Gas Hydrates

Taking the heat out of the burning-ice debate | Appendix A – PATENT ANALYSIS Gas Hydrates

A.T. Kearney Energy Transition Institute June 2015 Gas Hydrates

Compiled by the A.T. Kearney Energy Transition Institute

Acknowledgements A.T. Kearney Energy Transition Institute wishes to acknowledge Ray Boswell, Technology Manager, Natural Gas Technologies, U.S. DoE / National Energy Technology Laboratory and Robert L. Kleinberg, Schlumberger Fellow, Schlumberger Doll Research for their detailed review of this FactBook. The Institute also wishes to thank the authors of this FactBook for their contribution: Benoit Decourt, Romain Debarre, and Sylvain Alias.

About the FactBook – Gas Hydrates The role gas hydrates may play as an energy resource is a controversial, polarizing subject. Therefore, a fact-based report has been developed by the A.T. Kearney Energy Transition Institute, presenting: key concepts; the status of exploration and production technologies; the status of research, development and demonstration (R,D&D); and the environmental and safety challenges associated with the potential exploitation of this resource. This publication aims at providing stakeholders with a balanced, unbiased assessment of gas hydrates and the tools to understand them properly. The Institute performed a literature review and engaged experts in the gas-hydrate field. The Institute also analyzed patents from 50 offices worldwide, using the Thomson Derwent World Patents Index (DWPI) database, and conducted a survey of gas- hydrate stakeholders to present the state of R,D&D and a faithful picture of current thinking among academics and industry players involved in the field. Outcomes of the DWPI analysis and the results from the survey are available in separate documents referred to as Appendix A and Appendix B.

About the A.T. Kearney Energy Transition Institute The A.T. Kearney Energy Transition Institute is a nonprofit organization. It provides leading insights on global trends in energy transition, technologies, and strategic implications for private sector businesses and public sector institutions. The Institute is dedicated to combining objective technological insights with economical perspectives to define the consequences and opportunities for decision makers in a rapidly changing energy landscape. The independence of the Institute fosters unbiased primary insights and the ability to co-create new ideas with interested sponsors and relevant stakeholders.

Gas Hydrates 1 Natural Gas Series

The FactBook – Gas Hydrates Appendix A – Patent Analysis

About the Patent Analysis To support the Gas Hydrates FactBook, the A.T. Kearney Energy Transition Institute analyzed patents from 50 offices worldwide based on the Thomson Derwent World Patents Index (DWPI) database. Key outcomes of the analysis were integrated into the FactBook, while this Appendix presents the analysis in full This report aims to provide a deep understanding of the gas-hydrate research and development (R&D) landscape. It highlights gas-hydrate patent publishing trends over recent decades, and identifies: the technologies that have generated the most interest; the countries most active in patent publishing; and the main stakeholders

Gas Hydrates 2 Executive summary (1/2)

Patent analysis highlights a growing interest in gas hydrates as a resource and the increasing involvement of Chinese research institutions

General overview of the gas-hydrate patenting landscape: ■ The number of patents filed in relation to gas hydrates has been growing at an accelerating pace since 1990. As of December 31th 2013, there were 2,933 patents, thirteen times as many as in 1990. The patenting rate in 2013 was more than seven times higher than in 1990 ■ So far, the majority of patents have been published in Japan. However, over the past decade, patent filings has grown rapidly in China, now the most active country in terms of gas-hydrate patent filing. Patenting in the U.S. – the second-most-important country, after Japan, for cumulative numbers of patents filed – remained relatively stable ■ From a technology standpoint, most patents still relate to chemistry related to natural gas and flow insurance issues caused by the formation of gas hydrates. Nevertheless, patents related to drilling and fluid recovery experienced more robust and steady growth over the past decade, mirroring increasing interest in gas hydrates as a potential energy source ■ Most patents have, so far, been filed by corporate players: chemicals companies and oil and gas firms own the largest gas- hydrate patents portfolios. Japanese conglomerate Mitsui is the world’s leading individual publisher. However, the role of research organizations, including universities and laboratories, has grown over the past decade. Since 2010, new players have become the main drivers for gas-hydrate patenting – notably Chinese research institutions

Gas Hydrates 3 Executive summary (1/2)

Patent analysis highlights a growing interest in gas hydrates as a resource and the increasing involvement of Chinese research institutions

Upstream: ■ The number of patents filed in 2013 in relation to gas-hydrates exploration and production technologies was 22 times higher than in 1990 (1,011 patents on December 31st 2013). Upstream-related patenting increased faster than the average increase in gas-hydrate patenting, mirroring growing interest in gas hydrates as a potential energy source over the past decade. With the exception of 2012, more than 100 gas-hydrate upstream-technology patents have been filed every year since 2010, compared with 10-20 a year in the 1990s ■ Japan is not the leading country in exploration and production patents: with 86 patents to date in this category, Japan is ranked fifth, after China, the U.S., the former Soviet Union and Europe. In 2013, China became the global leader, with 293 patents, ahead of the U.S. (280 patents). Activity in Europe and the former Soviet Union, meanwhile, is in decline ■ Within exploration & production, gas-hydrate patents are mostly filed under three categories: (i) drilling and fluids recovery; and, to a lesser extent, (ii) the measurement of physical and chemical properties, and (iii) equipment or products used for drilling and treating boreholes and wells ■ Research organizations are more involved in upstream gas-hydrate patents than in gas-hydrate patents in other areas, and now account for more than 40% of all upstream patents filed. However, within the upstream segment, oil and gas service companies remain dominant. Two oil and gas service companies and Swiss chemicals company Clariant are the largest patent-holders for gas-hydrate exploration and production technologies

Gas Hydrates 4 Executive summary (2/2)

Patent analysis highlights a growing interest in gas hydrates as a resource and the increasing involvement of Chinese research institutions

Exploration: ■ The number of patents filed in relation to gas-hydrate testing and measurement was negligible until the 2000s. It started to increase in the mid-2000s and has grown strongly since 2010. The bulk of these patents focus on chemical and physical properties (217 as of the end of 2013). Only a few relate to the measurement of electric and magnetic variables (20 patents), and geophysics (53 patents) ■ The vast majority of gas-hydrate testing and measurement patents have been filed in China: 167 compared with 34 in the U.S. and 27 in Japan. However, organizations in the U.S. – in particular, U.S. oil and gas service companies – have the largest patents portfolio relating to geophysics

Production: ■ The number of patents related to gas-hydrate drilling and “obtaining fluids from wells” started to increase significantly in the late 1990s and the patenting rate accelerated in the 2000s. As of December 31st 2013, there were 536 patents in the category, compared with 33 in 1990 ■ Technologies aiming to obtain fluid from wells have generated the most patents (and accounted for 59% of all production patents at the end of 2013). Drilling and well equipment and maintenance technologies come next (with 33% at end-2013), followed by control, surveying and testing technologies (8%). It is interesting to note that in the “obtaining fluids from wells” category, most patents relate to the use of heat and steam (67% of patents at the end of 2013) and to the use of chemicals or bacteria (24%) ■ In terms of gas-hydrate production-related patents, the U.S. is leading the way, with 163 patents, ahead of China (114) and the former Soviet Union (107). The largest patent publishers are U.S. oil and gas services companies, and, to a lesser extent, Chinese research organizations and oil majors

