Carbon Capture and Storage (CCS) is a technology that is attracting global attention. CCS aims to reduce CO₂ emissions by capturing the CO₂—a major driver of global warming—emitted from major stationary sources such as thermal power plants and steel plants, transporting, and then storing it in deep underground aquifers over the long term. The INPEX Group has been promoting research aimed at commercializing CCS technologies by working with the Research Institute of Innovative Technology for the Earth (RITE) since 2000 on the Nagaoka CCS Pilot Project and by collaborating in various research projects with Japan CCS Co., Ltd., a joint venture established in 2008 to achieve practical application of CCS.

One prerequisite to deploying CCS at a commercial scale is reducing the energy and cost required to separate, capture, and pressurize CO₂ before storing it underground. One CO₂ separation and capture technology we are focusing on that has a higher energy efficiency than existing technologies is High Pressure Acid-gas Capture Technology (HiPACT), which was co-developed by JGC Corporation and German-based BASF. From August to September 2010, we teamed up with both companies to carry out demonstration tests of HiPACT at our Koshijihara Plant at Minami Nagaoka Gas Field. These tests used HiPACT on an actual operating natural gas facility and confirmed what we expected: highly energy efficient performance.

Besides the energy efficiency and cost issues mentioned above, there are many other obstacles between where we are now and achieving CO₂ emissions reductions through commercial use of CCS. In addition to activities to reduce our own environmental impact, we will continue to make ambitious efforts to develop CCS and other global warming solutions through broad partnerships involving a mix of government, industry, and academia.

In March 2010, we commenced a two-year joint research project with the Japan Oil, Gas and Metals National Corporation on CO₂ enhanced crude oil recovery (CO₂ EOR) in the large-scale Lower Zakum oil field off the coast of Abu Dhabi.

In fiscal 2010, we performed a fluid-gas interaction study^*1 and our first CO₂ core flood test.^*2 We also developed a fluid-flow model,^*3 and performed parts of a simulation study^*4 that included selection of the pilot area. In fiscal 2011, we plan to perform additional CO₂ core flood tests and a fluid study involving asphaltene,^*5 and will continue our simulation studies. If we obtain favorable results, we intend to create a pilot test implementation plan.

In an age when the need for advanced forms of energy is growing, the INPEX Group is working to develop technologies that can accelerate our shift to a low-carbon society. With various potential methods for reducing CO₂ emissions currently on the table, we are trying to develop technologies that can directly reduce CO₂ emissions by using CO₂ effectively. Currently, one of our endeavors is research and development of a photocatalyst with which to produce methane from CO₂ and water. Artificial synthesis is said to be a “dream technology,” but recent research on photocatalytic methane production has shown that this technology not only produces methane, but also gives organic by-products with high added value. If we can commercialize this technology in the future, it will have tremendous importance in the fight to reduce CO₂ emissions. We hope to advance this research in the near future.

In an effort to create a sustainable carbon-cycle system, we are aiming to develop a technology that realizes effective use of both CO₂ and depleted oil fields at the same time. Since fiscal 2008, we have been cosponsoring a research program entitled “Sustainable Carbon-Cycle System Engineering” with the Frontier Research Center for Energy and Resources at the School of Engineering of the University of Tokyo, through which we have conducted research related to the development of a methane production technology that uses subsurface microbes living in depleted oil and gas fields. This technology uses methane-producing bacteria to produce methane from hydrogen, which subsurface hydrogen-producing bacteria make by decomposing the residual crude oil left in the reservoir of a depleted oil field, and CO₂, which is injected underground for carbon capture and storage. This research holds promise for building a sustainable carbon-cycle system in which CO₂ can be converted into methane that can be used as a fuel.

We have already confirmed the presence of hydrogen-producing and methane-producing bacteria, which play a major part in generating methane in subsurface oil reservoirs, in research conducted on the microbial community in our Yabase Oil Field (Akita Prefecture) and Niibori Oil Field (Yamagata Prefecture). Using these bacteria, we successfully produced methane at the laboratory level by adding CO₂ under high pressure and temperature conditions similar to those in actual oil fields. In a series of experiments on methane-producing bacteria, we have also found that microbial oil decomposition is very slow compared with the rate at which these bacteria produce methane from hydrogen and CO₂. We plan to develop methods to speed decomposition reactions in bacteria that feed on oil—their presumed source of hydrogen—and also explore ways to supply hydrogen other than with oil to increase the efficiency and rate of conversion to methane.

Eucalypts trees grown in Kirkwood,
South Western Australia

INPEX continues to investigate reforestation as a CO₂ offset option via our Pilot Forestation project in Australia. Started in 2008 through our subsidiary INPEX Browse, Ltd., 1.4 million eucalyptus saplings were planted on 645 hectares of land located in the southwest of Western Australia. The eucalypts are showing good health and vigor with some now standing four meters tall. Over the next 50 years the trees are expected to absorb around 450,000 tons of CO₂. Based on the success of the current plantation, we may consider an expanded forestation project that serves as one of INPEX’s GHG countermeasures in Australia.

The West Arnhem Land Fire Abatement Project (WALFA) is a partnership between Darwin LNG (DLNG), of which INPEX owns a 10% stake, the Aboriginal Traditional Owners of the area, the Northern Land Council and the Northern Territory Government. Through this partnership, Indigenous Ranger groups are implementing strategic fire management across 28,000 square kilometers of Western Arnhem Land in Australia’s Northern Territory, to offset some of the GHG emissions from the DLNG plant in Darwin Harbour. Started in 2006, the project seeks to increase the proportion of controlled early dry season fires to create fire breaks to minimize destructive late dry season wildfires and maximize biodiversity protection. The project has been successful in abating the equivalent of over 100,000 tons of CO₂ per year. Based on the success of the project to date and the potential application to the Ichthys project in Australia, INPEX is investigating the feasibility of entering into similar GHG offset agreements using this approach.

