Shale Oil is Key to Jordan’s Energy Future

Shale Oil is Key to Jordan’s Energy Future

Jordan plans to have electricity from shale oil make up 14 percent of energy demand by 2020. Recent developments indicate that Jordan is moving closer to making this vision a reality.

According to current estimates, Jordan holds somewhere between 40 and 70 billion barrels worth of oil in shale deposits. While Jordan has been slow to mobilise and capitalise on this resource, it has set in motion the process of exploring and developing its oil shale reserves.

In late April, the Jordanian-Estonian Attarat Power Company (APCO) accepted bids from six companies to construct the country’s first shale oil-fired power plant at Attarat Umm Ghudran, about 100 km southeast of Amman. Oil Review Middle East reports that the companies in the running for the contract are Alstom/Daewoo E&C; Hyundai E&C/LG International, Samsung Engineering, Posco/Daewoo International, China Machinery Engineering Corporation, and Guangdong Power. The project is scheduled to get underway in 2014, depending on the choice of company, with the goal of being operational by 2017.

On shale oil

Oil shale is a type of sedimentary rock containing kerogen, a solid that can be converted to liquid oil upon heating. Shale oil is the fossil fuel that results from this heating process. Because of shale’s geological characteristics, the extraction process is complex and, therefore, more difficult and more costly than extracting standard petroleum. Rather than being pumped directly from the ground, oil shale must first be mined and then subjected to a process known as retorting, in which the extracted rock material is heated and transformed into a liquid, which is then treated in order to separate oil fractions from mineral fractions. An alternative method—known as “in-situ retorting”— combines these processes by heating the oil shale underground and then pumping up the liquid. No matter the method, after the retorting stage, the resultant oil must undergo further processing before being sent to refineries and ultimately put into use.

The extraction and processing of oil shale has a variety of downsides. The environmental impact includes both greenhouse gas emissions and potentially destructive effects on the mined land. In addition, excess shale minerals must be disposed of—though they can often be deposited back into initial mine sites. Most notably for Jordan, the process requires a substantial amount of water. Estimates suggest that several barrels of water are used in the production of one barrel of oil.

Exploration and development of oil shale in Jordan

While economic and logistical roadblocks long delayed the exploitation of oil shale, Jordan has taken significant steps to further explore and develop this resource in cooperation with major international companies. The Jordan Times has reported that, in addition to Estonia’s Eesti Energia, Shell and Karak International Oil (a subsidiary of the British firm Jordan Energy and Mining Ltd.) have signed contracts. Shell’s regional branch, the Jordanian Oil Shale Company (JOSCO), has an exploration contract and will likely receive concessions to mine and process oil shale in the locations it explores. Meanwhile, Karak International Oil has put in place plans to produce oil from the Al-Lajjun deposit.

The mobilization of the APCO project bodes well for the future of oil shale in Jordan. The high costs associated with the shale oil extraction process mean that Jordan, a relatively poor country, must seek foreign direct investment. In assessing this opportunity, however, one must not forget the challenges that accompany the initiative and others like it. In addition to the environmental concerns that any country would face, companies looking to invest in this field in Jordan must pay particular attention to the fact that processing oil shale requires a large amount of water. This presents a serious issue in water-poor Jordan. The kingdom will need to act to ensure the availability of water for this process in order to facilitate the development of the shale oil industry.

The Jordanian government has taken steps to overcome these challenges because it is well aware of what it has to gain from tapping into this resource. At an energy investment summit in late 2011, oil shale was the headliner. Organizers of the event highlighted the importance of shale oil, indicating that current reserves could provide Jordan with sufficient energy for hundreds of years. For this reason, the summit sought to encourage investment in Jordanian shale oil, an industry worth billions of dollars.

Movement on this front in recent weeks is especially encouraging. The expected launching of the APCO plant is a sign that more shale oil-related opportunities are around the corner in Jordan. An Oxford Business Group report states that a second power station is planned to operate in tandem with the upcoming Attarat Umm Ghudran plant. In addition to Attarat Umm Ghudran, large deposits can also be found at Al-Lajjun, Sultani, Jurf Al-Darwish, Wadi Al-Maghar, and Al-Thamad—spread throughout the Irbid, Karak, and Ma‘an districts. The emergence of these power stations will also require extraction and treatment facilities. Prospective investors and bidders should regard the Attarat Umm Ghudran project as a bellwether for further opportunities.

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