Gas Hydrates 5 Executive summary (2/2)

Patent analysis highlights a growing interest in gas hydrates as a resource and the increasing involvement of Chinese research institutions

Industrial landscape: ■ Oil and gas service companies are the most important patent publishers. ■ Chemicals companies are also deeply involved. Clariant, for example, is the largest publisher of gas-hydrate related patents in the “drilling, well equipment and well maintenance” category, and is ahead of oil and gas service companies ■ Other large industrial players in the gas-hydrate patent field include: international oil companies such Chevron, ConocoPhillips and Shell; national oil companies such as Petrochina and China National Offshore Oil Corporation (CNOOC); and various Japanese conglomerates

Gas Hydrates 6 Summary table

Main figures

Drilling and obtaining General overview Upstream Geophysics2 fluids from wells3

Number of patents as of 2,993 1,011 53 536 December 31th 2013

Increase in patenting rate x7.5 x9.3 - x5.7 compared with 1990

Aggregated number of x13 x22 x13 x16 patents compared with 1990

CAGR1 since 1990 +12% +14% +13% +13%

Priority patent-filing office China China United States China in 2013

Leading priority office Japan China United States United States since 1960

Leading type of publisher Research Research Corporate Research organization in 2013 organization organization

Leading type of publisher Corporate Corporate Corporate Corporate since 1960

1. CAGR for Compounded Averaged Growth Rate; 2. Main patent class for gas-hydrate exploration, hence used as a proxy; 3. Main patent class for gas-hydrate production, hence used as a proxy Gas Hydrates 7 Table of contents

1. Methodology ……………………………………………………………………………………………………………………………………………………… 9 2. General overview ………………………………………………………………………………………………………………………………………………… 14 2.1 Patenting trend ………………………………………………………………………………………………………………………………………………… 15 2.2 Regional breakdown ………………………………………………………………………………………………………………………………………….. 17 2.3 Technology breakdown ……………………………………………………………………………………………………………………………………….. 19 2.4 Publishers ………………………………………………………………………………………………………………………………………………………. 21 3. Upstream …………………………………………………………………………………………………………………………………………………………… 26 3.1 Patenting trend …………………………………………………………………………………………………………………………………………………. 27 3.2 Regional breakdown …………………………………………………………………………………………………………………………………………… 29 3.3 Technology breakdown ………………………………………………………………………………………………………………………………………... 32 3.4 Publishers ……………………………………………………………………………………………………………………………………………………….. 33 4. Exploration …………………………………………………………………………………………………………………………………………………………. 36 4.1 Patenting trend ………………………………………………………………………………………………………………………………………………….. 37 4.2 Measurements of chemical and physical properties ………………………………………………………………………………………………………… 39 4.3 Measurements of electric and magnetic variables ………………………………………………………………………………………………………….. 42 4.4 Geophysics ………………………………………………………………………………………………………………………………………………………. 43 5. Production ………………………………………………………………………………………………………………………………………………………….. 46 5.1 Patenting trend ………………………………………………………………………………………………………………………………………………….. 47 5.2 Regional breakdown ……………………………………………………………………………………………………………………………………………. 49 5.3 Technology breakdown ………………………………………………………………………………………………………………………………………… 51 5.4 Publishers ……………………………………………………………………………………………………………………………………………………….. 54 6. Industry landscape ………………………………………………………………………………………………………………………………………………… 56 7. Appendix & bibliography ………………………………………………………………………………………………………………………………………… 62

Gas Hydrates 8 1. Methodology

Gas Hydrates 9 Methodology – Thomson DWPI

Patents were retrieved from the DWPI database, the world's most comprehensive database of enhanced patent documents

Derwent world patents index (DWPI) – screen shot from database

1. For more information on the DWPI, please visit http://thomsonreuters.com/derwent-world-patents-index/ Gas Hydrates 10 Methodology – Study methodology

A.T. Kearney Energy Transition Institute based its analysis on priority year and priority country, including patents granted and patent applications Description of the key steps undertaken in patent analysis

Selected • A.T. Kearney Energy Transition Institute analysis was conducted using both the core Derwent Word Patents Index (DWPI) and DWPI’s Asian patent collection1 offices

Search • Patents were selected if the patent title, abstract or claim contained the words "gas hydrate" or "methane hydrate" terms • A.T. Kearney Energy Transition Institute retrieved and assessed families of patents filed between January 1st 1960 st Patent and December 31 2013, from International Patent Documentation (INPADOC). This enabled to regroup all the patents directly or indirectly linked to a priority document and consequently to single count inventions retrieval

Patenting • Patents were analyzed according to priority year, which is the first patent application date for a specific invention rate • Geographical patent analysis was conducted according to priority patent-filing region. The choice of filing region is Regional influenced by the geographical origin of the patent filer and by the region in which a publisher intends to protect an analysis innovation (i.e. innovation hub and potential markets). • International Patent Classification (IPC), a hierarchical system that classifies patents with language-independent Technology symbols, was used to determine the technology area of patents and has been used as a proxy for identifying analysis patents associated with exploration and production2.

• A.T. Kearney Energy Transition Institute assignee analysis was conducted based on DWPI patent assignee codes Assignee without distinguishing patents granted from those still in the approval phase. analysis

1. These collections includes patents published by US, Canada, Europe, Australia, WIPO, China India, Japan Indonesia, Korea, Malaysia, Singapore, Thai, Vietnam and other authorities, for more information, please visit: Thompson Innovation website; 2. A full list of IPC used is given in appendix. Gas Hydrates 11 Methodology – Study methodology

Patents have been grouped in accordance with the International Patent Classification (IPC)

How were IPC Classes grouped for exploration & production?1

Exploration and production IPCs G01N: Measurement of chemical or physical properties G01R: Measurement of electric or magnetic variables G01V: Geophysics and gravitational measurements G01V 1/00: Seismic or acoustic prospecting or detecting G01V 3/00: Electric or magnetic prospecting or detecting G01V 5/00: Prospecting or detection by the use of nuclear radiation G01V 7/00: Gravimetric prospecting or detection2 G01V 8/00: Prospecting or detection by optical means G01V 9/00 to G01V 15/00: Other prospecting methods

E21B: Earth or rock drilling; Obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells E21B 1/00 to E21B 41/00: drilling, well equipment and maintenance E21B 43/00: Obtaining fluids from wells E21B 44//00: to E21B 49/00: Well control, surveying and testing

C09K008: Chemical compositions for drilling or treating boreholes or wells

1. Details of IPC classes used in the analysis are available in appendix on slide 6 For more information, please visit the Word Intellectual Property Organization website; 2. No patents were retrieved under this IPC code Gas Hydrates 12 Methodology – Study methodology

Patents have been grouped in accordance with the International Patent Classification (IPC)

