Saturday, May 20, 2023

U.S. Legislators Attempt To Ban Oil And Gas Exports

Three U.S. legislators have proposed a bill that would reimpose a ban on U.S. crude oil exports on the ground that this would benefit coastal communities, U.S. energy consumers as a whole, and help the U.S. achieve its climate change goals.

“Block All New (BAN) Fossil Fuel Exports Act, legislation that would amend the Energy Policy and Conservation Act and ban the export of American crude oil and natural gas abroad to protect frontline communities from dangerous export infrastructure, prioritize U.S. consumers against fossil fuel profiteering, and help ensure the United States meets its climate and clean energy commitments on the world stage,” a news release on the page of Senator Edward Markey, a lead sponsor of the legislation, said.

This is the latest attempt to stop U.S. oil and gas producers from exporting their products overseas after a removal of the ban in December 2015 turned the United States into one of the largest energy exporters in the world.

“Oil and gas companies continue to pad their pockets at the expense of American consumers and frontline communities – all while fueling our global climate crisis,” Markey said. “Our country is due for an oil change. A ban on oil and natural gas exports overseas is a win for environmental justice, for our economy, and for our planet.”

The bill was introduced simultaneously in Senate and in the House of Representatives, where it will likely be rejected by the Republican majority. Yet it is a signal that the aggressive push against the oil industry from any direction possible is not letting up.

Previous attempts to reimpose the ban on crude oil and gas exports have run along similar lines with a special focus on keeping energy affordable for U.S. consumers. Opponents have invariably beat the initiative, however, pointing out that in a global oil market, even with an export ban, U.S. oil—and retail fuel—prices would be tied to global prices and a ban would lead to a surge in these.

An additional argument has been the importance of U.S. oil and gas for international partners such as Europe, which only avoided a major energy shortage last year thanks to urgent deliveries of U.S. liquefied natural gas.

By Irina Slav for Oilprice.com

UK

ClientEarth Asks High Court To Reconsider Its Case Against Shell

ClientEarth, the environmentalist group that tried to sue Shell’s board of directors, will ask the High Court at an oral hearing to reconsider its decision to dismiss a case the group brought against Shell’s board of directors.

The organization took Shell’s board to court in February on allegations that the company’s directors were guilty of mismanaging climate risk and of breaching company law with their failure to devise an emission-reduction strategy in accordance with the Paris Agreement targets.

“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” a senior lawyer for the environmentalist group said, as quoted by CNBC, in February.

The High Court, however, dismissed the case on the grounds that the plaintiffs “do not disclose a prima facie case for giving permission to continue the claim” and that its allegations imposed specific obligations on company directors on managing climate risk, ESG Clarity reported earlier this month.

The lawsuit send waves across the industry since it was the first of its kind—company executives and directors have never been targeted individually by environmentalist organizations before.

The High Court judge who ruled on the case noted that although ClientEarth had made some valid points with regard to the risk Shell faces as a result of climate change, the allegation that directors mismanaged this risk was hard to prove.

There is no “universally accepted methodology as to the means by which Shell might be able to achieved the targeted reductions [to emissions]…this means that it is very difficult to treat what is said as providing a proper evidential basis for alleging that no reasonable board of directors could properly conclude that the pathway to achievement is the one they have adopted,” Judge Trower said.

By Irina Slav for Oilprice.com

China Steps Up Inspections On Old Oil Tankers

As the number of old oil tankers shipping Russian oil has soared, Chinese authorities in the Shandong province have increased the safety checks on old vessels arriving at the major oil import port of Qingdao, holding ships more than 20 years old at the port for weeks.

At least two old oil tankers, including one from Russia, spent nearly a month at the port of Qingdao, waiting to be inspected more thoroughly, Bloomberg reported on Friday, quoting sources familiar with the checks and a database of inspections in the Asia Pacific.

Last year, an unusually large number of tankers changed ownership in what analysts and shipping industry officials believe was a push from Russia to continue shipping large volumes of its crude and entities willing to profit from Russian oil trade in a sanctions regime. The ‘dark’ or ‘shadow’ fleet of oil tankers is growing to now include tankers not only shipping sanctioned Iranian and Venezuelan oil, but also increasingly larger volumes of Russian oil and products. 

