Issue Date: July 29, 2013
Energy Production The Estonian Way
Igor Kond stands on the top floor of a brand-new refinery in Auvere, Estonia, that when complete will turn the country’s brown shale rock into both oil and electricity. From his perch on a metal balcony 150 feet above the ground, Kond surveys the huge complex under construction just three miles from the border with Russia.
“Our shale oil quality is the best in the world,” says Kond, chairman of the board of Enefit Oil & Gas, a subsidiary of Estonian state-owned energy company Eesti Energia. “Here everything possible is used to get more energy out of the stone.”
Enefit officials are focused on expanding their technology, which mines, pulverizes, and superheats the shale rock to produce oil as well as steam that is used to run electric power turbines. At Auvere, the company is replacing its older refinery and power plant with cleaner and more efficient units. But Enefit’s plans stretch to building plants in Utah, Jordan, and perhaps even China.
Many nations are looking for domestic sources of fossil-fuel energy that are both cheaper and easier to access than importing oil from overseas. For countries that have oil shale, which is sedimentary rock containing organic matter, the resultant fuel shows promise as a viable option.
Oil shale exists around the world at more than 600 sites, according to a 2007 report by the European Academies Science Advisory Council. The report also says that although the organic matter content of oil shales can be as high as 50% in some high-grade deposits, such as those in Estonia, in most cases it ranges between 5 and 25%. Different oil shale methods use in situ refining to extract the oil from the rock underground. Although this sounds like fracking, or hydraulic fracturing, it’s not. Fracking involves deep wells and reserves, whereas oil shale is located near the surface.
The Estonian technology could hold the key to turning some of this promise into reality, but these projects involve mining and processing under severe conditions. Both of those activities present political hurdles and technological challenges. A full-scale push to explore oil shale worries critics who fear a large negative impact on the environment.
Several nations have begun to evaluate and test the production potential of shale formations located in their countries. Poland, for example, has leased prospective shale acreage and, as of April, drilled 43 test wells. Argentina, Australia, China, England, Mexico, Russia, Saudi Arabia, and Turkey have begun exploration of or expressed interest in exploring their shale formations, according to a report released in June by the U.S. Energy Information Administration (EIA), a part of the Department of Energy.
Exporting its technology is a bold move for Estonia. The Baltic country has seen a dramatic rise in its standard of living and the blossoming of its high-tech sector since its 1.3 million residents won freedom from the former Soviet Union in 1991. Domestic oil shale provides the nation with 90% of its electricity, jobs for about 1% of its workforce, and energy independence from its neighbor and former occupier to the east.
“People have been visiting us and asking, is this possible?” says Alo Kelder, chief executive officer of Enefit Outotec Technology, a joint Estonian-Finnish venture that is optimizing the Enefit technology at the new plants. “Enefit felt they would be able to bring this technology and experience to other countries.”
Oil shale in Estonia was formed 400 million years ago from carbon-rich marine life in the warm shallow sea that once covered the region. The shale alternates with layers of limestone. After the rock is mined, it is transported to a refining plant, also called a retort. When it’s completed, the $288 million Enefit280 facility in Auvere, which Enefit calls the world’s biggest, will be able to process 280 metric tons of shale per hour.
After a drying and pulverizing process, the shale is heated to 500 °C in a horizontal rotary kiln where volatile organic compounds are separated from the oil. Enefit’s proprietary technology is different from other refining methods because it can handle variation in shale particle size and it does not require additional fuel to keep the process going, Kelder says. The process does have gaseous emissions that must be scrubbed before being released to the air.
When the Estonian shale process is done, more than 45% of it by weight is ash, a by-product that Enefit sells to be used as road material or to mix with concrete aggregate. The oil is used to run heavy machines or can be further refined to make gasoline.
Although Estonia has been quietly mining and refining oil shale for nearly 100 years, some experts wonder if Enefit’s new overseas gamble is too risky.
The U.S. shale rock sites hold about 58 billion barrels of oil that can be recovered, according to EIA, second worldwide behind Russia. Most of that U.S. shale rock lies underneath Utah and Colorado. However, mining the oil shale is expensive, and retorting it produces sulfur, nitrogen, and carbon emissions, which must be treated.