Natural gas produces 75% and 60% percent less CO₂ than oil and coal, respectively, for every calorie it produces, and is therefore the most environmentally superior energy source among fossil fuels.

The last several years have seen an acceleration in the move to switch from petroleum-based fuels to natural gas among customers along our gas pipeline networks in Japan. For example, businesses can dramatically reduce their CO₂ emissions by switching their boiler fuel for factories and other operations from heavy oil to natural gas. We actively use natural gas ourselves by, for instance, installing more energy-efficient natural gas-powered systems at our gas production plants.

With global natural gas reserves expected to last another 200 years or so, we believe that in Japan, to achieve both reductions in greenhouse gas emissions and a stable supply of energy, expanding our use of natural gas is essential.

The INPEX Group produces natural gas in Japan, much of it at the Minami Nagaoka Gas Field, and is also developing large-scale LNG projects in Australia and Indonesia. Delivering a stable supply of natural gas to more customers and encouraging wider use through the development and production of natural gas and the building of LNG receiving terminals and pipeline networks forms one of the pillars of our climate change mitigation policy.

The Minami Nagaoka Gas Field, our primary gas field located in Nagaoka, Niigata Prefecture, has been increasing its production capacity to meet the growing demand for natural gas since the Koshijihara Plant became operational in 1984.

In 1994 we began production at the Oyazawa Plant, the second plant in the gas field, and since then have been adding capacity to both plants, resulting in what currently is a combined daily output of more than five million normal cubic meters—enough to service some five million average-sized homes.

We have also been seeking to diversify sources of natural gas, and in 2010 began sourcing gas derived from imported LNG from Shizuoka Gas Company. When the Naoetsu LNG Receiving Terminal at Naoetsu Port, Niigata Prefecture, becomes operational in 2014, we will begin using natural gas derived from LNG imported from the Sea of Japan, which, coupled with LNG coming through the Pacific coast and natural gas production sites in Japan, will ensure that we provide an even more stable supply of natural gas.

Since we began operating the Tokyo Line—the first long-distance high-pressure natural gas transportation pipeline built in Japan—between Niigata and Tokyo in 1962, we have applied a series of extensions and upgrades to the pipeline network, which now boasts a total length of over 1,400 kilometers running coast-to-coast from the Sea of Japan to the Pacific Ocean.

Our next project is to enhance our transportation capacity to the Kanto region by building stage four of the Shin Tokyo Line (between Tomioka and Fujioka cities in Gunma Prefecture, slated for completion in 2012), and in May 2011 we decided to construct the Toyama Line, a 102 kilometer-long natural gas transportation pipeline that will run from Itoigawa in Niigata Prefecture to Toyama in Toyama Prefecture. The Toyama Line is a trunk pipeline that will provide a steady and efficient supply of natural gas from the Naoetsu LNG Receiving Terminal currently under construction to gas companies in Toyama Prefecture and commercial customers along the line. We are aiming to begin using the line by the end 2014. We will help our customers reduce their environmental impact by promoting wider use of natural gas through these projects.

Keeping our 1,400 kilometers of pipelines in good working condition is a critical duty we have to fulfill in order to supply natural gas to our customers safely and securely. To accomplish this, Teiseki Pipeline Co., Ltd., an INPEX Group company, conducts visual inspections of the pipelines at least twice a week, along with routine physical diagnostics to look for leaks or signs of corrosion. We also run emergency patrols to check pipelines when rainfall greater than the daily standard (140 millimeters/day) has been recorded or when there is an earthquake of intensity 4 or higher on the Japanese seismic scale.

An emergency patrol sent out after the Great East Japan Earthquake in March 2011 confirmed no damage to the pipelines.

In addition, to prevent accidents during pipeline construction projects that contractors undertake, we brief all staff members and other workers at construction sites on safety precautions and compile case studies on accidents that have occurred at other exploration sites to learn from them.

Furthermore, we apply the Manual for Contractors’ HSE Management to contractors working on our pipeline construction projects. Based on this manual, we assess plausible risks and conduct solo or joint HSE Audits and safety patrols. We also verify that contractors are in compliance with risk countermeasures and the agreed upon content of the HSE Plans. With this system in place, we can constantly maintain an appropriate level of safety.

Because natural gas in its raw, unprocessed state contains components that can damage transport pipelines and consumer products such as gas cassettes (e.g., water and CO₂), we remove these components and safely transport and sell the gas.

For the gas that we sell, we perform analyses of substances subject to the PRTR Law and Industrial Safety and Health Law, and distribute MSDS* providing full safety instructions to our customers.

Natural gas can be injected into a depleted gas or oil reservoir for storage. The advantages of storing natural gas underground compared to storage in an artificial facility are numerous, one being that the facilities are simpler and can store natural gas for long periods of time. Another advantage is the ability to respond to seasonal fluctuations.

Our Domestic Project Division has been storing natural gas underground in the Sekihara Gas Field in Nagaoka, Niigata Prefecture, since July 1968. In fiscal 2010, we helped stabilize the natural gas supply by supplying 29 million normal cubic meters to meet peak demand.

We make efforts to store natural gas during periods of low demand; as of March 2011, we had approximately 210 million normal cubic meters of natural gas in underground storage.

Because natural gas is used in ordinary homes and many other places that concern the general public, and therefore calls for a constant supply, underground storage serves an important role in realizing a steady and highly flexible supply.