Discrepancies • It should be noted that patents are commonly filed under several International Patent Classification (IPC) classes and in 1 between several priority countries. This can explain discrepancies between figures (e.g. while 208 patents were published for gas numbers hydrates in 2010, patents listed by country breakdown amount to 212 for the same year) • International Patent Classification (IPC), a hierarchical system that classifies patents with language-independent symbols, was Technology 2 used to determine the technology area of patents. Due to the complexity of IPC categorization, technology breakdowns may analysis not be exhaustive. For instance, three IPCs (G01V, G01N, and G01R) were used as proxy for “exploration”. However, a few exploration-related patents may have been filed under other IPCs

• Searches were performed in English. These capture the vast majority of commercially relevant patents and patent families 3 Language (Thomson Derwent World Patents Index translates patents from all national offices). But there may be a time-lag for patent applications still in the national phase

Lag in patent 4 • It can take up to 18 months for some patent offices to publish patent data. As a result, there is sometimes a significant publications discrepancy between the date an invention was made and the publication of its patent

Patents • The rise in patent-filings in China can partly be attributed to the backlog of patentable innovations and products developed both 5 issued in by Chinese companies and foreign firms waiting to enter the Chinese market. As the Chinese patent system strengthens and 1 China IP practices mature, companies’ willingness to use its national patent system should increase further Patents • Only a limited amount of information is available electronically on patents issued in India. This may have resulted in an 6 issued in underestimate of Indian innovation in some of the focus areas of this report India M&A and • Despite A.T. Kearney Energy Transition Institute’s efforts to harmonize assignee names, mergers & acquisition (M&A) activity 7 company is continually changing the energy and chemicals industries and this may slightly affect the analysis identity

1. Some observers have also expressed concerns about the quality of patents currently being granted in China, specifically around the distinction between design and utility patents Gas Hydrates 13 2. General overview

Gas Hydrates 14 General Overview – Patenting trend

The gas-hydrate patenting rate has increased steeply since the 1990s

Gas-hydrate Patenting rate # of patents published per year1

260 252

240 220 220 213 208 211 200 194 187 180 165 160 158 133 140 126 x7.5 119 120 101 100 90 79 80 60 45 45 40 35 35 33 28 24 18 20 17

0 1990 1995 2000 2005 2010

Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 15 General Overview – Patenting trend

The number of gas-hydrate related patents rose 13-fold between 1990 and 2013

Gas-hydrate Patenting level Cumulated # of patents since 1960

3,000

2,500

2,000

1,500 x13

1,000

500

0 1990 1995 2000 2005 2010

Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 16 General Overview – Regional breakdown

Since the 2000s, China’s patent publication rate has been on the rise, while Japan’s has declined

Gas-hydrate patenting rate by region # of patents published per region per year1

260 252 240 223 220 215 212 211 198 200 188 180 170 160 160 140 136 130 123 120 104 100 89 79 80 60 50 42 48 35 34 40 29 24 20 17 20 0 1990 1995 2000 2005 2010 United States China Japan Korea Former Soviet Union2 Europe3 Rest of the World4

1. Some discrepancies may exist between this slide and slide 13. For more information, please refer to slide 5; 2. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the former Soviet Union office; 3. Includes patents filed in the European patent office and in specific national patent offices in European countries; 4. Includes patents filed in the patent Cooperation Treaty Office and other national offices not mentioned above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 17 General Overview – Regional breakdown

As of 2014, Japan remains the leading country for gas-hydrate patents filed, followed by China and the U.S.

Gas-hydrate patent Filings by region Cumulated # of patents since 1960

Japan 825

China 730

United States 526

Europe1 334

Former Soviet Union2 275

Rest of the World3 162

Korea 139

1. Includes patents filed in the European patent office and national patent offices in European countries; 2. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the former Soviet Union office; 3. Includes patents filed in the patent Cooperation Treaty Office and other national offices not mentioned above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 18 General Overview – Technology breakdown

Drilling and obtaining fluids from wells is the only gas-hydrate related patent class that has grown continuously since the 1990s

Patenting rate under the three main International Patent Classification (IPC) classes # of patents published per IPC class per year 100

60 -18% 50 CAGR

40 -20% 30 +11% CAGR CAGR 20

10 0 0 0 0 1990 1995 2000 2005 2010 Chemistry related to natural gas1 Drilling and fluid recovery from wells2 Chemistry for Acyclic or carbocyclic compounds3

1. C10L: Fuels not otherwise provided for, natural gas, synthetic natural gas obtained by processes not covered by subclasses C10G or C10K, liquefied petroleum gas, use of additives to fuels or fires; 2. E21B: Earth or rock drilling, obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 3. C07C: Acyclic or carbocyclic compounds; CAGR for Compound Annual Average Growth Rate. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 19 General Overview – Technology breakdown

The bulk of gas-hydrate patents relates to chemical-based technologies

Gas-hydrate patents by technology category1

Cumulated # of patents since 1960 2000-2013 CAGR7 800 +14% 700

600 +12% 500 +13%

400

300 +14% +8% 200

100

0 1990 1995 2000 2005 2010

Chemistry related to natural gas2 Chemistry for Acyclic or carbocyclic compounds4 Materials for specific applications (including treating wells or boreholes)6 Drilling and fluid recovery from wells3 Chemical or physical processes5 1. Patents filed under the top 5 International Patent Classification (IPC) Classes since 1960; 2. C10L: Fuels not otherwise provided for; natural gas; synthetic natural gas obtained by processes not covered by subclasses C10G or C10K; liquefied petroleum gas; use of additives to fuels or fires; 3. E21B: Earth or rock drilling; Obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 4. C07C: Acyclic or carbocyclic compounds; 5. B01J: Chemical or physical processes, e.g. catalysis, colloid chemistry; 6. C09K: materials for applications not otherwise provided for, includes compositions for drilling of boreholes or wells; 7. CAGR for compound annual average growth rate. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 20 General Overview – Publishers

Since the mid 2000s, there has been a significant increase in the number of patents filed by research organizations

Gas-hydrate Patents filed by publisher type

Cumulated # of patents since 1960 2000-2013 CAGR1 1,600 +12%

1,400

1,200

1,000

800 +16% 600

400 +13% 200 +21% +26% 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Research organization(s) together with corporate player(s) Research organization - single institution Corporate - single company Research organization - consortium Corporate - consortium

1. CAGR for Compound Annual Average Growth Rate Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 21 General Overview – Publishers

Since 1960, most gas-hydrate patents have been filed by industrial players

Gas-hydrate Patents filed by publisher type Cumulated # of patents since 1960

Corporate - single company 1,571

Research organization - single institution 679

Corporate - consortium 205

Research organization(s) together with corporate player(s) 104

Research organization - consortium 58

1. This breakdown accounts for 87% of gas-hydrate patents published since 1960. The remaining 13% were published by individuals or did not contain sufficient information to be included in this graph. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 22 General Overview – Publishers

The three largest publishers of patents of gas-hydrate technologies since 1960 are Japanese companies

Top 10 gas-hydrate patent publishers Share of patents owned by top 10 publishers and # of patents published since 1960 2,993

