- Email: [email protected]
Oil shale production and power generation in Estonia Economic and environmental dilemmas
Oil shale production and power generation in Estonia Economic and environmental dilemmas N.I. Barabaner and I.Z. Kaganovich
Combustive oil shale is the main type of fuel used in Estonian power plants. The economic state of the oil shale mining industry has deteriorated during the last decade. The development of oil shale production and use in power generation is accompanied by severe environmental pollution. The future of shale based power generation in Estonia depends on building new small capacity mines, in conjunction with the renovation and reconstruction of existing power plants and implementing measures to protect the environment. Keywords: Oil shale; Estonia; Environmental damage
More than half of Estonia's fuel demand is met by oil shale, which is the major fuel used in the Republic's power stations. The source of the raw material for power generation is located in the Baltic shale basin comprising the Estonian and Leningrad deposits. The deposits differ essentially in their quality, in the conditions met, technical expertise, and economic efficiency of oil shale extraction, which is carried out by both open cut as well as underground methods. Within the area of the Estonian deposit (Figure 1) six mines and four sections are operating, whereas in the Leningrad region there are three mines. The oil shale consumers are situated in north-eastern Estonia: they comprise two power plants (Baltic and Estonian), with a total capacity of 3045 MW; two thermal power plants; a cement works; and two shale processing industries (Kohtla-J/irve and Kivi61i). In the Leningrad region (the small town of Slantsy) oil shale is utilized in a shale processing complex and at thermal power plants. Estonia's demand for shale raw materials is met by domestic The authors are with the Institute of Economics, Estonian Academy of Sciences, 7 Estonia Avenue, Tallinn 200101, Estonia.
0301-4215/93/060703-07 © 1993 Butterworth-Heinemann Ltd
resources and by 8% imported from the Leningrad region.
Production trends and costs The rapid development of power generation and the shale processing industry in the 1970s called for a growth in oil shale mining, which reached its peak, 36.5 million tonnes (Mt), in 1980. Comparatively low shale-extraction costs provided consumers with high efficiency. However, the demand for oil shale has since declined. Extraction has been reduced, and in 1989 amounted to 28 Mt in the basin as a whole. In power generation, unconcentrated oil shale, with a size of 0-25 mm and a heating value of 8.6-9.0 MJ/kg, is used, but thermal processes use concentrated oil shale with a coarseness of 25-125 mm and a heating value of 10.9-11.3 MJ/kg (at the Kohtla-J~rve works). The industry in Slantsy uses oil shale with a heating value of 9.6-10 MJ/kg. The production of the coarse grained oil shale costs much more than the shale used in power generation because of the high costs of the concentration process and the loss of up to 40% of the initial raw material. At present, the share of coarse grained oil shale in Estonia is 20% of total extraction. In 1975-89 the consumption of coarse grained oil shale declined by 43%. The consumption of oil shale for power generation has also fallen. The export of coarse grained oil shale to the Leningrad region has ceased. This situation has led to the stockpiling of unsold oil shale; 8 Mt remained at mine depots at the end of 1985. The fall in the demand for oil shale has led to a curtailment of its extraction. In 1989 oil shale mining in Estonia had decreased by 25% compared with 1980, the productive capacities of mines were at 73.8% of load and production costs had increased by 44.5% (Table 1). In 1980 the production cost of a tonne of oil shale was 3.03 roubles; in 1989 it was 4.38 roubles; the probable 703
Oil shale production and power generation in Estonia
Gulf
~::~
of
Finland
Kohtla-Jarve
Tallinn
Narva
Estonia CIS Lake 0
50 km
I
I
Peipsi Oil shale deposit
Figure 1. Estonian oil shale deposit. cost from new mines may be in the region of 7-9 roubles per tonne. In addition to the reduction in industrial demand for shale, its cost has also been influenced by the general price rise in building materials, and the rise in industrial and office workers' pay in the coal and oil shale mining industries. Since the Estonia mine (in 1972) and the Oktyabrsky section (in 1974) came into operation, oil shale production costs have invariably risen, even at times of increasing extraction rates (Figures 2 and 3). The economic efficiency of the mining industry has also been adversely affected by the deterioration in the geological conditions, the increase in the scope of the stripping works, the worsening of the structure and quality of the layers, increases in water levels and more complicated processing systems.
