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Jordan—rocks to watts

Jordan is hoping that burning oil shale to create power will be a significant step towards greater energy independence

Jordan's first integrated oil shale mining and power project is barely in its infancy. There's still no sign directing you to it on the main southern highway that runs from the capital, Amman, to Aqaba. Bumping along that much-patched road, threading a way among fuel and water tankers, you keep your eyes peeled for the watchtowers of a prison ahead of you on the right. Then it's a hold-your-breath highway u-turn to catch a smaller road heading off across the rocky desert to the east.

After passing scatterings of small Bedouin encampments, each with a tethered horse standing close to the tents and sheep feeding around a green water tank, you come upon an olive plantation. Then, after a further half hour through the featureless desert you notice in the distance vast puffs of yellowy dust and the outline of drilling rigs and low buildings.

"You can now see the activity," says Jason Pok Hooi Loong (known to all as Jason), a Malaysian in his mid-thirties who is chief executive of the project company carrying out this $2.1bn venture. Jordan has never witnessed a private project of this scale, a ground-breaking one that will make use of the country's natural resources in order to trim the government's enormous energy import bill. Unlike many of its neighbours, Jordan isn't blessed with abundant hydrocarbon resources: as much as 95% of its needs are met by imported oil and natural gas. But it does possess an estimated 31m tonnes of in-place oil shale.

Earlier this year, with finance finally secured, work began at Attarat um Ghudran, a remote desert spot around 110km southeast of Amman. Today, giant trucks and mechanical diggers are at work in this 40-square-km patch of inhospitable dusty moonscape preparing for the mining of oil shale and a power station close by. Oil shale, not to be confused with shale oil, is sedimentary rock containing kerogen. The mined rock will be crushed and carried by conveyor belt to the completed power station where it will be burnt to provide the heat to create steam for two steam turbine electricity generators.

The first of these is scheduled to come on line in mid-2020, the second by the end of that year. The venture is committed to supplying Jordan's national electricity company Nepco with 470 megawatts of baseload power by 2021—an estimated 10-15% of Jordan's annual demand. The balance between the electricity provided for the grid and gross output (554MW) will power the mining/generation project. The whole project term is for 30 years, with an option to extend.

International investment

The main company involved at Attaarat um Ghudran is the Attarat Power Company (Apco), which is working alongside a mining and an operating firm under the same corporate umbrella. Apco is owned by Malaysia's YTL Power (YTL) and China's state Guangdong Yudean Group, each with 45%, while the remaining 10% is in the hands of Enefit (a state-owned energy company from Estonia).

While the venture can be summarised in a couple of paragraphs, the full picture is much more complex. "It's taken 10 years from the time the project was conceived to the start of the project," says Jason, an employee of YTL. "I couldn't believe it would take so long."

The Attarat um Ghudran concession was awarded to Eesti Energia as far back as 2006—Estonia has many decades of experience in exploiting oil shale. The idea at first was to extract oil from the shale. But the Jordanian government, after looking at the operation in Estonia, decided that, with the demand for electricity rising fast, it would be better served using oil shale to generate power.

As the development progressed it became clear that the venture would require major international investment and financing. In 2010, YTL Power joined the partnership. This was the moment when Jason became involved. "There were three priorities," he says. "To prove the viability of the project, to finalise the agreement with the Jordanian government and then secure the financing."

But before achieving these goals there were administrative hurdles to cross. "Jordan had no legislation covering oil shale and solid fuels," the Apco chief executive recalls. "It took a long time for the legislation to be discussed with the various committees." Then there was a whole range of agreements to be negotiated, for mining licences, tax incentives, land-lease deals, and so on.

But progress was gradually made. International firms were brought in to assess the economic prospects for the venture. SRK Consulting of the UK certified that the oil shale deposits in Attarat um Ghadrun were of sufficiently good quality to justify a mining operation. At the same time, France's BRGM checked the state of the underwater aquifers.

Meanwhile, China was starting to be supportive of the oil shale venture—including the financing. Jason said that "to raise the money needed in the local market wasn't possible". With the personal encouragement of the Chinese ambassador to Jordan, wheels started to move. Discussions, Jason adds, "involved the highest levels of the Chinese leadership. The ministers of finance, commerce and foreign affairs were all part of the discussions, which involved several Chinese banks."