Ahead of the December 5 EU embargo on imports of Russian crude oil, which was announced months before the implementation, hundreds of vessels—mostly older ones nearing the end of service life and bound for scrap—had changed ownership to companies not associated with the EU or G7, such as firms based in Dubai.  

China’s increased scrutiny of old vessels coincides with the surge of opaque trades and shipping practices after the price cap on Russian oil came into effect.

The number of tankers operating in opaque markets reached a record high in the first quarter of 2023, supported by Russian and Iranian trade, Vortexa said in a report last month.

Vortexa observed 125 tankers that switched from Iran and Venezuela to Russian trade and carried 1.1 million barrels per day (bpd) of Russian crude in March 2023, a record high.

Shipping oil with old tankers without EU/G7 companies’ insurance is a disaster waiting to happen, shipping analysts and brokers say. 

Just this week, the United States and several other Western countries plus Ukraine called for increased surveillance for cracking down illicit ship-to-ship transfers of oil, which have soared since the embargoes on Russian crude and product exports came into effect.  

By Tsvetana Paraskova for Oilprice.com

New Mexico Accounted For 50% Of U.S. Oil Production Growth In 2022

New Mexico, home to part of the Permian basin, saw the highest crude oil production growth of any U.S. state last year, with output gains of 300,000 barrels per day (bpd) accounting for half of America’s oil production increase, the Energy Information Administration (EIA) said in a report on Thursday.

Total U.S. crude oil production increased by 600,000 bpd in 2022 compared with 2021, averaging 11.9 million bpd, per EIA’s Monthly Crude Oil and Natural Gas Production report.

For the third year in a row, New Mexico’s oil production growth eclipsed the growth of crude output in any other U.S. state, including Texas, the biggest U.S. oil-producing state and also home to part of the Permian shale basin.

Crude oil production in New Mexico jumped by 300,000 bpd to 1.6 million bpd in 2022, a record for the state, the EIA has estimated.

New Mexico and Texas contributed the most growth to U.S. crude oil production in 2022, while oil output in the rest of the United States grew by just 0.6% last year, or by 33,000 bpd.

Crude oil production in California fell for the eighth consecutive year, and production in Alaska declined for the fifth consecutive year. North Dakota, which had been one of the leading states in oil production growth in the past decade, saw oil production fall for the third consecutive year in 2022, the EIA noted.

The administration forecast in its Short-Term Energy Outlook (STEO) in May that U.S. crude oil production would continue to increase this year and next. Total U.S. crude oil production is set to climb to 12.5 million bpd in 2023 and to 12.7 million bpd in 2024, according to EIA’s most recent estimates.

However, production growth could be lower than expected as the new priorities of the shale patch – capital discipline and a focus on returns to shareholders and debt repayments – have coupled with supply chain constraints and cost inflation to weigh on growth in recent months.

By Tsvetana Paraskova for Oilprice.com

Trans Mountain Pipeline Needs More Funds

AB ELECTION LEADERS DEBATE MAY 17,2023 


Canada's Trans Mountain Expansion crude oil pipeline needs more funds as construction costs have skyrocketed, Canada's federal government said on Friday.

"Given the significant expenditures expected ... [Trans Mountain Corporation] will require the continued availability of future financing in order to proceed with the project," the Canada Development Investment Corporation (CDEV) said in its 2022 annual report.

The Trans Mountain Pipeline was due for an expansion years ago, but the former owner, Kinder Morgan, was planning on killing in the project so the federal government stepped in and forced Trans Mountain Corporation to finish the project. In 2017, the project was estimated at C$7.4 billion, but by March 2023, the estimated costs had ballooned to a staggering C$30.9 billion—or $22.3 billion.

The company has attributed the increased costs in part to inflation, supply chain challenges, and labor shortages.

The project is about 80% complete, with an expected in-service date of early next year. That is, if the financial issues are sorted in time.

As of the end of 2022, Trans Mountain Corporation owned the federal government C$16.1, nearly three-fourths of which were construction-related costs for the new line.