The economic outlook for oil shale mining will continue to deteriorate for the following reasons: the sections most suited for open cut development, as well as the central parts of the deposit with their better thickness, heating value, depth of bedding etc, have already been depleted; • the scope of stripping works will continue to increase in the sections; • in the next decade present capacity will fall as reserves are exhausted, and new enterprises can only be built in the outlying parts of the basin with even worse extraction conditions and lower quality deposits; and • the costs of preventing and eliminating environmental damage connected with the extraction and utilization of oil shale will undoubtedly increase. •
Table 1. Characteristics of Baltic oil shale production, 1975-89.
Estonian deposit Production (Mt) Production cost (roubles/t) Mining Open cast Production personnel (thousand) Calorific value (MJ/kg) Leningrad deposit Production (Mt) Production cost (roubles/t) Production personnel (thousand) Calorific value (MJ/kg)
704
1975
1980
1985
1989
28.5 2.59 3.46 1.81 10.41 9.46
31.3 3.03 3.56 2.44 10.48 9.45
26.4 2.87 4.46 3.21 9.38 9.49
23.3 4.38 5.0 3.74 7.89 9.47
5.1 4.38 4.45 8.96
5.2 4.67 4.42 8.88
4.9 6.42 4.24 8.85
4.7 7.86 4.2 8.79
E N E R G Y P O L I C Y June 1993
Oil shale production and power generation in Estonia r
30
I ~ ~Ing
OI en cast
i!ii!i!iiiijiii!!ii '""iii:!iii!iiiiiiii' ii!iiiiiiiiiiiiii ,....................... ,
i
iiiiiiiiiiiiiiiil '!i!i!i!i!i!i!i!i!i!i!i' 'ii!iliiiiii!iiii!i!ii' i3!!!?i!i?i!3!?i?i?i~ 'iiiiili!iiiiiii!i!iiii'
iiiiiiiiiil
~!i!i!i!i!iiiiliiiiiiil iiiiiiiiliiiiiii~i~i~i
10
0
1960
1965
1975
1970
1980
1985
1991
Figure 2. Oil shale production in Estonia 1960-91. E n v i r o n m e n t a l aspects
Between 200 and 300 million m 3 of water is annually pumped out of the oil shale mine and sections. The mine and open pit waters have above standard hardness, with a high suspension content. They drain mainly to the Gulf of Finland and Peipsi Lake. Pumping out the underground waters causes depression around the mines and, as a result, a water deficit is created and the level of water in nearby lakes is sinking. The water pumped out contains up to 500 milligrammes per litre (mg/l) of sulphates, 40 mg/l of chlorides and up to 200 mg/l of suspensions. The oxygen deficit in the reservoirs causes the sulphates to be converted into hydrogen sulphide, which has a destructive effect on the flora and fauna. 2 As can be seen from Table 2, about 85% of all the water consumed in the Republic is used by the oil shale mining industries. In addition to this, power plants account for 99% of the water used by the oil shale complex. The oil shale complex contributes 83% of the total amount of waste water in the Republic, including a 75% share from power engineering.
Shale mining activities are extremely damaging to the environment: both extraction and consumption of oil shale cover a relatively small area, which accounts for the high concentration of pollutants. Shale fired power plants cause the greatest damage to the atmosphere, while the mining and processing facilities disturb and pollute the water systems. Oil shale mines and sections damage forestry and agriculture and peat extraction. Industrial development of the oil shale basin without the necessary environmental protection has rapidly degraded the state of the environment. The air in the towns of the shale mining region is polluted beyond any permissible standard by volatile ash and dust, by nitric and sulphuric compounds, phenols, and noxious organic substances. Of all the pollutants from stationary sources in the Republic, 85-87% come from this region. In 1987 emissions from oil shale industries amounted to 347.6 thousand tonnes, 323.7 thousand tonnes came from power plants, 21.5 thousand tonnes from shale processing industries and 2.4 thousand tonnes from mining activities, a
20 18 16
0 x
Mining Open cast
(
c
E ~ _~ o ..Q D
12 lO 8
6 4[ ~ 2 L 0 1960
O ~
x
-
I 1965
-
x
O _ I 1970
_
x
/ I 1975
I
I
1980
1985
1991
Figure 3. Oil shale production cost in Estonia 1960-91. ENERGY POLICY June 1993
705
Oil shale production and power generation in Estonia Table 2. Waste water output in Estonia in 1987 (m 3 x 106).