MITSUI ENGINEERING & SHIPBUILDING 404

29% CHUGOKU ELECTRIC POWER COMPANY 84

MITSUBISHI 65

CLARIANT 55

SCHLUMBERGER1 50

GUANGZHOU ENERGY INSTITUTE2 49

71% UNIVERSITY OF CHINA PETROLEUM3 46

JAPAN NAT INST ADVANCED SCIENCE AND TECHNOLOGY 41

BAKER HUGHES4 40

ROYAL DUTCH SHELL 34

1. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 2. Includes assignees referenced under “Guangzhou Energy Inst Conversion Chinese”, and “Guangzhou Energy Res Inst Chinese Acad of Sc”; 3. Includes assignees referenced under “Univ China Petroleum East China” and “Univ China Petroleum Beijing”; 4. Includes patents published by Baker Hughes, and BJ Services. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 23 General Overview – Publishers

New patent publishers, which began to emerge in force in 2005, have dominated gas-hydrate patenting since 2010

Top 10 gas-hydrate patent holders and top 7 publishers since 2010, publishing rate # of patents published per publisher per year

MITSUI ENGINEERING & SHIPBUILDING CHUGOKU ELECTRIC POWER COMPANY 150 MITSUBISHI 146 CLARIANT SCHLUMBERGER1 128 GUANGZHOU ENERGY INSTITUTE2 UNIVESITY OF CHINA PETROLEUM3 JAPAN NAT INST ADVANCED SCIENCE AND TECHNOLOGY

100 10 Top patentholders ROYAL DUTCH SHELL 4 BAKER HUGHES 86 83 CHINA NATIONAL OFFSHORE OIL CORPORATION 79 5 76 QINGDAO INSTITUTE OF MARINE GEOLOGY 71 UNIVERSITY OF CHANGZHOU 55 58 58 PETROCHINA 50 DALIAN UNIVERSITY

since 2010 38 38 HALLIBURTON 35

Top 7 7 Top publishers KOREA INSTITUTE OF INDUSTRIAL TECHNOLOGY 27 18 7 6 7 2 2 3 1 1 4 0 1990 1995 2000 2005 2010 1. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 2. Includes assignees referenced under “Guangzhou Energy Inst Conversion Chinese”, and “Guangzhou Energy Res Inst Chinese Acad of Sc”; 3. Includes assignees referenced under “Univ China Petroleum East China” and “Univ China Petroleum Beijing”; 4. Includes patents published by Baker Hughes, and BJ Services; 5. Mitsui Engineering and Shipbuilding and University of China Petroleum have been top 10 gas-hydrate patent publishers since 1960 and top 9 patent publishers since 2010. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 24 General Overview – Publishers

Mitsui Engineering and Shipbuilding was the main publisher of gas- hydrate related patents for ten consecutive years: 2002 to 2012 Top 10 gas-hydrate patent holders, publishing rate Share of # of patents per publisher per year

1990 1995 2000 2005 2010

MITSUI ENGINEERING & SHIPBUILDING SCHLUMBERGER1 ROYAL DUTCH SHELL CHUGOKU ELECTRIC POWER COMPANY GUANGZHOU ENERGY INSTITUTE2 BAKER HUGHES4 MITSUBISHI UNIVERSITY OF CHINA PETROLEUM3 CLARIANT JAPAN NAT INST ADVANCED SCIENCE AND TECHNOLOGY

Gas Hydrates 26 Exploration & Production – Patenting trend

The patenting rate for upstream gas-hydrate technologies has increased 9-fold since 1990

Patenting rate for upstream gas-hydrate technologies1 # of patents published per year

110 103 103 102 100

70 66 68 62 63 60 x9.3 58 49 50 46

40 38 39

30 26 27 22 20 20 17 14 15 11 13 10 5 5 3 0 1990 1995 2000 2005 2010

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 27 Exploration & Production – Patenting trend

There were 22 times as many gas-hydrate patents related to upstream technologies in 2013 than in 1990

Patenting level for upstream gas-hydrate Technologies1 Cumulated # of patents since 1960

1,100

1,000

900

800

700

600

500 x22

400

300

200

100

0 1990 1995 2000 2005 2010

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 28 Exploration & Production – Regional breakdown

Since 2000, exploration & production patent filings have risen in China but remained static in the U.S.

Patenting rates for upstream gas-hydrate technologies by region1 # of patents published per region per year2

110

100

0 1990 1995 2000 2005 2010

United States China Japan Korea Former Soviet Union3 Europe4 Rest of the World5

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class; 2. Some discrepancies may exist between this slide and the preceding one. For more information, please refer to slide 9; 3. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the Former Soviet Union office; 4. Includes patents filed in the European patent office, and in specific national patent offices in European countries; 5. Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 29 Exploration & Production – Regional breakdown

Since 1960, most patents relating to upstream gas-hydrate technologies have been filed in China, followed closely by the U.S. Patent filings for upstream gas-hydrate technologies by Region1 Cumulated # of patents since 1960

China 291

United States 280

Europe2 175

Former Soviet Union3 125

Japan 86

Rest of the World4 53

Korea 24

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2. Includes patents filed in the European patent office, and in specific national patent offices in European countries; 3. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the Former Soviet Union office; 4. Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 30 Exploration & Production – Regional breakdown

In Japan and Korea, the majority of gas-hydrate-related patents are not focused on exploration and production technologies

Share of upstream gas-hydrate technologies by region1 Share of cumulated # of patents since 1960

United States 40% 60%

China 53% 47%

Europe2 52% 48%

Former Soviet Union3 45% 55%

Japan 10% 90%

Rest of the World4 33% 67%

Korea 17% 83%

E&P Non E&P

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2. Includes patents filed in the European patent office, and in specific national patent offices in European countries; 3. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the Former Soviet Union office; 4. Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 31 Exploration & Production – Technology breakdown

Among IPC classes for upstream technologies, a large share of patents have been published under the “drilling and obtaining fluids from wells” class

Upstream gas-hydrate patents by technology category1

Cumulated # of patents since 1960 2000-2013 CAGR7 550 +12% 500 450

400

350 300

250 +24% 200 +8%

150

100 +22% 50 +26% 0 1990 1995 2000 2005 2010 Drilling and obtaining fluids from wells2 Geophysics5 Materials for specific applications (including treating boreholes or wells)3 Investigation of electric or magnetic variables6 Investigation of chemical or physical properties4 1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2. E21B: Earth or rock drilling, obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 3. C09K008: Compositions for drilling of boreholes or wells, compositions for treating boreholes or wells; 4. G01N: investigating or analyzing materials by determining their chemical or physical properties; 5. From G01V: Geophysics, gravitational measurements, detecting masses or objects, tags; 6. G01R: Measuring electric variables, measuring magnetic variables; 7. CAGR for Compound Annual Growth Rate. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 32 Exploration & Production – Publishers

The number of upstream gas-hydrate related patents filed by research organizations has risen rapidly since the late 2000s

Upstream gas-hydrate Patents filed by publisher type1

Cumulated # of patents since 1960 2000-2013 CAGR2 500 +12% 450

400

350 +18% 300

250

200

150

100 +10% 50 +21% +2% 0 1990 1995 2000 2005 2010

Research organization(s) together with corporate player(s) Research organization - single institution Corporate - single company Research organization - consortium Corporate - consortium