Now, TMC is estimating that it will take another C$9.1 billion this year, but it has nearly exhausted its credit limits.

The federal government has stated that it is not interested in long-term ownership of the two Trans Mountain lines, but according to Argus, the government may be unable to recoup its investments.

The Trans Mountain pipeline is expected to help Canada overcome its constrained pipeline capacity and open new markets by nearly doubling the amount of oil capable of flowing through the system, at 890,000 bpd.

The pipeline continues to face climate opposition.

By Julianne Geiger for Oilprice.com

G7 Urged To Take The Lead In Phasing Out Fossil Fuels

  • A group of nations urged the G7 to take the lead in phasing out fossil fuels.

  • The small island nations of the Marshall Islands, Palau, Saint Lucia, and Vanuatu are extremely vulnerable to climate change and have increased their influence at the UN discussions about ways to curb the rise in global temperatures.

  • The G7 leaders gathered on Friday for their three-day summit in Japan, which is expected to tackle climate issues alongside geopolitical topics.

Several countries, including the Netherlands, Chile, and New Zealand, are calling on the G7 to lead by example and take the lead in phasing out fossil fuels, according to a letter sent to the group of the world’s most industrialized nations, which Reuters has seen.

“We must bring the fossil fuel era to an end and phase out fossil fuels,” the Netherlands, Chile, New Zealand, the Marshall Islands, Palau, Saint Lucia, and Vanuatu wrote in the letter.

The small island nations of the Marshall Islands, Palau, Saint Lucia, and Vanuatu are extremely vulnerable to climate change and have increased their influence at the UN discussions about ways to curb the rise in global temperatures.

“We call on you to take the lead and work with us to agree this at COP28,” the letter reads, referring to the climate summit to be held in Dubai at the end of this year.

The G7 leaders gathered on Friday for their three-day summit in Japan, which is expected to tackle climate issues alongside geopolitical topics such as the Russian invasion of Ukraine and the relations of the West with China.

The G7 group was struggling to find common ground on committing to phasing out coal power generation by 2030 ahead of a summit of climate ministers in Japan in April.

While all G7 members were firm on the issue of a coal phase-out, they appeared unable to agree on a single deadline for that.  

Canada and several other G7 members committed to a coal phase-out by 2030, but others refrained from making such a commitment.

The main commitments of the G7 climate ministers last month were to work to boost solar and wind power generation capacity. They agreed to look to increase offshore wind energy generation capacity by 150 gigawatts and a similar boost to solar capacity to over 1 terawatt.

By Charles Kennedy for Oilprice.com

The Death Of Fracking In Colombia

  • Colombia’s left-wing President Petro plans to end contracting for hydrocarbon exploration and officially ban hydraulic fracturing known as fracking.

  • Various Colombian governments have long viewed fracking as a viable solution to the country’s shortage of proven oil and natural gas reserves.

  • The anti-fracking bill, after being debated and approved by the Senate, has moved to the lower house of Congress for review, inching Colombia ever closer to prohibiting fracking

Colombia’s beleaguered oil industry is facing a series of volatile headwinds as it struggles to return to a pre-pandemic tempo of operations. Petroleum output despite rising during March 2023 to 771,332 barrels per day remains well below 2019 pre-pandemic production of nearly 900,000 barrels daily. Meagre proven oil reserves of just over 2 billion barrels with a production life of eight years are also weighing on the crucially important hydrocarbon sector. The Andean country’s first leftist President Gustavo Petro, a former socialist guerilla, plans to end contracting for hydrocarbon exploration and officially ban hydraulic fracturing known as fracking. There are signs that the legislative prohibition of fracking is close to being enacted, which could spell disaster for Colombia’s economically crucial oil industry. 

Various Colombian governments have long viewed fracking as a viable solution to the country’s shortage of proven oil and natural gas reserves, which at the end of 2021 stood at 2.4 billion barrels and 3.164 trillion cubic feet respectively. Those reserves possess a relatively short production life of 7.6 years and eight years, even with production volumes at far lower levels than before the pandemic. It is for those reasons that fracking has long been considered a solution for an industry that is a key driver of the economy and government finances. That is highlighted by data from Colombian government statistical agency DANE showing that during 2022 oil generated $19 billion of export earnings which is 33% of exports by value. 

