Enefit´s oil shale projects in Jordan

October 2010 Andres Anijalg Project Manager Business Development Department Enefit

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Contents

•  Enefit Overview •  Enefit in Jordan •  Oil and Power Projects •  Development Plan + Next Steps

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1. Enefit Overview Enefit (Eesti Energia in Estonia) is the largest oil shale mining and processing company in the world

• Over 90 years operations with more than 1 billion tonnes of oil shale mined to date

• Remaining reserves of ca. 500 mt •  Annual production ca.14 – 16 mt •  4 operating mines

u  2 surface u  2 underground

•  2,900 mining employees •  Experienced in remediation

12,000 hectares restored

Oil Shale Mining • Over 50 years of continuous surface retort

production with more than 200 million barrels of shale oil produced to date

•  Technology involves: u  Drying unit u  Rotary kiln reactor u  Combustion unit for spent shale

•  2 x Enefit 140 units (operating) • New Enefit 280 unit under construction •  Enefit proprietary technology considered to

be best available processing technology

Shale Oil Production

•  Vertically integrated utility (oil shale mining, shale oil production, generation, distribution, supply) •  State owned

Eesti Energia

Eesti Power Plant 1615 MW

Balti Power Plant 765 MW

Narva Oil Plant Narva Open Pit Mine

•  Provides 95% of Estonia’s electricity generation with more than 550 TWh produced to date

• Comprises over 2,380 MW of oil shale fired capacity – largest oil shale fired plants in the world

•  Allows significant electricity exports to Baltic region and Finland

•  Ensures security of supply •  1,350 employees

Oil Shale Power Generation

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2. Enefit portfolio for oil shale developing

Technology Provider • Enefit Technology license • Opportunity Analyses • Conceptual Studies • Pre-Design (bench tests) • FEED (pilot testing) • Technology package (design, construction, operation)

Project Developer • Enefit Technology license

• Resource assessment • Feasibility studies including mining, retorting, upgrading, power production

• Testing • Plant construction & operation • Possible investment

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3. Enefit Global Activities

Project: Enefit 280 construction Developer: Eesti Energia (Enefit) Project status: construction ongoing

Projects: shale oil production Enefit interest: technology sale Developers: Local mining

companies Project status: MoU signed

negotiations ongoing

Projects: shale oil + power

Project status:

MoU with local partners for power opportunity analysis for oil

Projects: 38,000 bbl/d shale oil 600-900 MW power

Enefit interest: project development technology sale

Project status: concession agreement signed on 11. May 2010

USA

Estonia

China

Morocco

Jordan

Project: 50,000 bbl/d shale oil Enefit interest: technology sale Developer: OSEC, Mitsui,

Petrobras Project status: conceptual study

completed

Enefit worldwide oil shale projects for oil and power production

The Enefit Projects in Jordan are most advanced

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4. Enefit in Jordan

September 2006 •  Enefit initial visit to Jordan

November 2006 •  Shale Oil / Mining Memorandum of Understanding with NRA signed

October 2007 •  Power Project Memorandum of Understanding signed by NEPCO, Government of Jordan and Eesti Energia

April 2008 •  Oil Project Feasibility Study submitted to NRA

April 2008 •  Power Project Development Agreement signed by NEPCO, Government of Jordan and Eesti Energia

October 2008 •  Commencement of Concession negotiations with NRA

May 2010 •  Signing of the Concession Agreement with the Government

June 2010 •  Royal Assent

The Oil Project in Jordan was started in 2006

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5. Enefit oil shale deposit in Jordan

Location in Jordan Map of Concession Area (incl. Right of First Refusal Area) in Attarat Um Ghudran

•  Approximately 110 km south of Amman

•  50km east of Al Qatrana on the desert highway

•  Approximately 270 km north of Aqaba •  Total OSEJ Concession Area and Right of First Refusal Area

u  Area: 70 km2

u  In place oil shale: 4.4 bn t oil shale

Red Sea

Jordan

Saudi Arabia

Syria

Israel

Egypt

Iraq

Dead Sea

Amman

Attarat Um Ghudran (Concession Area)

Aqaba

Al Qatrana

Zarqa Refinery West Bank

Gaza

Attarat Um Ghudran - the total in place oil shale resource of Concession Area ca. 2.6 billion tons (1.5 billion barrels of shale oil)

AUG 28

Area = 23.5km2

Reserve = 1560t

Area = 14.2km2

Reserve = 1153t

AUG 23 (INCOSIN)

AUG 22

AUG 25 AUG 21

Area = 11km2

Reserve = 1253t

Area = 11.2km2

Reserve = 1700t Area = 15.5km2

Reserve = 1701t

(PETROBRAS)

