Jordan’s Oil Shale Development

“Policy & Strategy”

By

Geologist Hazem Al-Ramini

Acting Director of Petroleum & Oil Shale

Natural Resources Authority

31st Oil Shale Symposium

Colorado School of Mines

hramini@nra.gov.jo or hazemramini@gmail.com

Introduction

• Till to–date, very few fossil fuel

resources have been discovered in

Jordan

• The majority of energy is imported

• Jordan will face big challenges to

meet increasing energy demands due

to population and economic growth.

Jordan is Looking for Change

Opportunity to transform

Jordan into a net exporter of

Oil and Electricity by implementing an Oil Shale Resources

Development

Transformation

– Lack of natural resources

– Complete reliance on

imported energy supplies

(Energy importer “97%”).

– Water Resources Scarcity

– Huge Oil Shale Resources

– Well placed

geographically and

politically

Curent Status

Oil Shale Stratigraphy General lithology Member Formation Group Stage Period Era

Oil Shale

Jordan’s Initial Concerns

Energy from oil shale will not be cheap

– Facilities “complicated and expensive”.

– No modern oil shale industry has yet been created in a free market environment.

–Retorting systems and power generators have not been tested with Jordanian oil shale, at large scale, for long periods.

– Capital and operating costs, production rates, and capacity factors will not be established until a project has actually been completed, commissioned, and operated.

– High operating costs are expected.

Jordan’s Oil Shale Environmental

Challenges

•Retorting & In-Situ Emissions can

generate gases including SOx, NOx, CO2,

particulates, and water vapor.

•Land Impacts: Land Disturbance &

Subsidence depends on the Oil Shale

Utilization processes.

•Water Impacts

GoJ’s Strategy

• The mean elements in Jordan’s current strategy

are:

Encourage private-sector’s activity and risk-taking

– Offer resource & Offer help

– Offer business incentives

– Share developers’ data, especially previous

tests, pre-feasibility studies & resource related

• Jordan is building control capacity by:

– Strengthening environmental monitoring,

enforcement, & Develop expertise & institutions

(such as OSCC).

Oil Shale Development Strategy

“Surface Retorting - Phase 1”

Call for Proposals (CfP) March 2006:

The intention of the call for proposals was to:

1- Identify the companies readiness to move quickly towards a real project, and

2- Allocate Acreages for Surface Retorting Projects other than that defined for Shell interest.

The outcome of the bidding process was incomplete with only seven proposals received from companies.

Electricity Generation through direct

burning a frame agreement was singed on

April 30th 2008 with Eesti Energia to develop

a 600-900 MW project for power generation

using direct combustion of oil shale on BOO

basis.

Negotiations are ongoing.

Oil Shale Development Strategy

“Oil Shale Firing Project - Phase

1”

Government of Jordan’s

Internal Tracks

• Capacity Building

• International Consulting Firm

• Oil Shale Conferences “organizing &

Participation”.

• Drafting laws and bylaws to establish an

Oil Shale Cooperation Centre “OSCC”

• Drafting laws and bylaws to tackle

environmental concerns

• Fiscal Regime on “Win Win Basis”.

Issues delayed signing concessions with potential

companies in oil shale utilization are:

1- Lack of known Royalty (%).

2- Lack of known Production – Split Ratios to carry

out contractual negotiations with companies.

3- No Model Agreement existed “locally & /or

Globally” in oil shale utilization “Prior to May 9th

2009”.

4- Lack of Environmental guide-lines in Oil Shale

Utilization.

Thus, contractual issues are required to avoid

problems that will arise in the future with

Investors.

Negotiating with Shell Exploration &

Production to develop and utilize the

deeply buried oil shale deposits through In-

situ Conversion Process (ICP).

A Concession Agreement was concluded on

May 9th, 2009.

Second Track

The second phase strategy is being

implemented in two phases and is

designed to achieve the following

objectives.

• To encourage Oil Shale investment in Jordan.

• To license a small portion of resources to allow companies to develop their technologies and capabilities.

• To award acreage in the future to successful companies.

• To develop competition for access to future resources.

Oil Shale Surface Retort Concession Agreement between The Government of the Hashemite Kingdom of Jordan, represented by the Natural Resources Authority “NRA” and Jordan Oil Shale Energy “JOSE” Company

http://www.nra.gov.jo/index.php?option=com_content&task=view&id=136&Itemid=136

Oil Shale Concession Agreement between the Government of Jordan represented by the Natural Resources Authority and Shell Company represented by Jordan Oil Shale “JOSCo” Company BV. Signed in May 2009.