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2CAGR for Compound Annual Growth Rate. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 33 Exploration & Production – Publishers

Oil and gas service companies are leading the way in upstream gas- hydrate-related patents

Main upstream gas-hydrate patents publishers1 Cumulated # of patents since 1960 and breakdown by publisher 1,011 CLARIANT 49 SCHLUMBERGER2 47 BAKER HUGHES3 37 34% HALLIBURTON 30 CHINA NATIONAL OFFSHORE OIL CORPORATION 27 BP 23 ROYAL DUTCH SHELL 21 PETROCHINA 14 CHEVRON 12 CONOCOPHILLIPS4 11 EXXON MOBIL5 11 ISP INVESTMENTS INC 10 66% MITSUI ENGINEERING & SHIPBUILDING 10 AIR PROD&CHEM INC 9 BASF 9 STATOIL 8 MITSUBISHI HEAVY INDUSTRIES 8 OFFSHORE HYDROCARBON MAPPING 8

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 3. Includes patents published by Baker Hughes, and BJ Services; 4. Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company; 5. Includes patents published by Exxon Mobil, Exxon, and Mobil. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 34 Exploration & Production – Publishers

The number of patents filed by the top-18 patent publishers varies widely from year to year

Top-18 Upstream gas-hydrate patenting companies, publishing rate # of patents published per publisher per year 40

33 30 30 28 25 23 23 20 20 19 19 16 16 13 12 12 10 8 8 8 6 4 2 3 2 3 3 0 1990 1995 2000 2005 2010

CLARIANT BP EXXON MOBIL5 STATOIL SCHLUMBERGER2 ROYAL DUTCH SHELL ISP INVESTMENTS INC MITSUBISHI HEAVY INDUSTRIES BAKER HUGHES3 PETROCHINA MITSUI ENG & SHIPBUILDING OFFSHORE HYDROCARBON MAPPING HALLIBURTON CHEVRON AIR PROD&CHEM INC CHINA NATIONAL OFFSHORE OIL CORPORATION CONOCOPHILLIPS4 BASF

1. Patents associated with upstream technologies were selected according to their International Patent Classification (IPC) class. For more information, please refer to slide 10; 2. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 3. Includes patents published by Baker Hughes, and BJ Services; 4. Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company; 5Includes patents published by Exxon Mobil, Exxon, and Mobil. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 35 4. Exploration

Gas Hydrates 36 Exploration – Patenting trend

Measurements of chemical and physical properties is the fastest- growing of the three main IPC subclasses for gas-hydrate exploration

Patenting rate under the three main IPC subclasses for Gas-Hydrate exploration # of patents published per IPC per year 55

0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Measurement of chemical or physical properties1 Measurement of electric or magnetic variables2 Geophysics3

1. G01N IPC subclass: covers investigating or analyzing materials by determining their chemical or physical properties; 2. G01R IPC subclass: covers measuring electric variables, measuring magnetic variables; 3. From G01V IPC subclass: covers geophysics, gravitational measurements, detecting masses or objects, tags. For more information on International Patent Classification (IPC), refer to slide 10. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 37 Exploration – Patenting trend

Since 2007, an increasing number of patents for gas-hydrate exploration have been filed in China

Patenting rates for gas-hydrate-exploration patents by region1 # of patents published per region per year2

0 1990 1995 2000 2005 2010 United States China Japan Korea Former Soviet Union3 Europe4 Rest of the World5

1. Exploration-related patents include the G01N, G01R and G01V International Patent Classification (IPC) classes. For more information, please refer to slide 9; 2. Data may differ from data in previous slides, as patents published in several countries are counted several times; 3. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the former Soviet Union office; 4. Includes patents published in the European patent office, as well as patents published in specific national patent offices of European countries; 5. Includes patents published in the patent Cooperation Treaty Office and other national offices not cited above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 38 Exploration – Measurements of chemical and physical properties

The patent-filing rate for measurements of the chemical and physical properties of gas-hydrates has increased rapidly since the 2000s

Patenting rate for measurement of chemical and physical properties of gas hydrates1 # of patents published per year 45 44

35 32 32 30 24 25 x44 20 18

15 14 13

10 9 7 5 5 2 3 3 2 1 1 0 0 0 0 0 0 1 1 0 1990 1995 2000 2005 2010

1. Patents associated with chemical and physical properties measurements were selected as those with International Patent Classification (IPC) G01N: Investigating or analyzing materials by determining their chemical or physical properties. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 39 Exploration – Measurements of chemical and physical properties

The number of patents related to the measurement of the chemical and physical properties of gas hydrates has increased 17-fold since 2000

Patenting level for gas-hydrate chemical and physical properties measurements1 Cumulated # of patents since 1960 220

200

180

160

140

120 x17 100

0 1990 1995 2000 2005 2010

1. Patents associated with chemical and physical properties measurements were selected as those with International Patent Classification (IPC) G01N: Investigating or analyzing materials by determining their chemical or physical properties. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 40 Exploration – Measurements of chemical and physical properties

Patenting-rate analysis does not indicate a preference for any particular technology for measuring the chemical and physical properties of gas hydrates Technology breakdown for Measurements of chemical and physical properties1 Share of cumulated # of patents since 19602 134 10% CN103267802A - “Detection device for detecting fidelity of natural gas hydrate core rock, has sound wave transducer whose one end is arranged on measuring tube wall and other end is connected to spring to realize fastening/loosening of tube wall” 12% CA2686567A1 - “Determination of pore water content in equilibrium with gas hydrate in dispersed medium including rock, involves 13% drying dispersed medium specimen, measuring weight, processing at preset pressure condition, and measuring final weight”

CN101718730A - “Method for measuring resistivity of gas hydrate and hydrate-containing deposit in situ, involves measuring 20% resistivity of hydrate or hydrate-containing deposit with resistivity formula”

US20090114387A1 - “Chemical compound identifying method for producing heavy oil from steam assisted gravity drainage well, involves determining whether combined property of molecular model is improved relative to molecular model of starting compound” 22% FR2984504A1 - “Device i.e. crystallization cell, for measuring and detecting presence of gas hydrate in e.g. gas processing system, has adjustment unit for adjusting temperature of end of optical fiber by controlling Peltier effect element”

22% KR2012099956A - “Method for measuring phase-balance point of gas hydrate, involves putting piezoelectric crystal into pressurization chamber, and measuring conductivity of sensor and resonance of piezoelectric crystal”

Total Using volume or pressure measurements3 Using magnetic resonance measurements5 Using accoustic waves7 Using optical, microwave or radiation measurements4 Using Electro-chemical, or magnetic measurements6 Using chemical methods8

1. Patents associated with measurements of chemical and physical properties were selected as those with International Patent Classification (IPC) class G01N: Investigating or analyzing materials by determining their chemical or physical properties. 2Patent titles were improved by Thomson DWPI; 3IPC Subclass G01N 5/00, G01N 7/00, G01N 19/00; 4IPC Subclasses G01N 21/00, G01N 22/00, G01N 23/00; 5IPC Subclass G01N 25/00; 6IPC Subclass G01N 27/00; 7IPC Subclass G01N 29/00; 8IPC Subclasses G01N 30/00, G01N 31/00. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 41 Exploration – Measurements of electric and magnetic variables