Total Oil shale industry activities Mining Processing Power generation
Total output 3226.0 2682.5 260.3 16.2 2406.0
Without purification 203.0 21.1 5.8 15.2 0.1
The technology for underground oil shale mining causes subsidence, which in turn leads to the formation of hollows, cracks and moulds. In the process of stripping works in the sections the topsoil is eroded and hydrological systems disturbed. The rock slagheaps occupy ever larger areas, topsoil is covered, forests and natural landscapes die. To reduce the negative influence of oil shale extraction on the environment, a combined approach to the utilization and preservation of natural resources is needed, which would include the extraction of oil shale and its attendant minerals with a minimum of loss; protection of timber and peat resources within the area of oil shale extraction; recultivation and reclamation of the exhausted soil around mines; and utilization of the wastes from mining activities and concentrating facilities. A number of measures to reduce emissions of liquid and gaseous pollutants, to use wastes or render them harmless, have been carried out in the oil shale basin. The recultivation of exhausted areas is also in progress. However, this is not enough to reduce the pressures on the environment. The share of funds for nature protection amounts to as little as 4-6% of all fixed assets. According to domestic and overseas experience, expenditures of not less than 20% of the total cost of capital are required to ensure effective protection of the environment against noxious emissions from the power generation and chemical industries. Research on industrial development in northeastern Estonia 4 shows that the region's chances of withstanding technogenic pollution are rather limited. This is why the continued use of outdated oil shale extraction and utilization technologies in new and refurbished facilities must not be tolerated. Power generation capacity should not be expanded unless methods of shale burning are changed.
Utilization of geological reserves The close connection between the poor quality of oil shale and inefficiency in all aspects of its recovery and utilization and environmental degradation has been proved. The increasing inefficiency of oil shale
706
in the combustion process is caused directly by deterioration in the quality of the fuel itself. As well as a deterioration in economic efficiency, the combustion of low-grade oil shale in power plants is accompanied by an increase in both ash slagheaps and emissions of particulate and gaseous substances into the atmosphere. Oil shale losses are in many ways connnected with the need to provide users with good quality raw materials and to preserve the earth's surface in the excavation area. Losses will continue to grow with the need to increase the quality of the extracted oil shale and leave the low-calorific layers of the seam unexploited. The pillars left to prevent roof collapse and surface subsidence also contribute to production losses. As any comparison of the various excavation technologies shows, the most efficient extraction technologies are characterized by the highest rate of change (damage) to the earth's surface; but the higher combustion heat of the rock mass is accompanied by an almost proportional increase in operational losses. 5 The level of operational losses during oil shale extraction in the Baltic basin averages 21-22%, although this figure fluctuates between 6% and 45% according to the excavation method and technology used. Together with all losses during mining, and the exclusion of oil shale reserves which for various reasons cannot be processed, losses total 50% This explains why it is extremely urgent to develop and apply efficient technologies in this field. As these new technologies involve the planned collapse of pillars the benefits of cost reduction and production efficiency must be balanced against the environmental damage. Until recently the prospects for the development of oil shale were based on the assumption that production in the Estonian deposits would be maintained at a level of 23 Mt per year until 2005. This included building a new mine with a capacity of 5.8 Mt, and including 21-22 Mt for power generation. In this context, the production of electricity was also assumed to stay at the present level of 17.5 TWh per year, of which the share of shale fired power plants would amount to 16 TWh. In 1989 the difference between the amount of oil shale production (23.3 Mt) and demand (26 Mt) was met by imports from the Leningrad region (2.0 Mt), and by reducing the residues of unsold oil shale at the mines (0.8-1.0 Mt per year). However, after 1995 the oil shale balance will change considerably. First, residues will have been consumed. Four mines and one section will cease production because their reserves will be exhausted. The volume of open pit mining in