Oil is responsible for nearly a fifth of fiscal revenue, making it an important source of income for a country with a narrow tax base where the government is battling ballooning budget deficits. Indeed, Colombia’s government has long fought to broaden the tax base and bolster fiscal income, with Petro’s predecessor Ivan Duque seeking to hike taxes as part of a broad 2021 reform package that triggered violent nationwide protests. Despite recent reforms, including Duque’s revised 2021 tax increases and Petro’s $4 billion tax package approved in November 2022, Colombia still has one of the lowest tax-to-GDP ratios in Latin America. OECD data shows that by the end of the 2022 it was a mere 18.7%, which is nearly half of the OECD average of 33.5%, placing Colombia 12th lowest in Latin America behind Ecuador and ahead of Mexico. A long-term chronic shortage of tax revenue is weighing heavily in Colombia’s government, especially since the 2020 COVID-19 pandemic when the budget deficit blew out to 7% of GDP, remaining elevated ever since despite falling to 5.3% for 2022. For these reasons prior administrations have sought to introduce fracking to Colombia, which is estimated by the U.S. EIA to contain around 92 billion barrels of shale oil and 153 trillion cubic feet of shale gas in place. That underscores the tremendous unconventional oil and natural gas potential of the Middle Magdalena Valley and Llanos Basins which could resolve the risks created a by lack of hydrocarbon reserves.

It is for those reasons that various energy companies, the industry regulator the National Hydrocarbon Agency and national government were exploring shale hydrocarbon potential over a decade ago. A decade ago, Bogota introduced regulations aimed at attracting unconventional hydrocarbon investment, the most notable being a 40% tax reduction for shale oil and gas. Between 2012 and 2015, the first shale blocks were allocated by the ANH to various energy companies including Ecopetrol, ExxonMobil, ConocoPhillips, Canacol Energy and Parex Energy. Since then, shale hydrocarbon exploration in the Andean country has been fraught with difficulties and failed to take off. A key problem being considerable community dissent and protests regarding the controversial hydrocarbon lifting technique. That eventually saw Colombia’s highest administrative tribunal the State Council place a moratorium on fracking during 2018 which prevented the technique from being employed in Colombia.

While the moratorium was upheld in 2019 the tribunal did, that year, exempt projects aimed at testing the controversial technique from the ruling, allowing Ecopetrol and ExxonMobil to proceed with the Kale and Platero fracking pilots. During July 2022, the State Council rejected a lawsuit (Spanish) seeking to abolish the regulations that made fracking viable in Colombia, essentially overturning the 2018 moratorium and consenting to the controversial hydrocarbon extraction technique being used in Colombia. By August 2022, newly inaugurated President Petro had introduced a bill to Congress to officially ban fracking in Colombia. Petro is seeking to prohibit fracking, which is outlawed in Germany, France, Spain and Australia, because of its association with groundwater contamination along with the tremendous amounts of toxic wastewater produced. Fracking is also believed to cause frequent minor earth tremors sparking concerns about its use in Colombia’s unstable geology. 

The anti-fracking bill, after being debated and approved by the Senate (Spanish), has moved to the lower house of Congress for review, inching Colombia ever closer to prohibiting fracking. While that is pleasing many community and environmental groups opposed to the hydrocarbon extraction method it has sparked considerable fallout for Colombia’s economically crucial oil industry which has yet to recover from the 2020 pandemic. 

Many of the energy companies holding fracking licenses are seeking to shelve them while global supermajor Exxon is exiting upstream operations in Colombia. Already the integrated energy company has announced its withdrawal from the VMM-37 Block in the Middle Magdalena Valley Basin where it was participating in the Platero fracking pilot which required an investment of $53 million. Exxon is also in the process of ditching several other blocks it holds interests in and is attempting to recover the investment already made in the Platero pilot from the Petro administration.

