Boss Energy Limited Report for Latrobe Oil Shale Resource Technology Screening Study

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Boss Energy Limited Report for Latrobe Oil Shale Resource Technology Screening Study Boss Energy Limited Report for Latrobe Oil Shale Resource Technology Screening Study August 2009 Contents Executive Summary iv 1. Introduction 1 2. Comparison of Shales 4 2.1 Shales from around the world 4 2.2 Tasmanite of the Latrobe Resource 9 3. Shale Technologies 14 3.1 Retorting Processes 15 3.2 Solids based heating 18 3.3 Heat transfer by other means 20 3.4 Alternative Processes 21 4. Technology Comparison 23 4.1 General 23 5. Other Factors 28 5.1 Water Considerations 28 5.2 Energy Considerations 28 5.3 Cost Considerations 28 5.4 Initial Screening 30 5.5 Technology Status and Scheduled Operation 32 5.6 Environmental Effects 33 5.7 Engineering Risks (high level) 37 5.8 Technology Development Plans 38 5.9 Barriers to Oil Shale 38 5.10 Shortlisted Shale to Oil Processes 39 6. Development Alternatives 40 6.1 Tasmanian Shale to liquid facility 40 6.2 Offsite/Toll Processing 40 6.3 Synergistic Applications 41 6.4 Alternative Solutions 41 7. Summary of Findings 43 61/24140/89495 Latrobe Oil Shale Resource Technology Screening Study 8. Stage 2 Project Definition 44 8.1 Options 44 8.2 Project Definition 44 9. Bibliography 46 Table Index Table 1.1 History of US Shale Development [18] 1 Table 2.1 Oil Shale Compositions [2] 6 Table 4.1 Summary of major processes (internal GHD report) 25 Table 5.1 CAPEX of plants (source: internal GHD report) 29 Table 5.2 OPEX of plants 29 Table 5.3 OPEX cost split 29 Table 5.4 Surface retorting costs 30 Table 5.5 Status and Evaluation 32 Table 5.6 Environmental Evaluation 34 Table 6.1 Cost component per tonne of Coal 41 Figure Index Figure 2.1 Kukersite (left) and Tasmanite (right) (source: http://www.envir.ee and www.bossenergy.com) 10 Figure 2.2 Boss Energy's Latrobe Resource 11 Figure 2.3 Prepared Mine (ready for extraction) 12 Figure 2.4 Shale Stockpile 12 Figure 2.5 Backfilled pit with topsoil added 12 Figure 3.1 Snapshot of shale to liquid [8] 14 Figure 3.2 A typical gas retort with oil recovery [31] 15 Figure 3.3 The ATP Processor [31] 19 Figure 3.4 The TSK process (source: http://www.shaleoil.ee/index.php?id=132) 19 Figure 3.5 The Tosco process [31] 20 Figure 3.6 The Chattanooga Process (source: http://www.chattanoogaprocess.com) 22 Figure 5.1 Ash heap and revegetated ash heap (http://www.bspinfo.lt/bspnews/992/992_33.htm) 34 61/24140/89495 Latrobe Oil Shale Resource Technology Screening Study Appendices A Boss Energy Report on Bulk Sample China Flats 61/24140/89495 Latrobe Oil Shale Resource Technology Screening Study Executive Summary Oil Shale is a potential fuel source of the future. It is often a misnomer as the mineral is neither oil nor shale. The carbon rich component known as kerogen is embedded within the mineral matrix. Shale was discovered in the 1600s and used as fuel similar to coal. It is only with the advent of today’s petroleum based economy that oil from shale was considered. The two major uses for shale are generation of power and extraction of oil. Other uses include utilising the spent shale synergistically with other industry, asphalting roads and to make paint. Boss Energy holds rights to an oil shale resource in Tasmania. This resource contains 42 million tonnes of shale at a shallow depth with another 30 million tonnes at deeper. The median grade of the oil shale is 130 litres of raw shale oil per tonne of dry shale with a high of 300 litres per dry tonne. Conservatively, this equates to a possible 50 million barrels of raw shale oil. Boss Energy has engaged GHD to conduct a Technology Screening Study to determine suitable technologies for developing the resource. The study included researching and evaluating available shale to liquid technologies to identify those that were suitable for the resource and generally commercially proven. Other opportunities for Boss Energy to monetise the resource were also identified. Over 100 technologies were considered in the technology review. From the shale to oil perspective, the Estonian TSK and Petrosix processes are considered the frontrunners. Further investigation of these technologies, which would involve a more in-depth technical and economic evaluation of various options, would be carried out in the next phase. Consultations with stakeholders to understand synergies, influences, commercial return and benefits of other options would assist in proving direction to the next phase. Developing a resource to commercial status could reflect a timeline of 5-10 years, even if the development is based on an established process. Other technologies are under development. The opportunity to leverage newer and more appropriate technologies should they arise