Sample News Story
Hokkaido Gas Chooses the Domestic Option
28/02/1993
Early last month Hokkaido Gas and Japan Petroleum Exploration (JAPEX) signed an agreement to explore the natural gas fields in the Yubari area, near the city of Tomakomaiin Hokkaido. The agreement, which is more a memorandum of understanding than a sales/purchase (S/P) contract, stipulates that JAPEX will carry out the appraisal drilling activities required to quantify the gas reserves in the area, while Hokkaido Gas undertakes to purchase any gas produced by JAPEX. The two companies are expected to conclude a formal S/P contract by the turn of this year only if JAPEX finds enough gas to meet the requirements of Hokkaido Gas.
JAPEX has drilled five exploration wells in southern Yubari since 1988 and found oil and gas reserves with three of them. The company is currently planning to drill two more appraisal wells in the neighbouring structures, one in Numanohashi and the other in Akebono, to discover the extent of the reservoir. Although the details of the sales contract will be finalised when JAPEX completes the appraisal work, it is likely that JAPEX will be able to supply 1.5 MMcmd of gas to Hokkaido Gas from the reserves in the Minami Yubari structure. Its proven reserves are expected to increase to 3.2 - 3.6 Bcm from the current 1.7 - 1.8 Bcm.
This project will cost the companies a total of Y120 billion each. JAPEX will invest Y40 billion to develop gas wells and to lay a 75-km/l4-inch pipeline from the fields to Hiroshima-cho, a city-gate to Sapporo; while Hokkaido Gas will contribute Y80 billion to install a distribution network from Hiroshima-cho to the customers in Sapporo city and to carry out the calorie conversion work from imported LPG to natural gas. The pipeline route has yet to be decided, but the line has a capacity of 2.7 MMcmd. The gas will start to flow in April 1996 for ten years, with an option to extend depending on the extra availability. The possibility of building branches for surrounding areas along the line has not been considered.
Hokkaido Gas has been studying for several years whether it should import LNG or use domestic gas to realise their company policy of natural gasification. Although the company plumped for the latter this time, this does not mean they have given up the LNG option. On the contrary, they hope the JAPEX gas will make it easier for them to import ING, since it will contribute to preparing the infrastructure for a future LNG project which will prove economically viable if Hokkaido Gas can increase natural gas demand. The JAPEX pipeline, however, will not be used for the LNG project since Ishikari Shinko, a northern port near Sapporo, is still scheduled as the LNG terminal.