Eventually a deal was signed off by the prime minister. Financial close was reached on 16 March ("A very exciting moment," says Jason), with a $1.6bn debt facility arranged by the Industrial and Commercial Bank of China and Bank of China. China Construction Bank and Export Import Bank of China are also participating in the facility. The 15-year debt financing is being provided on the basis of export credit insurance from China Export & Credit Insurance Corporation (Sinosure). The project sponsors are funding the remaining cost of $0.5m.

Water shortage

As part of the deal, Yudean was brought into a consortium with a 45% stake to provide engineering, procurement and construction services, while Enefit's stake was reduced to 10%. Yudean has contracted Amec Foster Wheeler to design and supply two circulating fluidised-bed (CFB) steam generator boilers, as well as technical and advisory services.

At the same time, Siemens is designing and supplying two SST5-5000 steam turbines, with two air-cooled generators and the turbine control system. The condenser is cooled by air, the company says, because of the shortage of water at the site.

As well as lacking its own oil and natural gas resources, Jordan has the misfortune of being one of the driest countries in the world and an estimated 14% of the country's power capacity is used for water treatment and distribution. According to Apco, air-cooled condensers will save up to 90% of the water needed for the plant's operation, compared with the use of a water cooling system.

'It's been a lot of stress, but now things are progressing well'

Nevertheless, an abundant supply of water is vital for the success of the project. Nine water wells are being drilled, four down to around 400 metres and five to 1,000 metres. Across the project site, a number of rigs can be seen in operation. Even this aspect of Apco's task has not been without difficulties. "Every drilling has its own surprises," Jason said. "In one well, we encountered cracks in different underground layers. We then had to put cement down and let it settle before we could continue."

Elsewhere at the Attarat um Ghudran site, tonnes of stony sand have been shifted from what will be the first area to be mined, leaving a white layer of rock which shimmers like a lake under the desert sun. Neat lines of explosives mark out where the next mining site will be.

Some distance away, a vast area of sand has been flattened, giving the appearance of an aircraft apron or a tract of land on which many football pitches will be marked out. Here the power station will stand. In one corner of this flattened patch I watched a mechanical digger creating a large trough, ready to receive one of the Siemens steam turbines. "This is the heart of the project," Jason told me. "This is where electricity will be generated and earn a return for our shareholders—where we make our money."

Achieving the goal of capacity electricity output by end-2020 presents Apco with a major logistical challenge. Temporary accommodation is being built for the estimated 5,500 people who, at peak period, will be working on the construction site-many of whom are at present living in air-conditioned container dormitories. Of the workers at Attarat um Ghudran, around 75% are Jordanian. When the mine and power station are operational, the project will employ around 1,000 people.

Sleepless nights

At present, Jason estimates, there are 10 different nationalities working for Apco. English is supposed to be the common language. Even with everyone conversing in the same tongue there's huge scope for cultural misunderstanding. "Take a simple food example," Jason said. "To the Chinese, chicken with rice means steamed chicken and yellow rice. To Jordanians it means fried chicken with spiced rice." The implications for misunderstandings on more important issues are clear.

Providing food and water is a constant concern for the managers of the project. Convoys of tankers bring water to the site. During the summer months, the wind whips up the sand, carrying it not only into the eyes and mouths of workers, but also into machinery. Apco is also preparing for a very different challenge when winter comes. Two major wadis (valleys of sand) run across the mining and power site. When the rains come, torrents of water will poor down the wadis—and, hopefully, through culverts that are under construction to keep the Apco operations safe.

The decade that Jason has spent preparing for the mining/power project has had several periods of stress when it seemed that the construction stage would never be reached. "I can't tell you how many sleepless nights I've had," he told me. "Every day I meet more challenges, and sometimes it's the small ones that are harder to solve."

Jason's calm and relaxed demeanor belies the cares that he's carried since joining the venture. "It's been a lot of stress," he admitted, "but now things are progressing well, but there are continuous challenges ahead." Having worked so hard to get this pioneering project under way, Jason says he has every intention of sticking with it way after 2020 to ensure its success. By then, presumably, Attarat um Ghudran will be better signposted than it is today.

 This article is part of a report series on Jordan. Next article is: Jordan—pick and mix

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