ENERGY POLICY June 1993
Oil shale production and power generation in Estonia Table 3. Oil shale reserves of the Estonian and Leningrad deposits. Reserves as of 1 J a n u a r y 1989 Estonian Leningrad deposit deposit Operating mines Operating open cast pits Reserve explorations Total explored areas Prospective areas O t h e r possible areas Total
(Mt) 408.8 321.2 1510.0 2236.0 769.2 869.8 3875.0
(%) 10.4 8.3 39.0 57.7 19.8 22.5 100.0
(Mt) 188.2 455.2 643.6 413.0 38.0 1094.6
(%) 17.2 41.6 58.8 37.7 3.5 100.0
the other three sections will also decrease because of unresolved economic problems in the industrial areas and the absence of sufficiently powerful equipment to process the oil shale seam (the bedding of these seams is larger in the new operational units than in the old, exhausted ones). The production of this necessary equipment in Estonia is insufficient, and in any case it is made mainly for coal extraction. If the short-term prospects for the industry are determined by the level of investment available, its further development will depend upon recoverable oil shale reserves and the possibility of developing them. Oil shale reserves in the Baltic basin in January 1989 amounted to 4.97 Gt. Table 3 shows the reserves by deposit. The higher the degree of exploration of the reserves, the more reliable the forecasts of recoverable fuel will be. For the presently operating mines and sections of the Estonian deposit the extraction to reserves ratio has been determined at the level of 70%; for the explored reserves the figure is 50%, and for the rest it is 3 0 - 4 0 % . According to these figures, the reserves of the Estonian mines currently in production might ensure oil shale extraction at the level of 23 to 24 Mt per year up to 2010-2011, and taking into account the reserves, perhaps up to 2045. This reserve estimate is based on their quality, degree of exploration and, to some extent, on the mining conditions. The potential reserves were confirmed under past scenarios and do not correspond to contemporary requirements from the standpoint of industrial development, and further exploration and evaluation is needed. The Estonian Geological Service has recently carried out an estimation of oil shale reserves based upon their environmental characteristics, such as their possible influence on the terrestrial surface and water systems. According to these characteristics the reserves are divided by the survey into three categories: first, the environmentally suitable reserves held in mines and sections already in opera-
ENERGY POLICY June 1993
tion, amounting to 0.7 Gt; second, the reserve deposits environmentally suitable for exploitation, amounting to 1 Gt; and, third, the reserves, amounting to 2.1 Gt, not recommended for exploitation as this would cause a rapid deterioration of the environment. 6 Thus, only 1.7 Gt out of the 3.8 Gt of Estonian reserves are in the first and second categories where exploitation will not cause any vital damage to the environment. With the contemporary state of technology the mining of environmentally suitable reserves in existing mines and sections will give an output of 550 Mt of oil shale, with 660-770 Mt from potential future mines. 7 If annual production remains at the level of 23 Mt, environmentally suitable reserves of oil shale might meet demand for 50-55 years. This level is only possible with the timely introduction of new capacity to replace the exhausted mines. In the meantime the problem of building new oil shale mines is very urgent. The Kuremfie mine, with a capacity of 5.8 Mt per year, has been considered the premier candidate for substitute capacity because of its level of geological and project preparedness. But the building and operation of the Kuremfie mine could cause irreparable damage to the Kurtna lakes system because of the inevitable formation of powerful depression hollows formed by the pumping out of shaft waters. The water system will be disturbed not only within the bounds of the shaft field, but far beyond it. The shaft waters are characterized by a high degree of hardness caused by the presence of sulphates and chlorides: the water will naturally drain into the Peipsi Lake and will have a negative influence on the quality of water of this unique reservoir. Similar negative effects will affect the ground above the shaft wastes which will subside; and the peat reserves in turn will also suffer, leading to their underdevelopment. According to the Geological Service, the Kuremfie reserves are among those not recommended for development on environmental grounds.
