lead the world in hydrate reclamation and its carbon-neutral utilisation.”

What will happen to the miners then?

"Oh, there's plenty of ongoing work for them! We already have enquiries from neighbouring countries, and with a 200-year design life they will only just be 'run-in' when they finish Brazil"

This seems to be the end of his speech, and he turns back to his paperwork. Your eyes close for a bit of catch-up sleep. When you awake, you are flying across a broad river… "Rio Mearim, Maranhao province" you are advised, "that's São Luis over on the right hand side. Just time for a cup of coffee before Paulino"

Roger  Clark
STEP 2000