Exxon’s decision is understandable given the considerable success it is enjoying in Guyana, a lower risk South American jurisdiction, where it secured extremely favorable terms for the prolific offshore Stabroek Block. In that block alone the supermajor has discovered over 11 billion barrels of oil. Given the considerable risk now associated with operating in Colombia, other energy companies could very well follow suit creating a legal and financial headache for Petro’s government. Falling energy investment also threatens Colombia’s oil dependent economy, the value of the peso and government coffers with Bogota reliant upon income from oil rents, especially after Petro’s tax reforms boosted revenues from the petroleum industry. 

By Matthew Smith for Oilprice.com

The EU Is Deeply Divided Over Nuclear's Role In The Energy Transition

  • Thirteen EU countries – nearly half of the 27 member states – had operational nuclear reactors as of 2021.

  • As of the middle of April, Germany no longer produces nuclear power after it phased out all its nuclear plants.

  • The spat between proponents and opponents is even hampering the EU from passing the Renewable Energy Directive, which stipulates a binding target of 42.5% renewables share in the EU’s electricity mix by 2030.

While the U.S., the UK, and even Japan are doubling down on nuclear energy in the wake of the energy crisis, the European Union has seen divisions among member states over the role of atomic power in the climate goals only deepen since the Russian invasion of Ukraine and the spike in energy prices.

The clash between the pro-nuclear EU members – half of the bloc’s countries that have nuclear power plants – and those opposing the expansion of this form of energy has escalated in recent months. The spat is even hampering the EU from passing the Renewable Energy Directive, which stipulates a binding target of 42.5% renewables share in the EU’s electricity mix by 2030.   

The pro-nuclear camp, led by France, seeks greater recognition of nuclear energy in the EU’s Green Deal and the inclusion of nuclear energy in the zero-carbon targets. The anti-nuclear camp, led by Germany and Austria, dismisses nuclear as a “green” power source and wants the EU to focus on accelerating the installation of wind and solar energy instead.

Nuclear Generates 25% Of EU’s Electricity

Thirteen EU countries – nearly half of the 27 member states – had operational nuclear reactors as of 2021—Belgium, Bulgaria, Czechia, Germany, Spain, France, Hungary, the Netherlands, Romania, Slovenia, Slovakia, Finland, and Sweden.

In 2021, nuclear plants with a total installed capacity of around 100 gigawatts (GW) generated 25.2% of all electricity produced in the EU, according to Eurostat data. France had the highest share of nuclear power in its electricity mix, at 68.9%, followed by Slovakia with a 52.4% nuclear share and Belgium with 50.6%.

As of the middle of April, Germany no longer produces nuclear power after it phased out all its nuclear plants—a pledge made in the aftermath of the Fukushima disaster in Japan in 2011.

The clash among EU countries on how nuclear energy should be treated in the green transition could be simplified with the different paths the EU’s largest economies – Germany and France – have chosen to follow in recent years and in the wake of the energy crisis last year.

Europe’s biggest economy, Germany, last month ended the nuclear power era despite continued concerns about energy security and energy supply after the Russian invasion of Ukraine and the end of pipeline natural gas deliveries from Russia, which was the largest gas supplier to Germany before the war. Germany took its last three nuclear power plants offline in the middle of April, ending more than six decades of commercial nuclear energy use.

Although France has had troubles at many of its nuclear reactors, half of which have been shut down for repairs and maintenance several times over the past year, Europe’s second-largest economy doubles down on nuclear energy, spearheads EU efforts to include nuclear in the achievement of the net-zero targets, and is looking to develop small modular reactors

EU Alliance Seeks Greater Role For Nuclear In Reaching Net-Zero

But the EU hasn’t included nuclear in the pathways to reaching net-zero by 2050. Nearly half of the member states want that changed.

So this week, France’s Energy Transition Minister Agnès Pannier-Runacher hosted a meeting of the so-called Nuclear Alliance, at which representatives of 16 European countries – those with nuclear reactors plus the UK as invitee and Italy as observer – called on the EU “to take into account the contribution of all affordable, reliable, fossil-free and safe energy sources to achieve climate neutrality by 2050.”

