Suncor head for final agreement on oil shale deal
Representatives of a Canadian energy firm looking to conclude an agreement with the government to produce oil from shale, on Wednesday will begin what they hope will be the last round of negotiations on the deal, a source representing the company said on Monday.
“We are trying to finish as much as we can, although I do not know whether everything will be completed during this round,” the source said. “We are trying to move towards finalizing things, though.”
The announcement signals optimism from the company that a similar pilot project in Australia, carried out in partnership with Southern Pacific Petroleum, will be successful and that the technology used there could be applied here.
Canada's Suncor Energy was granted a 12-month exclusivity period to negotiate a project to develop oil shale reserves in the Lejoun area in the south of the Kingdom. Suncor has envisioned a four-phase $4.2 billion project, initially targeted to end by 2012.
The initial phase was expected to produce 17,000 barrels a day, starting from 2006 at a cost of $400 million. Output would increase to 67,000bpd within five years and 201,000bpd within a decade.
The project was pursued as part of the government's efforts to diversify energy resources, which now come almost exclusively from neighboring Iraq.
The deal was contingent on the success of a project in Australia to test the technology.
However, environmental and quality of life concerns expressed by residents near the Suncor facility in Queensland, Australia, prompted some delays in the testing of the technology.
Residents in the area said the plant emitted an unpleasant sulfurous odor, while Greenpeace environmental activists raised concerns that the emissions from the running of the plant could compromise the nearby Great Barrier Reef.
The movement also has asserted that shale oil is “four times more greenhouse-polluting than conventional oil, making it the dirtiest of all fossil fuels.”
The haggling and delay in Australia sparked concerns in Jordan that the energy giant had withdrawn from the deal shortly after the government had announced that another multi-million dinar investment project involving the Jordan Phosphate Mines Company had fallen through.
“The [Australian] plant couldn't run on a continuous basis because of complaints from residents,” the source said.
“Now, [Suncor] is looking to run the plant on a continuous basis over a course of months so as to collect sufficient data on the viability of the project.
I expect to see some kind of final decision this spring,” the source said.
The source told the Jordan Times that last fall, Suncor “invested more money and financing into getting rid of the odour” and added that the plant's emissions were within internationally accepted standards.
“Suncor does have a comprehensive environmental policy on which they pride themselves,” the source said, adding that an environmental impact assessment will be a component of any future deal with Jordan.
The government is also optimistic that Suncor will open shop in the Kingdom.
In November, the government invited international firms to submit proposals for the contraction of a shale oil fired power plant. Bids close in May.
By Amy Henderson
( Jordan Times )
© 2001 Mena Report (www.menareport.com)