-

http://www.nra.gov.jo/index.php?option=com_content&task=view&id=137&Itemid=137

The Oil Shale Cooperation Center was established by the

governments of the Arab Republic of Egypt, the

Hashemite Kingdom of Jordan, the Kingdom of Morocco,

the Syrian Arab Republic and the Republic of Turkey and

the delegates and representatives of Eesti Energia AS

(Enefit), JEML, INCOSIN BVI and supported by the Euro-

Mediterranean Energy Market Integration Project (MED-

EMIP).

The project created a regional platform for energy policy

dialogue and exchanges of experience on secure energy

supplies, diversified energy sources and limiting the

negative environmental effects of energy-related activities

in an environmentally friendly, energy-efficient and

financially attractive utilization of oil shale as an

unconventional hydrocarbon source.

http://www.oilshalecenter.com/index.aspx

Recent Trends in Oil Shale

Symposium 2006

International Symposia

The Upcoming Event

Oil Shale Symposium

May 7th – 9th 2012

Capability of the Interested

Companies

• Maximises interest in acreage • Licences appropriate acreage to companies with

appropriate capabilities. • Retains options for Jordan to licence access to

resources in the future. • The GoJ considers the companies capabilities

(technically & financially) to undertake such a project, resource assessment (quantity and accessibility), and pave the way regarding land use and ownership.

• Technology Access

• Commitment to and preparation completed

for rapid & effective execution of next step

• Realism of Proposal

• Major Project Execution Experience

• Environmental Performance

• Understanding & consideration of Jordan’s

aims associated with the project

Companies Evaluation

Project Awarding Process

Companies

Evaluation

Review of

Feasibility

Study

Memorandum

of

Understanding

To undertake

Feasibility

Study

Pre-

Development

Phase

Development

Phase

4 years

Concession Agreement

40 years 24 months 3-4 Months

MoU

Possible

Extension for

10 years

Review of the Feasibility Study

Criteria Topic Weighting Technology Access Technology Access 15

Technical Capabilities

Geology 5

Mining 10

Engineering Studies 20

HSSE 10

Subtotal 45

Commercial

Capabilities

Commercial Aspects 15

Financing 10

Subtotal 25

Project

Implementation

Implementation

Plan 15

Total Score 100

Feasibility Study Evaluation Criteria

Promotional Packages

The NRA had developed information packages (Promotional Packages)

for potential acreages in Attarat Um Ghudran, Al-Lajjun, Sultani Areas, which could be licensed through

tender (and such packages could be reviewed in a workshop or during the bid round timeline upon the

companies request.

Large Acreage MOU

• The database is growing

• More is known regarding the Geology and

structural setting of Oil Shale Resources

• Assaying of Samples

• Coring

• Promotional Packages for the New

Locations are ongoing

• Special considerations for New Acreage &

Location

• The Concession will be issued in a special law that will take precedence over conflicting Jordanian law in force at the date of ratification

• Fixed provisions

– Fiscal terms: taxation, royalties and bonuses

– The right to sell / export products

• Specific environmental regulation is included within the Concession

– Emission limit values for identified controlled substances

• Everything else operates within the existing legal framework

– Permits and approvals must be obtained in compliance with the Jordanian law

• Principle established that the Concession should be enforceable in accordance with its terms

A concession will be granted to develop

an oil shale project

Oil Shale Concession Agreements are

based on Royalty and Petroleum Tax

Fiscal Regime

– Upfront benefit to Jordan through Royalty, Bonuses & S D Payments.

– Risk and Rewards are shared and Improvement of Project Economics will be reflected on Company’s share and the Government’s share equitably.

– With Phasing Structured Concession, a new Phase will trigger Bonus Payment to GoJ.

– The agreement incentivized the company to develop oil shale exploitation project

– Royalty and Petroleum Tax are the only taxes paid by the Company.

The Concession Fiscal System addressed the following issues:

The GoJ has left the door open for

new environmental legislation to cope

with the environmental concerns

through the utilization processes.

Oil Shale “Current Status”

Direct combustion Retorting

Power Gen. Cement Ind. Surface Retorting. In-Situ

Shell Cons. JOSE Cons.

KIO Cons.

INCOSIN BVI

PETROBRAS

Al Lajjun

APCO

INTER RAO

JOSE

Finally We hope that

Oil shale will fit well

within the

National Energy

Strategy and will

contribute more

than expected.

“God Willing”

We in Jordan Welcome You at Jordan’s

International Oil Shale Symposium on

May 7th – 9th 2012

& Thank You for your attention