The representatives of the Nuclear Alliance “emphasized on the key contribution of nuclear energy, as an addition to renewable energy, to decarbonise Europe’s energy production and collectively reach climate neutrality by 2050 at the latest,” the statement from the meeting reads.

They also encouraged the European Commission, which was represented at the meeting by Energy Commissioner Kadri Simson, “to recognize nuclear energy in the EU’s energy strategy and relevant policies, including by proposing relevant initiatives and recognizing Member States’ efforts and commitment to decarbonize their energy mix with nuclear energy alongside all other fossil-free sources of energy in line with the transition toward climate neutrality.”

“16 European countries are convinced that nuclear power is an essential part of the energy transition, like renewable energies,” France’s Pannier-Runacher said

Yves Desbazeille, Director General at industry body nucleareurope who also attended the meeting, commented,

“This meeting shows that an ever-growing number of Member States recognise that if we want to decarbonise our economy in a sustainable and affordable way, then the EU needs to support the development of both nuclear and renewables.”

Nuclear Energy Spat Delays Adoption Of Higher Renewables Targets

The EU divide on nuclear energy this week delayed a key vote on the bloc’s renewable energy targets as member states continue to argue about the role of nuclear power in the clean energy targets. EU member states were set to vote on Wednesday to endorse higher renewable energy targets, the so-called Renewable Energy Directive, and potentially pave the way for a final formal vote next week.

But France voiced concerns about the small role of nuclear energy in the clean energy targets, while a number of Eastern European countries reportedly expressed concerns about the high cost of accelerating the deployment of renewable energy sources. 

Nuclear energy has been a bone of contention in several pieces of EU legislation in recent months. Last year, the EU decided to include nuclear energy and some natural gas projects and plants as environmentally sustainable economic activities. This was another controversial decision that drew the ire of environmental organizations that are now suing “the European Commission to end gas and nuclear greenwashing.”

By Tsvetana Paraskova for Oilprice.com


Remediation of Kyrgyz uranium legacy site to start

19 May 2023


Remediation works at Mailuu-Suu - the largest uranium legacy site in Kyrgyzstan - are set to begin following the allocation of a grant of EUR23 million (USD25 million) from the Environmental Remediation Account for Central Asia (ERA), managed by the European Bank for Reconstruction and Development (EBRD).

Mailuu-Suu (Image: WNN)

In the Mailuu-Suu area, uranium was mined and milled between 1946 and 1967 as part of the Soviet nuclear programme. During this period, some 10,000 tonnes of uranium oxide were produced there. The underground mines are subdivided into five mine fields and are accessible via three shafts. The Kara Balta Mining Combine was set up in the 1950s to mine and treat this ore in the north, near Bishkek.

Many unsecured deposits of uranium tailings on the steep and unstable mountain slopes around Mailuu-Suu (a former closed city) pose serious risks to the health of the local population and the environment. In addition, groundwater contaminated by mining waste can pose a risk when used for drinking and irrigation.

Radioactive substances are currently stored in 23 tailings ponds (total volume about 2 million cubic metres) and 13 mining debris heaps (total volume about 0.9 million cubic metres) situated along the Mailuu-Suu River, which feeds into the Syr Darya River. Some of these tailings have already been damaged by landslides, mudslides and floods, and some are in high-risk areas where major landslides are expected.

The ERA grant agreement - which will allow the commencement of seven years of remediation works - was signed on 16 May by Boobek Ajikeev, Kyrgyz Minister of Emergency Situations, and Balthasar Lindauer, director of the EBRD's Nuclear Safety Department.

The grant of EUR23 million, the largest since the establishment of the ERA, will help to stabilise and cover the radioactive tailings located along the Mailuu-Suu River. The planned soil covers will be 2 metres thick. About 350,000 cubic metres of tailings need to be relocated to a safe disposal site. The project will also finance the rehabilitation of contaminated land and water resources in the area.

"This is the third such site to be remediated in the Kyrgyz Republic following the successful completion of similar work at former uranium-mining locations in Shekaftar and Min-Kush in spring 2022," the EBRD noted. "The project will serve as a model for initiatives in other parts of Central Asia, where the issue of uranium legacy sites still needs to be addressed."

