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How to preserve the value that the oil shale industry creates?

Margus Vals, Member of the Management Board of Eesti Energia, Projects, Technology and New Business
05.01.2016
Some time ago the oil shale industry was regarded as completely “bullet-proof”, but now the external environment presents a number of challenges for the industry. Environmental requirements become stricter, energy markets integrate and prices are volatile. How do we preserve the value that thousands of employees create and the public revenue of approximately 300 million euros annually?

While working in open markets with many players, companies cannot influence the market situation and with low energy prices we have to find other ways to cope. By introducing a flexible regulation dependent on the market price the state can certainly alleviate the situation in the industry, but such decisions are not made overnight and such decisions alone will not keep the industry afloat.

Eesti Energia strongly contributes by doing what the company can do on its own. These efforts can be summed up as “industrial innovation”. We focus on development projects that increase energy production efficiency and reduce the environmental footprint.

New technologies increase the value derived from oil shale and reduce emissions

As a result of the development work of the company’s engineers today, Eesti Energia completely meets the stricter limits on air emissions in connection with the production of electricity from oil shale that came into force on 1 January 2016. Thanks to the sulphur scrubbers and nitrogen capture equipment, in the past five years sulphurous emissions have reduced by three times and nitrogen emissions by nearly two times. The “dirty” oil shale industry is now a thing of the past.

In recent years the oil shale energy sector has made a significant leap in development, when instead of direct incineration, Enefit technology was introduced. This makes it possible to produce oil from oil shale and the by-products – oil shale gas and semi coke – to be used to generate electricity. Therefore, we can obtain more than twice as much useful energy from oil shale and reduce air pollutant emissions from electricity production by half, helping to meet the European Union’s goal of reducing air emissions.

Developments in the field of oil shale processing do not stop there. Currently, we are improving Enefit technology; for example, we are preparing for the separation of gasoline from oil shale gas, which will enable us to increase production of liquid fuels by 10%. We can sell industrial shale oil gasoline to refineries and chemical companies as a raw material, and in a few years liquid fuels produced from oil shale may reach our gas stations. Precisely because of this, this project is one of the priorities for Eesti Energia for the coming years.

The competitiveness of oil shale is also greatly influenced by how effectively we are able to mine for oil shale. We are preparing to introduce the long wall mining method in the Narva underground mine, which makes underground mining more efficient thus reducing the cost of oil shale.

We produce cleaner energy from oil shale gas

No less important is the fact that the development of technology leads to more environmentally friendly options for electricity generation.

Instead of the direct incineration of oil shale, now we can produce more electricity from the oil shale gas, which is a by-product of the production of shale oil. In order to use the gas in the most efficient manner possible and to ensure more flexible operation of power plants, currently there are plans to reconstruct the 8th generating unit of the Eesti power plant. In the future to generate electricity using the 8th generating unit we will be able to use 50% oil shale gas and 50% oil shale and other fuels and also reduce air pollutant emissions from power generation.

Affordable renewable energy from Narva power plants

While the oil shale industry adapts to the new environmental standards, an irreversible transition from fossil fuels to renewable energy takes place. Today, renewable energy technologies are not yet competitive enough to hold in competitive market conditions without subsidies and require further development. There is no doubt that in a few years renewable energy solutions will become cheaper and will not need any more subsidies. In the meantime, however, the cheapest way to produce renewable energy is using biomass in the power plants in Narva. Biomass power generation requires two times less support per megawatt-hour than today’s 53.7-euro renewable energy support. Eesti Energia is able to produce both heat and electricity in an environmentally friendly manner while meeting all climate-related objectives.

We find new uses for by-products of energy generation

Instead of accumulating in piles, our production waste has to find a new value. Waste rock and oil shale ash have been used in the construction of pedestrian walkways, forest roads, various grounds and parking lots as well as a building material or a soil improver. Today, we get more by-products than we can use, and so we are looking for other companies we can offer inexpensive electricity, heat and steam, along with such raw material as oil shale ash and waste rock.

During the past hundred years the oil shale industry proved that it is able to adapt to different circumstances. Although today’s complex market situation results in having to make difficult choices, it also forces us to look for new and effective solutions able to create more value. We have ideas on how to maintain the sustainability of the oil shale industry, and we will consistently implement these ideas. The oil shale industry remains viable through innovation – by implementing smart solutions we can continuously provide hundreds of millions euros in public revenue along with thousands of jobs. Therefore, today’s lower market prices may prove to be a trigger for completely new innovative developments and a win-win situation for both oil shale companies and Estonia as a whole.

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