is not precluded. Toll treating as a commercial model can not be discounted. Detailed investigation into toll treating was beyond the scope of this study. Mining and exporting the shale to another location, for whatever use, should not be ruled out. A synergistic relationship between the shale processor and another industry is another option. The shale could be combusted completely to provide power at competitive rates to local industry, and the ash utilised elsewhere. Others have studied utilising the ash in the cement industry or to make bricks. The research carried out for this study reaffirms that Oil Shale is an important mineral resource that is increasingly being recognised as a source of energy. Billions of dollars have been invested worldwide in Research and Development and billions are still being spent. 61/24140/89495 Latrobe Oil Shale Resource Technology Screening Study 1. Introduction Boss Energy’s Latrobe oil shale project is based on a resource of Tasmanian oil shale located between Latrobe and Railton, 10 kilometres south-west of the port of Devonport. The Latrobe oil project has a JORC indicated resource of 42 million tonnes of Tasmanite oil shale of which approximately 6 million tonnes is at less than 20 metres depth and amenable to open cut mining methods. An additional JORC compliant inferred resource of 30 million tonnes of Tasmanite oil shale is estimated [4]. Boss Energy (BE) has indicated a desire to monetise the resource as early as possible. To this end BE engaged GHD to undertake a review of available technologies that could be suitable for Tasmanite (Tasmanian Oil Shale), the shale present in the Latrobe resource. A secondary objective is to consider other opportunities for monetising the resource. The history of extraction of oil from shale goes back more than 100 years [1]. Over the past hundred years, in the U.S., the development of shale has been intermittent. Although considerable investment has been made oil from shale has not reached sustained commercial quantities owing to availability and price of crude oil. The number of processes has been limited by a constraining the study to processes that are suitable to similar shales and mining techniques. The table below represents the history of oil shale development in the US. Similar developments have occurred worldwide leading to a plethora of processes. The research carried out for this study has indicated close to 100 processes that claim to be able to extract oil from shale. This study was a measured approach and focuses on those processes that have a history and for which verifiable information is available in the public domain. This evidence should necessarily be of the form of Government reports/publications and peer reviewed journal articles. We have also drawn upon internal GHD reports to support this study. The study highlights those processes that are relevant to Tasmanite and then evaluate them against a set of parameters that best reflect the way forward for BE Table 1.1 below is a brief history. Table 1.1 History of US Shale Development [18] Year Milestone 1909 U.S. Government creates U.S. Naval Oil Shale Reserve 1910 Oil shale lands “claim-staked” 1916 USGS estimates 40 B Bbls of shale oil in Green River formation in CO, WY, and UT 1917 First oil shale retort kiln in DeBeque, Co. 1918 First oil shale boom begins with over 30 0 mining clams; lasts until 1925 1920 Mineral Leasing Act requires shale lands be leased through the Secretary of Interior 1929 Test retort at Rulison stops at 3 600 bbls after oil discoveries in CA, TX, and OK 1944 U.S. Synthetic Liquid Fuels Act provides 18 million for experiments at Anvil Points 61/24140/89495 Latrobe Oil Shale Resource 1 Technology Screening Study Year Milestone 1950s Gulf Oil and Shell Oil both purchase oil shale lands in Green River formation 1956 Anvil Points operations cease after testing three experimental retort processes 1961 Unocal shuts down Parachute Creek “Union A” retort after 18 months and 800b/d due to cost 1964 Colorado School of Mines leases Anvil Points facility to conduct research on US Bureau of Mines Gas Combustion Retorts 1967 CER and U.S. AEC abandon plans for “Project Bronco” atomic subsurface retort 3 1972 Tosco, Sohio and Cleveland Cliffs halt Colony oil shale project begun in 1964 after 270000 bblof production 1972 Occidental Petroleum conducts first of six in-situ oil shale experiments at Logan Wash 1972 Paraho is formed as a consortium of 17 companies, obtains a lease of Anvil Points facility and builds and operates 24 ton/day pilot plant and 240 ton/day semi-works plant. 1970s Shell researches Piceance Creek in-situ steam injection process for oil shale and nahcolite 1974 Four oil shale leases issued by BLM under Interior’s Prototype Leasing Program.
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