Central Asia served as an important source of uranium for the former Soviet Union. Uranium was mined for more than 50 years and uranium ore was also imported from other countries for processing, and large amounts of radioactively contaminated material were placed in mining waste dumps and tailing sites. Most of the mines were closed by 1995 but very little remediation was done before or after the closure of the mining and milling operations. The contaminated material is a threat to the environment and the health of the population. The hazards include the possible pollution of ground and surface water in a key agricultural centre of the region.

The EBRD in 2015 established the ERA, at the request of the European Commission, to tackle this legacy. The ERA, which became operational in 2016, is supported by contributions from the European Commission, Belgium, Lithuania, Norway, Spain, Switzerland and the USA.

In August 2017, the Kyrgyz government ratified a framework agreement with the EBRD, which had been signed in January of that year. Ratification of the agreement meant all the basic conditions were in place for remediation work to begin at several uranium legacy sites in the country.

SMRs considered for Indonesian fertiliser plant

19 May 2023


A collaboration between Danish and Indonesian companies will study the operational and regulatory conditions for constructing an ammonia production facility in Indonesia powered by Copenhagen Atomics' small and modular thorium molten salt reactors.

The signing of the MoU in Copenhagen (Image: Copenhagen Atomics)

Four Danish companies - Copenhagen Atomics, Aalborg CSP, Alfa Laval and Topsoe - have signed a memorandum of understanding with Indonesian ammonia producer Pupuk Kalimantan Timur (PKT), together with Pertamina New & Renewable Energy to investigate building a facility in the city of Bontang on the eastern coast of the island of Borneo, in the province of East Kalimantan.

The facility - expected to open in 2028 - will produce 1 million tonnes of ultra-low emission ammonia annually, with an estimated investment of USD4 billion. This is sufficient to produce fertiliser for the production of food for 45 million people, about one-sixth of the Indonesian population. During the plant's 50-year lifetime, it will produce ammonia worth USD25 billion at today's prices.

In addition to the ammonia synthesis, Topsoe will supply newly-developed electrolysis cell technology, called Solid Oxide Electrolyser Cell (SOEC). SOEC is claimed to make the production of hydrogen up to 30% more efficient than competing technologies. Hydrogen is an intermediate stage in the production of ammonia. Alfa Laval will deliver heat exchangers to optimise the energy balance of the plant, and desalination to produce ultra-pure water for the electrolysis process. Copenhagen Atomics will supply its thorium molten salt small modular reactors (SMRs). Meanwhile, Aalborg CSP will design and supply thermal energy storage systems, molten salt based steam boilers providing the energy balancing required to integrate the energy production from the SMR modules with electricity production and waste heat from power turbines with production of ultra clean water.

The nuclear power plant part of the project will comprise of 25 SMR modules proving a total of 1 GW.


A visualisation of a 1 GW plant based on Copenhagen Atomics' molten salt reactor (Image: UK Atomics)

"In the next six months, the final examinations must be completed and the legal landscape in Indonesia should be fully mapped," Copenhagen Atomics said.

"The study aims to overcome the challenge of energy intensity in producing green ammonia," PKT said. "The study seeks to ascertain whether the use of thorium-based nuclear technology can enable the production of ammonia without the use of hydrocarbon raw materials while remaining competitive in price."

"Pupuk Kaltim views the joint study as an essential step towards achieving our sustainability goals," said Rahmad Pribadi, President Director of PKT. "We are honoured to work with industry leaders to promote sustainable practices and contribute to a greener planet. Our commitment to sustainability is reflected in our focus on innovation to revolutionise the agricultural sector. As consumers increasingly prefer sustainable and eco-friendly products, PKT is proud to be at the forefront of this movement."

Thomas Jam Pedersen, chairman and co-founder of Copenhagen Atomics. "Green ammonia at low price helps reduce the world's CO2 emissions, and for our thorium reactors, that market is a huge opportunity, especially when we can offer a complete plant together with our partners."

Researched and written by World Nuclear News