The number of patents focused on the measurement of electric and magnetic variables of gas hydrates remains very low

Patent-filing rate for Gas hydrates’ electric and magnetic variables1 Cumulated # of patents since 1960

10 x20

0 1990 1995 2000 2005 2010

1. Patents associated with the measurement of electric and magnetic variables were selected as those with International Patent Classification (IPC) class G01R: Measuring electric variables, measuring magnetic variables. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 42 Exploration – Geophysics

The number of patents filed in relation to geophysics has increased since the mid-2000s

Patents filed in relation to geophysics of gas hydrates1 Cumulated # of patents since 1960

30 x13 25

0 1990 1995 2000 2005 2010

Since 1960, most patents related to the geophysics of gas hydrates have been filled in the United States

Patents filed in relation to geophysics of gas hydrates by region1 Cumulated # of patents since 1960

United States 21

Japan 8

Former Soviet Union2 8

Europe3 7

China 6

Rest of the World4 2

Korea 1

1. Patents associated with geophysics were selected from International Patent Classification (IPC) class G01V: Geophysics, gravitational measurements, detecting masses or objects, tags. For more information on International Patent Classification (IPC), refer to slide 10; 2. Includes patents filed in the Russian Federation patent office, the Ukrainian patent office and the Former Soviet Union office; 3. Includes patents filed in the European patent office, and in specific national patent offices in European countries; 4Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited above. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 44 Exploration – Geophysics

Seismic and acoustic technologies are the main areas of focus within geophysics, according to patenting rates

Patents filed in relation to geophysics of gas hydrates: technology breakdown1 Share of cumulated # of patent since 19602 57 CN101441274A - “Submarine seismograph for e.g. exploration of natural gas hydrate, has direct-current motor whose output shaft is connected with end of steel wire, where another end of wire is connected with inner wall of counter-balanced copper plate” 8 US20040043501A1 - “Monitoring of downhole parameters and tools utilizing fiber optics the chemical parameters are measured in real 3 time and on-line and then used to control the amount and timing of the injection of the chemicals” 1 JP2003090884A - “Optical-fiber radiation monitor for diastrophism monitoring system, radiates calibration light to scintillator, to detect presence of radon based on excitation of light by scintillator” 16 GB2438430A - “Results analysis method for the controlled source electromagnetic surveying of e.g. oil reserves involves processing a survey data to model subterranean strata inside the region of interest accounting results in modeling outside the region”

29 CN101644781A - “Water saturated stratum's longitudinal and transverse waves impedance increment ratio utilizing method for identifying natural gas hydrate, involves containing hydrate in stratum when impedance increment ratio is more than threshold value”

Total Seismic or acoustic prospecting or detecting3 Prospecting or detecting by the use of nuclear radiation5 Other prospecting methods7 Electric or magnetic prospecting or detecting4 Prospecting or detecting by optical means6

1. Patents associated with geophysics were selected from International Patent Classification (IPC) class G01V: Geophysics, gravitational measurements, detecting masses or objects, tags; 2. Patent titles were improved by Thomson DWPI; 3. IPC Subclass G01V 1/00; 4. IPC Subclass G01V 3/00; 5. IPC Subclass G01V 5/00; 6. IPC Subclass G01V 8/00; 7. IPC Subclasses G01V 9/00, G01V 11/00, G01V 15/00. For more information on International Patent Classification (IPC), refer to slide 10. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 45 5. Production

Gas Hydrates 46 Production – Patenting trend

The patenting rate for gas-hydrate-related drilling and obtaining fluids has been increasing steadily since the 1990s

Patenting rate for drilling and obtaining fluids from wells1 # of patents published per year

55 50 51 51 50

40 36 35 33 x5.7 31 30 28 28 29 25 25 20 20 20 17 17 15 14 13 11 10 9 8 9 9

5 2 1 0 0 1990 1995 2000 2005 2010

1. Patents associated with drilling and obtaining fluids from wells were selected as those in International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 47 Production – Patenting trend

The number of gas-hydrate related patents for drilling and obtaining fluids from wells has increased 16-folds since 1990

Patenting level for drilling and obtaining fluids from wells1 Cumulated # of patents since 1960

550

500

450

400

350

300 x16 250

200

150

100

0 1990 1995 2000 2005 2010

Since 2002, an increasing number of patents related to drilling and obtaining fluids from wells have been filed in China

Patenting rates for drilling and obtaining fluids from wells by region1 # of patents filed per region per year2

0 1990 1995 2000 2005 2010 United States China Japan Korea Former Soviet Union3 Europe4 Rest of the World5

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Some discrepancies may exist between this slide and slide 45. For more information, please refer to slide 9; 3. Includes patents filed in Russian Federation patent office, Ukrainian patent office and Former Soviet Union office; 4. Includes patents filed in European patent office, and in specific national patent offices in European countries; 5. Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 49 Production – Regional breakdown

Since 1960, the majority of gas-hydrate related patents for drilling and obtaining fluids from wells have been filed in the United States Patent filings for drilling and obtaining fluids from wells by region1 Cumulated # of patents since 1960

United States 163

China 114

Former Soviet Union2 107

Europe3 71

Japan 53

Rest of the World4 30

Korea 12

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Includes patents filed in Russian Federation patent office, Ukrainian patent office and Former Soviet Union office; 3. Includes patents filed in European patent office, and in specific national patent offices in European countries; 4. Includes patents filed in the patent Cooperation Treaty Office and other national offices not cited. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 50 Production – Technology breakdown

Within production operations, obtaining fluid from wells has attracted increased attention

Patents filed in relation to drilling and obtaining fluid from wells by technology category1

# of patents filed per year 45 45 43

40 37 35

30 28 27 26 25 22 22 23 21 19 20 18 16 1515 15 16 16 15 12 12 12 10 11 10 10 9 9 8 7 7 8 7 8 8 8 7 7 5 5 65 6 5 4 4 4 4 4 3 4 2 2 2 0 0 1 0 010 000 0 0 0 0 1 1 0 1 1 1 1 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Drilling, well equipment and maintenance2 Obtaining fluid from well3 Control, surveying and testing3

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Drilling, well equipment and well maintenance: IPC Subclasses E21B0001 to E21B0041; 3. Obtaining fluid from wells: IPC Subclass E21B0043; 4. Control surveying and testing: IPC Subclasses E21B0044 to E21B0049. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 51 Production – Technology breakdown

Most patents published for drilling and obtaining fluids from wells relate to natural-gas recovery

Patents filed for drilling and obtaining fluids from wells by technology category1 Share of cumulated # of patents since 19602 683 8% US20040043501A1 - “Monitoring of downhole parameters and tools utilising fibre optics the chemical parameters are measured in real time and on-line and then used to control the amount and timing of the injection of the chemicals”

33% US20060124302A1 - “Well treatment composite for use in oilfield applications, e.g. treatment of subterranean formation or wellbore, comprises well treatment agent adsorbed onto water-insoluble adsorbent”

