While Jordan has few oil and gas resources of its own, it does have an abundance of several key natural resources that can potentially be used to produce energy. One of these is oil shale, the sedimentary rock that underlies around two-thirds of the kingdom’s territory – giving Jordan one of the largest deposits of this material anywhere in the world. Oil shale can be burnt in power stations to generate electricity or heated to produce crude shale oil.
With Jordan’s need for new energy sources widely accepted, the country has become an important testing ground for some of the sector’s more frontier technologies. Potentially the most significant of these involve oil shale, deposits of which cover around two-thirds of Jordan’s territory, with subterranean layers that are more than 200 metres thick in places. Figuring out how to harness this vast resource is perhaps the greatest single challenge facing the kingdom’s energy sector over the years ahead; indeed, if exploited successfully, shale oil could make Jordan’s current energy concerns a thing of the past.
Geologies & Processes
Oil shale is a sedimentary rock with a high organic content. It can be burned as a fuel directly, or heated at high temperatures to release a vapour that can then be distilled into shale oil, and it also releases shale gas. Countries with large deposits of oil shale include the US, Canada, Australia, Brazil, Estonia, Sweden, Morocco and Jordan. According to a recent statement by the Ministry of Trade, Industry and Supply, Jordan has 31bn tonnes of oil shale, representing the world’s fourth-largest reserves. “Jordan has one of the largest indigenous sources of oil shale in the world, and it is necessary to develop this resource to reduce our energy dependence and alleviate the national debt,” Thomas Meijssen, the general manager of the Jordan Oil Shale Company (JOSCO) and Shell country chair, told OBG.
Several different technologies are available to produce oil from oil shale, although so far, most are either at a developmental stage or not yet producing commercial quantities. First, there is the In-Situ Conversion Process (ICP), a propriety technology being developed by Royal Dutch Shell, which is in the process of employing this in Jordan through its wholly owned subsidiary, JOSCO.
The ICP method differs radically from other technologies in that instead of targeting oil shale on the surface, it goes after deposits deep underground. Wells are dug down into these deposits, and heaters are then placed within them. The deposits are slowly heated, a process that produces higher quality shale oil. “JOSCO’s oil shale development in Jordan is a frontier unconventionals project for Shell,” Meijssen told OBG. “Jordan will be the first country in the region to utilise the ICP technology.”
The other technologies in use resemble open cast mining, in that large areas of the surface are cleared and the oil shale dug up, crushed and then processed. To process for oil, a retort is needed, with these having to be extremely large if commercial quantities are to be produced. What then comes out is generally of good enough quality for bunker fuel, but it needs an upgrader to enable it to be refined into petroleum and other more useful products. An upgrader is a mini-refinery, indicating the scale of investment necessary if a shale oil deposit is to be processed in this way.
Much development is currently going on in this field, however, and it is likely that more efficient and cost-effective ways of processing oil shale will be found. Estonia, for example, is leading the way in burning oil shale directly in power plants.
Indeed, at the start of July 2014, Jordan’s energy and mineral resources minister, Mohammad Hamed, told reporters that the Cabinet had finally given Estonia’s Enefit the green light to construct a $2.4bn, 470-MW oil-shale-fuelled power plant in the kingdom – the final part of a deal begun back in 2008. Enefit is to do so as part of a consortium with Malaysia’s YTL Power and Jordan’s Near East Investments. The project may also see the power station’s capacity doubled in the future, to around 1000 MW. Two other companies are also active in oil shale in Jordan, both using similar, surface extraction technologies. These are Karak International Oil (KIO) and the Saudi Arabian Corporation for Shale Oil (SACOS). All four companies have signed oil shale concession agreements (OSCAs) with the Jordanian authorities.
These agreements, which are the first of their kind in the world, are in essence special laws, a status that gives them great stability, as they are guaranteed by the constitution. The OSCAs also apply the most rigorous international standards, particularly in regard to the environment. Fresh water, for example – a precious resource in a dry, desert nation like Jordan – is required in small quantities in the process, while brackish water can be used for getting rid of dust. Under the OSCAs, the companies are obliged to provide their own water to carry out their processes, even if this means shipping it in from abroad.
Shell’s OSCA passed through parliament in 2009 and covers a total area of 22,270 sq km, or one-quarter of Jordan’s territory. This is being narrowed down greatly, however, as the most worthwhile blocks are identified, with approximately 1000 sq km the likely final acreage. Enefit has a 70-sq-km concession at Attarat Um Ghudran, south of Amman, for the planned power station, and also has a surface retort concession agreement for a future shale oil production plant that entitles it to around 2.3bn tonnes of shale oil.
KIO, meanwhile, has a concession at Al Lajjun, an area the company says holds some 600m barrels of recoverable oil from shale oil. KIO’s parent company is the UK’s Jordan Energy & Mining, which has put some $38m into the project so far. SACOS, which is 100% owned by Saudi investors, signed a $2bn agreement in March 2014 to explore and develop oil shale in the same area as Enefit, with the next four years seeing the firm do technical, environmental and feasibility studies in its 11-sq-km concession area.
While the projects currently under way promise much, the timeframe involved is still a long one. Shell’s project has to go through a series of rigorous tests in the years ahead to see if the ICP technology works in local conditions. If all goes well, the company should start production in commercial quantities in the late 2020s. Similar target dates have been set by the other companies, with the exception of Enefit’s power station, which should come online in 2017. Thus, while oil shale may hold the answer to Jordan’s future energy needs, the short-term challenges still have to be faced – a factor acknowledged in the kingdom’s multi-strand energy policy.
Financing such expensive projects is also a challenge, with the sector currently suffering from the problem that while oil shale resources may be large, most of the firms operating in the sector are relatively small, making it difficult to attract project finance. The cost of production is also likely to be high, although, provided oil prices stay above certain levels, the numbers still work. “A $90-100 per barrel price is very attractive for oil shale,” said SACOS President Maher Ibrahim Hijazin. “Anything above $60-70 still works, in fact.”
In the future, Jordan may see a complete reversal in its energy balance, with the size of its oil shale deposits potentially setting it up as a future energy exporter. At the same time, the application of the most advanced technologies of the global oil shale industry in Jordan will also make the kingdom a leading light internationally in this segment. Many will be watching the desert concessions in the years ahead.
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