The prospects of oil shale based power generation Given the current situation it has become important to consider ways of developing oil shale resources without relying on the reserves of the Kuremfie field. Excluding Kuremfie, oil shale production may amount to 13-14 to 18-19 Mt per year by 2005; this will depend on solving the economic problems of the industry and providing some sections with new excavators. The decrease in shale extraction will lead to a situation in which both the production and
707
Oil shale production and power generation in Estonia
export of electricity will have begun to decline by 1993. After 2005 electricity generated in Estonia will not even meet domestic demand. With this in mind, possible solutions to these problems are now being discussed, including: • • • •
importing electricity; developing nuclear energy; development of gas fired power generation; and building new mines to supply oil shale power generation.
According to most analyses of the energy situation in the north-west and indeed the whole European part of the CIS, importing electricity cannot be considered a realistic consideration. It is our opinion that development of nuclear energy in Estonia cannot be relied on, at least in the near future. Its long-term environmental consequences are unpredictable and have not been thoroughly studied. The high capital intensity of nuclear power plants - 400-700 roubles/ kW (at 1990 prices), s also needs to be considered; this cost far surpasses the costs of retrofitting existing shale fired power plants. The development of gas fired power generation means substituting gas as fuel at one of two working oil shale power plants. The problems of importing additional volumes of natural gas, presumably from West Siberia or the Barents Sea on a contractual (perhaps concessional) basis with Russia, and methods of payment, are under discussion. The scenario has obvious environmental and social advantages and, further, it creates the potential of linking the Estonian energy system into the transEuropean energy and gas networks. The option does not exclude oil shale utilization for energy production in Estonia; it means a partial substitution of the less environmentally sound oil shale fuel by more environmentally friendly gas. Reducing both oil shale extraction and electricity production will impact on the on-going structural changes in the Republic's economy, which as a whole needs urgent capital investment. To preserve and/or develop oil shale power generation both the rise in power plant costs and oil shale will have to be considered. The costs of oil shale production in new mines will increase about 1.4-1.5 times in comparison with existing facilities; and construction costs (with equal capacity) will increase four or five times. A draft has been drawn up outlining plans to expand Baltic power plant by installing four baseload generators with a capacity of 200 MW. The cost of the new construction is estimated at 308 million roubles. However, in view of the need to upgrade the fuel used in the Baltic power plant, the total cost
708
of equipping this plant with more efficient baseload rises to more than 450 million roubles. To conform with international agreements on reducing sulphur dioxide (SO2) emissions, the plant will have to be equipped with the gas desulphurization equipment, this would further increase plant construction costs by about 250/0.9 Thus, implementation of the draft proposal at an approximate cost of 600 million roubles will not ensure either a change in the type of station (they will continue to generate baseload electricity) or elminate the oil shale deficit problem. The expansion of the Baltic power station and building the necessary infrastructure in the town of Narva will require an additional 4000 construction workers, their families making a total of 12 000 people. In a further contribution to the debate on the development of the Estonian power system, the Institute of Thermophysics and Electrophysics of the Estonian Academy of Sciences suggests that by the year 2000 oil shale power plants should perform the role of switching to meet semipeak load. The Institute also suggests retrofitting key equipment during the normal periods of shutdown for repairs. This will prolong the operational life of plants by up to 10-15 years and will be three to four times less expensive. 10 The Institute further recommends that the process should begin soon to prepare oil shale power plants for switching to a semipeak load working pattern. In the long term this move is the more economically viable option given electricity price changes. The restraints on building new oil shale mines will result in a reduction in electricity production to volumes which will only meet domestic demand. The loss of electricity export revenue will impact on domestic prices and also affect imports of gas, oil shale from the Leningrad deposit and oil. This problem needs urgent research, particularly given the various options discussed concerning Estonian energy supply. One of the options, in our opinion, might be to construct small oil shale mines with an annual production of 2.0-3.0 Mt in the vicinity of existing mine fields, where the harm to the environment may be significantly reduced in comparison to the Kurem~ie mine, with an annual capacity of 5.8 Mr. Table 4 gives an approximate economic comparison of the two routes for the development of the fuel and energy system: the first the construction of Kurem~ie mine, and expansion and renovation of the Baltic power plant; and second, the construction of two small mines with a total annual capacity of 4.6 Mt, and the replacement of basic equipment during capital repairs at the Baltic power plant. The
ENERGY POLICY June 1993
Oil shale production and power generation in Estonia Table 4. Economic comparison of the options for the development of the Estonian oil shale industry for 2005.
