STUART PROJECT 40 PERCENT COMPLETE

At the Southern Pacific Petroleum and Central Pacific Minerals (SPP/CPM) Thirtieth Annual General Meeting, I. McFarlane reported on the progress of construction of the joint venture's first oil shale plant. Construction of the Stuart Stage 1 oil shale demonstration plant by Bechtel Inc. commenced in July 1997 following the completion of financing and the signing of an agreement of support by the Queensland Government (see The Sinor Synthetic Fuels Report, January 1998, page 2-1). Since then construction has closely followed the planned schedule (Figure 1) and in April of this year passed the 40 percent level.

The initial period concentrated on design and fabrication. Field construction is now beginning to grow rapidly with tanks, towers and the AOSTRA retort due for installation by the end of the year. Mechanical completion is presently estimated to be on schedule during second quarter 1999.

Total cost is expected to be $250 million within which the construction agreement with Bechtel provides for a fixed price of $181.9 million and a specified level of operations for handover of the plant.

Operation of the plant will be through Suncor Energy Management Pty. Ltd. (SEM) which acts for the owners. SPP Development Pty. Ltd. (SSPD) is now planning and will design Stuart Stages 2 and 3. Both of these companies have been building up staff to meet these objectives.

The Stage 1 demonstration plant is expected to yield 4,500 barrels per steam day of shale oil. The plant will utilize the Alberta Taciuk Process (ATP). Under the ATP process, a large rotating kiln heats the shale to about 500oC causing the rock to give off oil vapor. The hydrocarbon vapor is then cooled to a liquid form which resembles conventional crude oil. Residual carbon in the shale is used to fuel the ATP and processed shale is used to preheat incoming shale before being returned to the mine as backfill.

Krupp Polysius in Germany was awarded the fabrication contract for the Alberta Taciuk Processor, with installation expected at Stuart early in 1999.

The Mining Lease for the Stage 1 portion of the Stuart deposit (527 hectares) was granted for 30 years from August 1, 1996. The whole deposit contains an estimated 3 billion barrels of shale oil and has the advantages of being close to power, water and port infrastructure, and of having a silica clay base which provides a cleaner oil.

As part of SPP/CPM's environmental policy, a broad range of innovative ways of minimizing CO2 has been under investigation as part of the project planning.

As operations have not yet started, there is no definitive data from which to project CO2 output for a full commercial plant. In the Environmental Impact Assessment Study filed for the Stage 1 plant, CO2 emissions were calculated to be 1.9 tonnes per tonne of product (68 kilograms of carbon per barrel of product). Stage 1 was not designed to optimize efficiency, however, and emissions from Stage 1 do not reflect the company's expectations for the commercial project.

Early estimates for a full scale commercial plant producing 70 percent refined product showed emissions could be divided into two broad categories, each of roughly 30 to 40 kilograms carbon per barrel, which have been targeted for rigorous emission reduction analysis. The first category encompasses the emissions resulting from all the energy consumed to run the extraction, upgrading and refining processes, and will decline with improvements in cost efficiency. Suncor has improved the overall cost of operations efficiency by 40 percent over five years at its oil sands plant in Canada.

The second category of emissions envisaged in the planning process is generated by what might be termed waste heat, such as the energy absorbed by the host rock during the heating process. This waste energy will be significantly reduced by improving recoverable heat management using conventional technologies.

In addition, SPP/CPM is commencing an active research program into alternate ways of managing CO2 with Australian universities and research institutions.