US20080135257A1 - “Hydrocarbon gases extracting process for use between sea floor and hydrate base line, involves raising overhead receiver to sea depth where pressure and temperature permit to dissociate accumulated hydrates into hydrocarbon gas” 59%

Total Drilling, well equipment and maintenance3 Obtaining fluids from well4 Control, surveying and testing5

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Patent titles were improved by Thomson DWPI; 3. Drilling, well equipment and well maintenance: IPC Subclasses E21B0001 to E21B0041; 4. Obtaining fluid from wells: IPC Subclass E21B0043; 5. Control, surveying and testing: IPC Subclasses E21B0044 to E21B0049. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 52 Production – Technology breakdown

Among the IPC class “obtaining fluids from wells”, most patents relate to the use of chemicals and heat

Technology breakdown for obtaining fluids from wells1 Share of cumulated # of patents since 19602 150 EP1412615B1 - “Exploiting desired geo-productive resources from boreholes comprises placing compression plate within casing, applying pressure in parts of flow-through chamber, and applying pressure in lower borehole chamber” 5% WO2007117167A1 - “Method of extracting hydrocarbon gases from hydrates in underground porous rocks, involves injecting hot water at pulsatory high pressure from ground surface facility on porous rock formation” 24% CN102704902A - “Method for exploiting natural gas hydrate, involves selecting hydrate decomposition-promoting agent i.e. methanol, from group consisting of salt water, where mass concentration of methanol is in specific range” CN101818635A - “Natural gas hydrate extracting method, involves drilling extraction well on geologic body, sending liquid to water injection pipe via high-pressure pump after liquid is heated again, and executing next extraction circulation” CN103015959A - “Machine-thermal hydrate exploiting method, involves converting hydrate sediments to hydrate sediment particles, decomposing mixture in decomposing chamber, and collecting gas generated from sediments in mining well”

67%

Total Repressuring or vacuum method3 Displacing by water4 Use of chemicals or bacterial activity5 Using heat, e.g. steam injection5

1. Patents associated with obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B 43: Methods or apparatus for obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Patent titles were improved by Thomson DWPI; 3. IPC Subclass E21B 43/18; 4. IPC Subclass E21B 43/20; 5. IPC Subclasses E21B 43/22 E21B 43/25 E21B 43/27; 6. IPC Subclasses E21B 43/24, E21B 43/24, E21B 43/247, E21B 43/243, E21B 43/28. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 53 Production – Publishers

Since 1960, corporate players have published 43% of gas-hydrate patents relating to technologies for drilling and obtaining fluids from wells

Patent filed for drilling and obtaining fluids from wells by Publisher type1 Cumulated # of patents since 1960

Corporate - single company 230

Research organization - single institution 165

Corporate - consortium 24

Research organization(s) together with corporate player(s) 19

Research organization - consortium 12

Schlumberger, Halliburton and Clariant are the three main patent- publishing companies for gas-hydrate drilling and recovering technologies

Main companies in patent publication in drilling and obtaining fluids from wells1 Cumulated # of patents since 1960 and breakdown by company 536 SCHLUMBERGER2 24

26% HALLIBURTON 19

CLARIANT 18

BAKER HUGHES3 15

ROYAL DUTCH SHELL 13

CHINA NATIONAL OFFSHORE OIL CORPORATION 11

CHEVRON 9 74% CONOCOPHILLIPS4 9

BP 8

PETROCHINA 8

STATOIL 6

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 3. Includes patents published by Baker Hughes, and BJ Services; 4. Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 55 6. Industry landscape

Gas Hydrates 56 Industry landscape

Most publishers of gas-hydrate patents specialize either in exploration or in production, but seldom both

Drilling and obtaining fluids from wells1 Geophysics2 Cumulated # of patents since 1960 Cumulated # of patents since 1960

24 11 8 5 3 19 2 18 2 2 15 1 13 11 9 9 1 8 8 6

STATOIL CHEVRON HITACHI MITSUI ENG & SHIPBUILDING PETROCHINA CHINA NATIONAL OFFSHORE OIL CORPORATION FUGRO ROCK SOLID IMAGES BP ROYAL DUTCH SHELL CLARIANT OFFSHORE HYDROCARBON MAPPING CONOCOPHILLIPS5 BAKER HUGHES4 HALLIBURTON SCHLUMBERGER3

1. Patents associated with drilling and obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B: Earth or rock drilling, as well as obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Patents associated with geophysics were selected from IPC class G01V: Geophysics, gravitational measurements, detecting masses or objects, tags. For more information on International Patent Classification (IPC), refer to slide 10; 3. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 4. Includes patents published by Baker Hughes, and BJ Services; 5. Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 57 Industry landscape

Schlumberger, Offshore Hydrocarbon Mapping and Rock Solid Image have strong portfolios of patents relating to geophysics technologies

Gas-Hydrate patents for geophysics by company and technology1 Cumulated # of patents since 1960

SCHLUMBERGER3 11

OFFSHORE HYDROCARBON MAPPING 11

ROCK SOLID IMAGES 8

BAKER HUGHES4 4

HITACHI 3

MITSUI ENG & SHIPBUILDING 3

HALLIBURTON 2

FUGRO 2

CONOCOPHILLIPS5 1

MITSUBISHI HEAVY INDUSTRIES 1

Seismic or acoustic prospecting or detecting6 Electric or magnetic prospecting or detecting7 Other8

1. Patents associated with geophysics were selected from International Patent Classification (IPC) class G01V: Geophysics, gravitational measurements, detecting masses or objects, tags; 2. Some discrepancies may exist between this slide and slides 41 and 55. For more information, please refer to slide 10; 3. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 4. Includes patents published by Baker Hughes, and BJ Services; 5. Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company; 6. IPC Subclass G01V1; 7. IPC Subclass G01V3; 8. IPC Subclasses G01V5 to G01V15. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 58 Industry landscape

Clariant is the main publisher for patents related to gas-hydrate drilling, well equipment and well maintenance, followed by Halliburton

Leading publishers of patents for gas-hydrate drilling, well equipment and well maintenance1 Cumulated # of patents since 1960

CLARIANT 26

HALLIBURTON 15

BAKER HUGHES2 10

ROYAL DUTCH SHELL 9

SCHLUMBERGER3 8

BP 8

CHEVRON 4

STATOIL 4

BASF 3

1. E21B1 to E21B7 International Patent Classification (IPC) subclasses: Methods or apparatus for drilling, E21B10 to E21B12 IPC subclasses: drilling tools, E21B15 to E21B41 IPC subclasses: Other equipment or details for drilling, well equipment or well maintenance; 2. Includes patents published by Baker Hughes, and BJ Services; 3. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 59 Industry landscape

Oilfield services companies are the largest publishers of patents relating to technologies designed to obtain fluid from wells containing hydrates

Companies with more than two gas-hydrate patents for obtaining fluid from wells1 Cumulated # of patents since 1960