Oil shale production (Mt) Oil shale imports (Mt) Total oil shale input (Mt) Including power generation Electricity production (TWh) Including oil shale fired plants Power plant use and network losses (TWh) Marketed electricity (TWh) Domestic consumption Exports Estimated total capital investment (million roubles) Oil shale production share Construction of mines Additional costs of pollution control Power generation Expansion of Baltic power plant Renovation of Baltic power plant Replacement of basic equipment at the Baltic power plant during capital repairs Filtering pollutants
With Kurem&e mine 22.0 2.0 24.0 21.5 17.5 16.0 3,0 14,5 10,4 4.1
With small mines 20.8 2.0 22.8 20.3 16.6 15.1 2.8 13.8 10.4 3.4
970--1040 350-370 290 60-80 620-670 310 160
480-530 150 150 330-380 -
150-200
180 150-200
approximate cost of environmental measures omitted in the draft proposal have been taken into consideration in both options. According to the first option, which includes the construction of the Kuremfie mine, with production amounting to 22 Mt, plus imports of 2 Mt and a thermoprocessing rate of 2.5 Mt, some 21.5 Mt of oil shale is available for generation, which will produce
ENERGY POLICY June 1993
16 TWh of electricity. Taking into account the 1.5 TWh of electricity generated at the power plant fuelled by natural gas, network losses, and the station's own power requirements (17.3%), commercially available electricity will amount to 14.5 TWh; 10 TWh will meet domestic demand, leaving 4.1 TWh for export. In the second option the production of electricity decreases by only 5-5.5%, but capital investment requirements decrease considerably. ~'Carrying out of measures for the protection and rational utilization of the natural resources in the Estonian SSR in 1987', Statistics, State Committee of Statistics of the Estonian SSR Tallinn, 1988, p 68 (in Russian). 2E.T. Lippmaa and M.M. Mytus, 'The effect of oil shale power engineering on the environment', Efficiency and Functioning of the Oil Shale Power Engineering Complex of the Region, Institute of Thermophysics and Electrophysics of the Academy of Sciences of the ESSR, Tallinm Estonia, 1989, pp 39-45 (in Russian). 30p cit, Ref 1. 4I.Z. Kaganovich, Macroeconomic and Sectoral Systems Research, Valgus, Tallinn, Estonia, 1979, p 188 (in Russian);
Analysis of the Multisectoral Complex under Uncertainty (On the Example of the Fuel-Energy-Chemistry Complex), Institute of Economics of the Academy of Sciences of the ESSR, Tallinn, Estonia, 1980, p 184 (in Russian). 5E. Reinsalu, Optimal Development of Oil Shale Mining, Valgus, Tallinn, Estonia, 1984, p 120 (in Russian). 6The 13th Session of the l l t h Convocation of the Supreme Soviet of the ESSR, Soviet Estonia, 14 October 1989 (in Russian).
71bid. SM.E. Mihkalev and G.N. Puzin, 'The research of the economic efficiency of the use of nuclear power stations', Energy Building, No 8, 1989, pp 46-48 (in Russian). 90p cit, Ref 2.
I°lbid.
709
Combustive oil shale is the main type of fuel used in Estonian power plants. The economic state of the oil shale mining industry has deteriorated during the last decade. The development of oil shale production and use in power generation is accompanied by severe environmental pollution. The future of shale based power generation in Estonia depends on building new small capacity mines, in conjunction with the renovation and reconstruction of existing power plants and implementing measures to protect the environment. Keywords: Oil shale; Estonia; Environmental damage
More than half of Estonia's fuel demand is met by oil shale, which is the major fuel used in the Republic's power stations. The source of the raw material for power generation is located in the Baltic shale basin comprising the Estonian and Leningrad deposits. The deposits differ essentially in their quality, in the conditions met, technical expertise, and economic efficiency of oil shale extraction, which is carried out by both open cut as well as underground methods. Within the area of the Estonian deposit (Figure 1) six mines and four sections are operating, whereas in the Leningrad region there are three mines. The oil shale consumers are situated in north-eastern Estonia: they comprise two power plants (Baltic and Estonian), with a total capacity of 3045 MW; two thermal power plants; a cement works; and two shale processing industries (Kohtla-J/irve and Kivi61i). In the Leningrad region (the small town of Slantsy) oil shale is utilized in a shale processing complex and at thermal power plants. Estonia's demand for shale raw materials is met by domestic The authors are with the Institute of Economics, Estonian Academy of Sciences, 7 Estonia Avenue, Tallinn 200101, Estonia.
