Gas Pipeline to Japan: A Realistic Gas Export Opportunity?
Authors: Crockett L.B. , Wilson D.P. 
Published: December 2007

In the next ten to fifteen years the demand for natural gas in North East Asia is set to double. This paper examines the technical and economic feasibility of transporting natural gas from the gas rich areas of the North West Shelf of Australia and South East Asia via a large diameter pipeline system to the gas markets of North East Asia.

A pipeline from Australia would cross water depths of nearly 2000 metres in the Timor Gap and around the Indonesian archipelago. Whilst advances in new technologies suggest that a pipeline crossing this difficult terrain in very deep water is feasible, economic analysis indicates that such a system is not commercially viable. However, a pipeline from S.E. Asia would offer tariffs similar to those of a LNG transportation system and accordingly it is concluded that such a pipeline can provide a feasible and attractive gas transport system.

Introduction

Natural gas markets in N.E. Asia, namely Japan, South Korea and Taiwan, are currently serviced by LNG imports from suppliers around the world. In the next ten to fifteen years gas demand in N.E. Asia is set to double, and there exists an opportunity for suppliers in Australia and S.E. Asia to service this demand.

The concept for a pipeline from the North West Shelf of Australia to Japan was publicly mooted in the early 1990's, but has never been considered in any detail. This paper investigates the feasibility of large diameter gas pipeline systems, firstly from Australia to Japan and secondly from S.E. Asia to Japan. Both technical and commercial assessments are made to determine the feasibility of such pipeline systems. For example, a pipeline system from Australia would lie in water depths of up to 2000 metres in the Timor Sea and surrounding southern islands of the Indonesian archipelago. This deepwater section raises many technical challenges which are discussed within the body of the paper.

Supply and Demand of Natural Gas in Asia

Before considering the feasibility of a gas pipeline to Japan, the projected gas demand must be analysed to ensure that a venture of significant magnitude is warranted.

Current forecasts indicate LNG demand in N.E. Asia will increase from 50 to 120 MTPA (68 to 162 BCMPA) in the next fifteen years. Forecasts are based on the increasing energy requirements of the established markets of Japan, Taiwan and South Korea, and emerging markets of Thailand and China, as shown in Fig. 1.

Assuming this demand is realised, by the year 2010 there will be a projected shortfall in supply of approximately 45 MTPA (61 BCMPA). To put these figures in perspective, Australia's current LNG export capacity is 7.5 MTPA. Shortfall in supply is shown on Fig. 1 and defined as gas demand not covered by known contracts, memorandums of understanding or letters of intent, but would be subject to competition from potential LNG projects in USA, South America, Russia and the Middle East. A shortfall in supply of such quantities yield significant opportunities for gas producers to secure market share, and fund developments for gas transport infrastructure.

A Gas Pipeline to Japan

A pipeline system from Western Australia would be approximately 8500 km long and pass up through the Indonesian archipelago, the South China Sea, past China, Taiwan and onto Japan and South Korea. A preliminary pipeline route based on minimising water depths is shown on Fig. 2. The depth profile along the proposed pipeline route is indicated in Fig. 3. The maximum water depth is approximately 1800 metres, located south-west of Timor.

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