SCHLUMBERGER2 16 HALLIBURTON 13 BAKER HUGHES3 11 CHINA NATIONAL OFFSHORE OIL CORPORATION 11 CHEVRON 9 ROYAL DUTCH SHELL 9 CONOCOPHILLIPS4 8 PETROCHINA 7 CLARIANT 5 STATOIL 5 BP 4 KAJIMA CORPORATION 4 ATLANTIC RICHFIELD COMPANY 3 EXXON MOBIL3 3 MITSUBISHI HEAVY INDUSTRIES 3 TOTAL 3 SHIMIZU CORPORATION 3 TAISEI CORPORATION 3 WORLD ENERGY SYSTEMS 3

1. Patents associated with obtaining fluids from wells were selected as those with International Patent Classification (IPC) class E21B 43: Methods or apparatus for obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells; 2. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 3Includes patents published by Baker Hughes, and BJ Services; 4Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 60 Industry landscape

Schlumberger and Shell are the main publishers of patents relating to wellbore surveying

Selected Companies with wellbore surveying gas-hydrate patents1 Cumulated # of patents since 1960

SCHLUMBERGER2 5

ROYAL DUTCH SHELL 3

PETROCHINA 1

AMERICAN AUGERS 1

BAKER HUGHES3 1

CHEVRON 1

CONOCOPHILLIPS4 1

HALLIBURTON 1

1. Patents associated with wellbore surveying were selected as those with International Patent Classification (IPC) class E21B47: Survey of boreholes or wells; 2. Includes patents published by Schlumberger, PRAD Research and Development, and M-I Swaco; 3. Includes patents published by Baker Hughes, and BJ Services; 4Includes patents published by ConocoPhillips, Conoco, and Phillips Petroleum company. Source: A.T. Kearney Energy Transition Institute analysis, based on Thomson DWPI (accessed October 2014) Gas Hydrates 61 Appendix

Gas Hydrates 62 Appendix

International patent classification (IPC) classes used and definitions

B01J: Chemical or physical processes, e.g. catalysis, colloid chemistry; their relevant apparatus. C07C: Acyclic or carbocyclic compounds. C09K: Materials for applications not otherwise provided for; applications of materials not otherwise provided for. C09K008: Compositions for drilling of boreholes or wells; Compositions for treating boreholes or wells. C10L: Fuels not otherwise provided for; Natural gas; Synthetic natural gas obtained by processes not covered by subclasses C10G or C10K; Liquefied petroleum gas; Use of additives to fuels or fires; Fire-lighters. E21B: Earth or rock drilling; Obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells. E21B 1/00 to E21B 12/00: Percussion drilling; Rotary drilling; Drives for drilling, used in the borehole; Drives for drilling with combined rotary and percussive action; Special methods or apparatus for drilling. E21B 15/00 to E21B 41/00: Drill bits; Other drilling tools; Accessories for drilling tools. E21B 43/00: Methods or apparatus for obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells. E21B 44//00: Automatic control systems specially adapted for drilling operations, i.e. self-operating systems which function to carry out or modify a drilling operation without intervention of a human operator, e.g. computer-controlled drilling systems; Systems specially adapted for monitoring a plurality of drilling variables or conditions. E21B 45/00 to E21B 49/00: Measuring the drilling time or rate of penetration; Survey of boreholes or wells; Testing the nature of borehole walls; Formation testing; Methods or apparatus for obtaining samples of soil or well fluids, specially adapted to earth drilling or wells. G01N: Investigating or analyzing materials by determining their chemical or physical properties. G01R: Measuring electric variables; Measuring magnetic variables. G01V: Geophysics; gravitational measurements; Detecting masses or objects; Tags. G01V 1/00: Seismology; Seismic or acoustic prospecting or detecting. G01V 3/00: Electric or magnetic prospecting or detecting; Measuring magnetic field characteristics of the earth, e.g. declination or deviation. G01V 5/00: Prospecting or detecting by the use of nuclear radiation, e.g. of natural or induced radioactivity. G01V 7/00: Measuring gravitational fields or waves; Gravimetric prospecting or detecting. - No patents were retrieved under this IPC code G01V 8/00: Prospecting or detecting by optical means. G01 9/00 to G01 15/00: Prospecting or detecting by methods not provided for in groups G01V 1/00-G01V 8/00; Prospecting or detecting by methods combining techniques covered by two or more of main groups G01V 1/00-G01V 9/00; Manufacturing, calibrating, cleaning, or repairing instruments or devices covered by groups G01V 1/00-G01V 11/00; Tags attached to, or associated with, an object, in order to enable detection of the object. For more information, please visit the World Intellectual Property Organization Website. Gas Hydrates 63 Appendix

Acronyms

Acad: Academy CNOOC: China National Offshore Oil Corporation CSEM: Controlled source electromagnetic methods DWPI: Derwent World Patents Index E&P: Exploration & production EPO: European Patent Office FSU: Former Soviet Union GH: Gas Hydrate Inst: Institution INPADOC: International Patent Documentation IODP: Integrated Ocean Drilling Program IP: Intellectual property IPC: International patent classification JAMSTEC: Japan Agency for Marine-Earth Science and Technology NOAA: National Oceanic and Atmospheric Administration NASA: National Aeronautics and Space Administration OECD: Organisation for Economic Co-operation and Development ROV: Remotely operated vehicle Sc: Science A.T. Kearney Energy Transition Institute: A.T. Kearney Energy Transition Institute Univ: University US: United States of America USGS: U.S. Geological Survey WIPO: World Intellectual Property Organization

Gas Hydrates 64 Appendix

Picture credits

Slide 9: Ocean Floor Geophysics performing a CSEM gas-hydrate survey in Japan in 2014, using the Scripps Institution of Oceanography Vulcan system from the deck of Fukada Shin Nichi Maru vessel, courtesy of Ocean Floor Geophysics Slide 14: Close-up of methane hydrates, at a depth of 1,055 meters, near bubble plumes detected in previous sonar data. Observed in the U.S. North Atlantic Margin by National Oceanic and Atmospheric Administration (NOAA) during the Okeanos Explorer Program, courtesy of NOAA Slide 26: Aerial photo of the temporary ice pad built in Alaska (U.S) for the ConocoPhillips Ignik Sikumi production test using CO2-CH4 exchange methodology and in the background the permanent operating gravel pads within the Prudhoe Bay Unit, courtesy of ConocoPhillips Slide 36: View of the remotely operated vehicle (ROV) Deep Discoverer investigating Block Canyon in the U.S. North Atlantic Margin during Okeanos Explorer Program, courtesy of NOAA Slide 46: View of Gas-hydrate stratigraphic test well, Mount Elbert, North Slope of Alaska for Ignik Sikumi production test, courtesy of the Mount Elbert gas hydrate stratigraphic test well project Slide 56: Japanese deep-sea scientific drilling vessel Chikyu, built for the Integrated Ocean Drilling Program, used during Nankai Trough production test in 2014 and operated by Japan Agency for Marine-Earth Science and Technology (JAMSTEC), courtesy of JOGMEC Slide 62: View of a test-well for collecting gas hydrates in Mallik, in the Mackenzie Delta-Beaufort Sea in Northern Canada, courtesy of the U.S. Geological Survey (USGS)

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Gas Hydrates 66