Chris Morgan, Managing Director of Jordan Energy and Mining, talks to Michael Forrest about the recently tapped shale oil supplies of the Middle East.
Until renewable energy sources begin to have a significant capacity to meet global energy demands, we are still in a carbon economy. The price of liquid carbon energy in the meantime has been rising and has reached levels that make alternative sources economic. These include oil sands in Canada (see Opening up oil sands, pp37- 38, Materials World, October 2009), shale gas in the USA, coal to liquids in South Africa and, in a number of countries, oil shale. All of these are based on organic-rich sedimentary rocks that can be regarded as the precursors of crude oil resources. They are usually fine-grained with the organic fraction being part of the mineralogy of the rock, whose carbon content is based on the biogenic degradation of organic content (see Oil of Wight, Materials World, November 2005, pp30-32).
The Middle East contains the world’s largest concentration of crude oil resources, yet there are some countries within the region that do not have this endowment. One is Jordan, whose geology is based on the same Arabian plate as the great depositional basins of the Arabian Gulf, yet does not contain the large crude oil resources of those countries and is dependent on them for energy resources.
Jordan, however, does have large alternative hydrocarbon resources, and they are found in organic-rich shales of Upper Cretaceous/Tertiary age (c65 million years). They occur in a series of basins running north-south parallel to the Wadi Araba-Dead Sea rift. The hydrocarbon content within the shales is in the form of kerogen, an intermediate product between organic carbon and crude oil. Unlike oil, however, it does not flow and remains as a solid until it is heated above 500ºC, when it turns into hydrocarbon vapours, which can be condensed into a range of ‘synthetic’ oil products. The various technologies for oil recovery are well established and have been used commercially in a number of countries for over 150 years.
‘The beginnings of a large-scale oil shale industry in Jordan are now underway,’ says Chris Morgan, Managing Director, Jordan Energy and Mining. ‘Jordan Energy and Mining Ltd (JEML) and its Jordanian subsidiary Karak Oil International (KOI) have completed a bankable feasibility study on oil shale deposits at Al Lajjun in central Jordan, concluding an exploration and bidding process that began five years ago. My involvement with oil shales began in the 1980s when I was head of Shell’s oil shale and oil sands group.’
Resource rich region
Oil shales are present in large quantities in a number of countries including Jordan, Morocco, Brazil, Estonia and the USA, and contain oil reserves globally estimated as twice those known in conventional crude oil reservoirs. The exploitation of oil shales is not new and the technology for oil extraction is well established. However, the economics of historic shale oil production were destroyed in some countries by the production of cheap crude oil from the Middle East, whose costs were, at times, below US$10 per barrel (bbl) (44 US gallons/bbl). With today’s oil prices at over US$100/bbl, the time has come for shale oil production.
In Jordan there are about 26 known deposits of oil shale, some of which are large and relatively high-grade, such as those at Wadi Maghar, Attarat Umm Ghudran, and Al Lajjun located in west central Jordan within 20-75km of the Dead Sea. Al Lajjun, and a few others have been extensively drilled, confirming their geology and resources.
The Jordanian Government, through its Natural Resources Authority, instigated a bidding process in 2006 for licences over some of the larger known resources including Attarat Umm Ghudran, and Al Lajjun.
‘JEML was successful at both these locations and after geological due diligence moved onto the all-important fundraising. The capital needed for mine and plant is substantial and significant seed corn money was required,’ declares Morgan.
This has been provided by RAB Capital, a Londonbased asset management company. The capital allowed JEML to move forward in its pre-feasibility study, which has focused on Al Lajjun.
‘We came to an arrangement with Eesti Energia (now called Enafit) from Estonia over our Attarat licences to allow consolidation of ground. This is essential if economies of scale in mining and processing are to be achieved,’ notes Morgan.
‘This exchange resulted in an increase of our licence area at Al Lajjun that contains some of the highest grade resources. Further funds were raised through Mirabaud Securities in 2008 to allow the bankable feasibility study to be completed and delivered to the Jordanian Government in mid-2009, resulting in a full mining and development concession agreement being granted in March of this year.’
The oil shales at Al Lajjun are found in the eastern side of the Wadi Araba-Dead Sea rift and the local geology is bound by a number of grabens. At the surface the shales are overlain by Pleistocene-Recent gravels covering the Palaocene Muwaqqar chalk marl. It is the lower part of this formation that contains the oil shale.
As elsewhere, the oil shales are underlain by the Al Hisa phosphorite that, at Al Lajjun, is represented by alternating marl, limestone and silicified phosphorite. The average thickness of the oil shales is 21m with thicker lenses in the north of the deposit that can reach 30-35m, overburden averages 26m. They are typically brown, grey, or black, and weather to a distinctive light bluish-grey. The oil’s moisture content shale is low (2-5.5wt%), and they have an organic content of less than 20% and an average oil content of around 10%.
Several drilling programmes have been carried out over the past decades that have revealed oil contents from 4-12.5%, with the highest values towards the base of the bituminous horizons. Overall, at Al Lajjun some 1,200Mt of oil shales have been identified.
‘The cost of oil production from shales, including an acceptable return on capital, is around US$60- 70 per barrel, and it is this price ceiling that has prevented the development of Jordan’s oil shale, the fourth largest resource globally,’ says Morgan.
These prices have been surpassed by the cost of crude oil for a number of years and it will get more expensive as new resources are discovered in more difficult offshore environments and in smaller deposits. The time has now come to develop these resources in Jordan, says Morgan, and JEML has already made a substantial investment in research and feasibility costs.
The principal constraint for the production of oil from shale is the energy cost in breaking down kerogen into oil. After considerable research, the JEML feasibility study identified the Alberta Tacuik Process (ATP) as the most efficient and economic route. Originally devised for pyrolysis of the Alberta oil sands, the process focuses on burning the residual carbon in the rock and recycling energy to maximise efficiency. Its horizontal retort allows both fine and coarse grain material to be heated simultaneously to 500-550ºC. The kerogen vapourises at these temperatures and is condensed to form a synthetic crude oil that can be processed in a normal refinery. The shale’s carbon content provides the energy for the operation, and both hot solids and gases are recycled to preheat the incoming raw material. The spare heat capacity can be converted into electricity.
‘In trials we have achieved 92% oil recovery at a cash operating cost of US$25 per barrel. We are on target to produce the first oil in 2015 at an annual rate of 15,000bbl. Under the terms of the March concession agreement, Karak Oil International will invest up to US$1.8bln in a project to extract and process oil shale in a 35km2 area of Al Lajjun. Tests have shown that for only a modest incremental cost, Al Lajjun shale oil can be converted to finished products that command a 20% premium or alternatively we can sell high quality synthetic crude oil,’ notes Morgan.
JEML has invested US$30m to date and is on track to substantially reduce oil imports to Jordan. ‘We are also funding a research project at Durham University, UK, focused on using spent shale for CO2 sequestration,’ concludes Morgan.
Chris Morgan FIMMM, Jordan Energy and Mining head office, Spa House, 18 Upper Grosvenor Road, Tunbridge Wells, Kent, TN1 2EP, UK. Tel: +44 (0) 1892 509950. Website: www.jeml.co.uk