282000 284000 286000 288000 290000 292000

1087

000

1084

000

1081

000

1087

000 Other Blocks

OSEJ Concession Area

AUG30

Right of First Refusal Area

Area = 32.0km2

Reserve = 1.8 bn t oil shale (1.1 bn bbl shale oil)

Concession Area

Area = 38km2

Reserve = 2,6 bn t oil shale (1.5 bn bbl shale oil)

1078

000

1075

000

1084

000

1081

000

1078

000

1075

000

282000 284000 286000 288000 290000 292000

Right of First Refusal area

Road

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6. Key Characteristics of the oil shale deposit Attarat Deposit is the biggest known oil shale deposit in Jordan

Surface •  Very scarce vegetation of grass and bush

•  No land use; nearest farm is 20km northwest

Overburden

•  Muwaqqar Chalk Marl Formation, partly covered by Umm Rijam Chert Limestone Formation

•  Thickness varies from 25m-90m

•  Total overburden in Concession Area 2.0 bn m3 and in the Right of First Refusal Area 1.7 bn m3

Oil Shale Seam

•  Oil shale layer variation from 10m-88m

•  Total over the 70km2 area 4,530 m t

u  Concession Area 2,670m t

u  Right of First Refusal Area 1,860m t

Groundwater

•  Aquifer at depth of 150m-200m

•  Aquifer has a thickness of 150m-180m

•  Groundwater flows southwest to northeast

•  No spring or other discharge of groundwater

Oil Shale Quality

•  Oil Yield 9% over the two areas in average

•  Heating Value of ca 5.5 MJ/kg

Views on the Attarat Oil Shale deposit

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7. Enefit Projects in Jordan – Oil & Power Enefit has two parallel projects in Jordan – Oil Shale based Oil Production and Oil Shale based Power Production

Mines

Upgrader / Treatment

Direct Burning Power Station Oil Recovery (Enefit)

Sulphur 1200 t/d

Syncrude 38.000 bld/l

Electricity 440 MW

Electricity 600-900 MW

Oil Shale (c. 26 m/t per annum)

Oil Shale (c. 12 m/t per annum)

Oil Project Power Project

Shale Oil Gas

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Oil Project – the industry complex will be established in 2 stages with 2nd stage partially financed by 1st stage cash flows Power Project – the project will be built up in stages according to the increase in power demand

8. Development Plan

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Oil

Proj

ect

Dire

ct B

urni

ng

Pow

er S

tatio

n R

esou

rce

& m

inin

g •  Geological and hydrogeological survey •  Shaft for pilot testing •  Mining Studies

Pre-Development •  Enefit bench and pilot testing •  Oil Upgrading Pilot Program •  Environmental Studies •  EIA •  FEED •  Capital Raising •  Applying for licenses and permits •  Enefit 280 operations in Narva

Pre-Development •  Feasibility Study •  Boiler Design (Foster Wheeler) •  FEED •  EPC and PPA negotiations •  Capital Raising

Construction 300MW

Operation 600(900)MW

Operation 300MW

Mine Operation Mine Opening

Construction 900MW

Industrial Complex Stage I construction 19,000 bbl/d

Industrial Complex Stage II construction 19,000 bbl/d

Construction 600MW

Stage II Operation

Stage I Operation

Pre-Development Construction Operation

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9. Key Terms for the Concession Agreement (Oil Project)

•  Exclusive rights to exploit oil shale within Concession Area

•  4 years for project development, 40+10 years for commercial production

•  Environmental regime established

•  Hydrogeology rights granted

•  Agreed fiscal regime

The Concession Agreement fixes the framework for developing and implementing the oil project

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10. Fiscal Regime - Royalty + Petroleum Tax The concession will operate under a Tax & Royalty fiscal regime.

0%

1%

2%

3%

4%

5%

6%

0 30 60 90 120 150Oil Price (US $ / Barrel)

Roy

alty

Rat

e

Royalty Petroleum Tax

0%

10%

20%

30%

40%

50%

60%

70%

0 1 2 3 4 5 6R-Factor (Cumulative revenue / cumulative costs)

Tax

Rat

e

Payable on the revenues: •  Minimum 1% if Brent (Real) < US$60/bbl; linear to •  Maximum 5% if Brent (Real)> US$120/bbl

Tax rate depends on the Revenue (R) and Cost (C) ratio •  Minimum 15% if R/C < 1.25; linear to •  Maximum 65% if R/C >= 5.0

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11. Next Steps – Pre-Development Period

Resource Studies Testing + Engineering Environmental Studies General Studies + Arrangements

Geological and hydrogeological surveys will be performed in several stages to increase the knowledge of the deposit step by step and to provide input for associated studies.