And Enefit faces competition from companies with mining technologies that heat the oil shale in place, bringing up the liquid hydrocarbons without sending the rocky material to and through a big processing facility.
Concerns about global warming could lead to political obstacles to introducing the Enefit technology. Enefit’s Jordan project, a power plant and shale oil refinery, has been given the green light by that country’s government, but the Utah expansion is up against environmental concerns as well as technological snafus.
The mining of oil shale produces 15 to 70% more carbon dioxide emissions than traditional oil recovery, says Jeremy Boak, director of the Center for Oil Shale Technology & Research at Colorado School of Mines. President Barack Obama’s plan to limit CO2 emissions from power plants could crimp the use of oil shale unless technological fixes can be brought on-line, such as carbon capture and storage.
“I think Enefit is moving forward very ambitiously,” Boak says. “I sometimes worry if they are overextended. This industry is capital intensive, so there are substantial risks.”
The payoff, though, could be large. Seth Lyman, director of the Bingham Entrepreneurship & Energy Research Center at Utah State University, has been watching the Estonian company and its U.S. subsidiary, Enefit American Oil, over the past two years. He says the Uintah Basin of Utah holds 70 billion bbl of recoverable oil from the shale. “There’s a lot of oil there,” Lyman says. “It’s just a matter of how easy it is to get it out.”
Lyman also notes residents of the area near the proposed site already experience severe ozone problems. He believes that under the Clean Air Act, Enefit will have to purchase pollution credits from other manufacturers in the area before starting production in order to offset the ozone the company will generate.
For their part, Enefit officials say their twin production facilities are clean. The new power plants in Estonia, Jordan, and Utah will produce almost no sulfur emissions, according to Kond, because of a more efficient burning process.
Early this year Enefit engineers also found another problem in Utah: The shale there will be more difficult than they thought to turn into oil during the retort process.
“The Utah oil shale has different characteristics than the Estonian shale,” says Rikki Lauren Hrenko, CEO of Enefit American Oil. “This causes it to behave differently in our retort during testing, and as such, we are now testing different operating parameters” as well as evaluating other retorting technologies. Enefit had anticipated some tailoring of its technology to other areas’ shale rocks. It just opened a $6.4 million pilot plant in Frankfurt, Germany, that will serve as a test bed for new burning technologies.
The delay means the Utah project could take longer than the four to five years that Enefit originally planned, but Colorado School of Mines’ Boak doesn’t believe it’s a deal breaker.
“I think any large technology project has the potential to encounter snags in the process along the way. These are engineering issues, not necessarily dead ends,” Boak says.
Estonia’s history with oil shale reveals its promise and its peril. The industry has provided energy and jobs but also left environmental scars on the landscape that are still visible today. The energy potential of oil shale was first discovered in northeastern Estonia in the 19th century, and the first mine opened in 1916. In the mid-1920s, Estonia built the first power plant fueled by oil shale, and the heavy oil it produced ran the country’s locomotives. When Nazi Germany invaded Estonia in 1940, the Germans set up labor camps in Auvere where prisoners mined shale quarries. Estonia changed hands in 1944 when the former Soviet Union took over.
When the Soviets pulled out of Estonia in 1991, they left behind a legacy of environmental contamination. Underground aquifers were polluted by hydrocarbons and other emissions from the mining process. The once-forested landscape was transformed into a barren moonscape, and air pollution compounded the health hazards for local residents.
“Huge amounts of water had to be pumped out of the mines and treated for sulfates,” says Erik Puura, vice rector for development at the University of Tartu, who studied the waste issues of Estonia’s mine industry for 25 years. Puura says the mining combined with normal rainwater led to the formation of underground lakes and an altered environment.
Since then, many of the environmental health problems have been abated through cleanups and improved mining processes, according to two senior Estonian government officials. Abandoned surface mines are being reclaimed, reforested, and turned into sports fields, wind farms, and artificial lakes for water sports.
Estonia’s push to export oil shale technology worries Puura, who believes that his nation would do better boosting renewable energy from biomass, wind, and hydropower.
“Estonians are very pragmatic and maybe too optimistic about the speed of development,” Puura says. “Because we Estonians are used to rapid changes, we may be thinking on a short timescale.”
Contributing editor Eric Niiler reported from Tallinn, Tartu, and Auvere, Estonia.
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