For Presentation at APEC Clean Fossil Energy Technical <strong>and</strong> Policy SeminarFriday, 28 January 2005, Cebu City Marriott Hotel, Cebu, Philippines<strong>Natural</strong> <strong>Gas</strong> <strong>Technologies</strong> <strong>and</strong> <strong>Markets</strong>: <strong>Japanese</strong><strong>Experience</strong>Hisao WatanabeGeneral Manager of Research DepartmentTokyo <strong>Gas</strong> Co., Ltd.JapanPage 1 of 5
For Presentation at APEC Clean Fossil Energy Technical <strong>and</strong> Policy SeminarFriday, 28 January 2005, Cebu City Marriott Hotel, Cebu, Philippines1. <strong>Natural</strong> <strong>Gas</strong> in the <strong>Japanese</strong> Energy Market1.1. Current SituationJust like petroleum, Japan does not have large domestic natural gas reserves <strong>and</strong>until LNG (liquefied natural gas) import started in 1969, share of natural gas inJapan’s primary energy supply was less than 1%. In around 35 year since then,share of natural gas rose to 13.5% or 3,111 PJ(peta joule=10 15 joule) of Japan’sprimary energy supply in 2002, which was 22,977PJ or 583 million kilo litter of oilequivalent.97% of natural gas used in Japan is imported in the form of LNG, mainly (about80%) from Asia Pacific economies such as Australia, Brunei Darussalam, Indonesia<strong>and</strong> Malaysia.Out of 55 million(10 6 ) tons of LNG imported to Japan in 2002, 69% was imported byelectric power companies for electricity generation at LNG power stations. The rest isprimarily distributed as city gas by city gas utilities for various end use applications inindustrial, commercial <strong>and</strong> residential energy market.<strong>Natural</strong> gas accounted for 26% of electricity generated in Japan in 2000. On theother h<strong>and</strong>, 87% of energy source of city gas was natural gas. Tokyo <strong>Gas</strong> pioneeredconversion of city gas source to natural gas in 1969 to mitigate air pollutions in urbanareas. Since then, 133 out of 238 city gas utilities have introduced natural gas.1.2. Future of <strong>Natural</strong> <strong>Gas</strong> in Japan<strong>Natural</strong> gas is environmentally more benign compared to other fossil energysources <strong>and</strong> its reserves are geographically more dispersed than petroleum whosereserves are largely concentrated in politically unstable Middle-east. Because ofthese advantages, <strong>Japanese</strong> government has positioned natural gas as an importantenergy source from the viewpoint of securing stable energy supply <strong>and</strong> protectingglobal environment, <strong>and</strong> has been promoting the shift to natural gas from petroleum.<strong>Japanese</strong> government’s “Long-term Energy Dem<strong>and</strong> <strong>and</strong> Supply Outlook (2004)”says “Expansion of natural gas use both in electricity generation <strong>and</strong> in heatapplication is desirable as natural gas has environmentally advantageouscharacteristics.” The “Outlook” forecasts that in 2030, share of natural gas in Japan’sprimary energy supply will increase to 18%.Because natural gas use in electricity generation in large scale power station isobvious, the rest of the paper describes the development of natural gas applicationsin Japan’s industrial, commercial, <strong>and</strong> residential sectors which are supplied withnatural gas as city gas by city gas utilities.2. <strong>Natural</strong> <strong>Gas</strong> Technology in <strong>Japanese</strong> Industrial Energy Market2.1. Historical Development<strong>Natural</strong> gas use in <strong>Japanese</strong> industrial sector began as a substitute for petroleum tomitigate air pollutions in urban areas. Although natural gas has been priced higherthan competing petroleum products, higher efficiency, pollution-free combustiontechnologies developed for boilers, furnaces <strong>and</strong> other industrial heat processeshave promoted conversion of industrial fuel from petroleum to natural gas.Page 2 of 5