Additional bench and pilot scale testing is required to complete the necessary engineering studies. Resource access has to be achieved.

Environmental studies for understanding the environmental impact of the industry will be conducted. EIA and associated studies will be performed.

To bring the project to a bankable status

Geological Survey u  Geophysics u  Drilling u  Mapping u  Sample preparation and

conducting laboratory analyses

u  Geological modeling u  Mineral Resource

estimations and Recoverable Reserves

Hydrogeological Survey u  Drilling water wells u  Performing pumping tests u  Water analyses u  Composing a groundwater

flow model u  Determine water extraction

rates and design well field for the industrial complex

Access to Resource u  Large diameter drilling for

accessing the resource for testing purposes

Testing + Engineering u  Performing retorting tests in

bench and pilot units

Preparing FEED package u  Study updates based on the

new geological information and test results

u  Preparing of basic engineering (FEED) package for :

•  Mining •  Oil Processing (retorting) •  Oil Upgrading •  Power Production •  Common Facilities and

Infrastructure •  Housing

Environmental Studies u  Weather monitoring and

baseline data collection u  Ash and overburden leaching

tests u  Waste disposal plan u  Land remediation u  Studies for reusing of ash and

by products

Environmental Impact Assessment (EIA)

u  EIA for the oil and power projects

u  Assessing and fixing the environmental limit values, quality standards and monitoring regime

Product Marketing u  Updating market study u  Consultations and pre-

agreements with potential off takers

Feasibility Study Update u  Implementation Plan u  Key project risks and mitigation

measures u  Updating of financial analyses u  Updating the Bankable

Feasibility Study

Financing of the Project u  Arrange financing for the

Development Stage of the Project

During the Pre-Development Phase, Enefit will focus on the following tasks with a view to reaching a bankable status with the project

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11. Next Steps - Resource Studies

Information on 49 boreholes has been incorporated into the geological model

•  20 boreholes inside the Concession and Right of First Refusal Areas

•  18 boreholes in direct neighborhood

•  11 boreholes outside direct neighborhood

Current Geological Database

To better understand: •  Geological setting of the oil shale •  Possible fault lines and potential areas with no oil

shale •  Overburden thickness and characteristics •  Quality distribution of the oil shale layers (heating

value + oil yields, chemical composition, etc) •  Groundwater situation and availability

The new geological exploration program will include:

•  A geophysical survey •  Drilling of additional boreholes

u  Phase I: 62 boreholes (1km spacing) u  Phase II: 43 boreholes (750m spacing)

•  Oil Shale analyses u  Fischer assay + heating values u  Macro- & microelements u  Mineralogy

•  Geological & topographical mapping •  Water well drilling and hydrogeological modeling •  Leaching tests

Further geological studies are required

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12. Next steps – Testing + Engineering For pilot testings a representative bulk sample of ca 100 tons is needed

EE has been considered the following alternatives for getting this sample: (1) Opening of Box Cut (2) Sinking an Exploration Shaft (3) Drilling a large diameter drill hole

Currently the preparation for the large diameter drilling is ongoing for the following reasons:

u  Fast drilling the preparation, mobilization and drilling can be completed within 3 months

u  Exact sampling it is possible to take 1m interval samples

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13. Next steps – Testing + Engineering CFB combustions tests at Outotecs 700mm CFB pilot unit

Equipment It is envisaged that the Outotec CFB pilot facility is used for that purpose:

•  Ø 700 mm •  recycle cyclone, char and magnetic separator •  gas cleaning system •  ancillary equipment

Attarat oil shale testing For preparing the final design for the CFB plant a 60 ton oil shale sample has to be tested at the pilot plant to:

•  test different qualities of the oil shale •  test blending according to mining plan •  fix fuel specifications

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14. Next steps – Testing + Engineering

Testing: •  Characterization of oil shale •  Bench-scale unit for solid heat carrier process 20 kg/h •  Bench-scale units to test fluidizing behavior of material •  Pilot plant for combustion of spent shale or oil shale in CFB •  Pilot plant for drying of oil shale

Modeling: •  Enefit process model in AspenPlus •  Fine particles behaviour modeling in SolidSIM •  CAD drawings

Engineering: •  Conceptual engineering •  Basic process and plant engineering •  Detailed plant design (layout, piping, electrical,

instrumentation, automation, mechanical, structural)

Approach: •  Conceptual study update 3 months •  Testing and basic engineering 6 -12 months •  Detailed engineering 9-12 months

Steps for proving the Enefit technology for the Jordanian oil shale

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A Reality