0301-4215/93/060703-07 © 1993 Butterworth-Heinemann Ltd
resources and by 8% imported from the Leningrad region.
Production trends and costs The rapid development of power generation and the shale processing industry in the 1970s called for a growth in oil shale mining, which reached its peak, 36.5 million tonnes (Mt), in 1980. Comparatively low shale-extraction costs provided consumers with high efficiency. However, the demand for oil shale has since declined. Extraction has been reduced, and in 1989 amounted to 28 Mt in the basin as a whole. In power generation, unconcentrated oil shale, with a size of 0-25 mm and a heating value of 8.6-9.0 MJ/kg, is used, but thermal processes use concentrated oil shale with a coarseness of 25-125 mm and a heating value of 10.9-11.3 MJ/kg (at the Kohtla-J~rve works). The industry in Slantsy uses oil shale with a heating value of 9.6-10 MJ/kg. The production of the coarse grained oil shale costs much more than the shale used in power generation because of the high costs of the concentration process and the loss of up to 40% of the initial raw material. At present, the share of coarse grained oil shale in Estonia is 20% of total extraction. In 1975-89 the consumption of coarse grained oil shale declined by 43%. The consumption of oil shale for power generation has also fallen. The export of coarse grained oil shale to the Leningrad region has ceased. This situation has led to the stockpiling of unsold oil shale; 8 Mt remained at mine depots at the end of 1985. The fall in the demand for oil shale has led to a curtailment of its extraction. In 1989 oil shale mining in Estonia had decreased by 25% compared with 1980, the productive capacities of mines were at 73.8% of load and production costs had increased by 44.5% (Table 1). In 1980 the production cost of a tonne of oil shale was 3.03 roubles; in 1989 it was 4.38 roubles; the probable 703
Oil shale production and power generation in Estonia
Gulf
~::~
of
Finland
Kohtla-Jarve
Tallinn
Narva
Estonia CIS Lake 0
50 km
I
I
Peipsi Oil shale deposit
Figure 1. Estonian oil shale deposit. cost from new mines may be in the region of 7-9 roubles per tonne. In addition to the reduction in industrial demand for shale, its cost has also been influenced by the general price rise in building materials, and the rise in industrial and office workers' pay in the coal and oil shale mining industries. Since the Estonia mine (in 1972) and the Oktyabrsky section (in 1974) came into operation, oil shale production costs have invariably risen, even at times of increasing extraction rates (Figures 2 and 3). The economic efficiency of the mining industry has also been adversely affected by the deterioration in the geological conditions, the increase in the scope of the stripping works, the worsening of the structure and quality of the layers, increases in water levels and more complicated processing systems.
The economic outlook for oil shale mining will continue to deteriorate for the following reasons: the sections most suited for open cut development, as well as the central parts of the deposit with their better thickness, heating value, depth of bedding etc, have already been depleted; • the scope of stripping works will continue to increase in the sections; • in the next decade present capacity will fall as reserves are exhausted, and new enterprises can only be built in the outlying parts of the basin with even worse extraction conditions and lower quality deposits; and • the costs of preventing and eliminating environmental damage connected with the extraction and utilization of oil shale will undoubtedly increase. •
Table 1. Characteristics of Baltic oil shale production, 1975-89.
Estonian deposit Production (Mt) Production cost (roubles/t) Mining Open cast Production personnel (thousand) Calorific value (MJ/kg) Leningrad deposit Production (Mt) Production cost (roubles/t) Production personnel (thousand) Calorific value (MJ/kg)
704
1975
1980
1985
1989
28.5 2.59 3.46 1.81 10.41 9.46
31.3 3.03 3.56 2.44 10.48 9.45
26.4 2.87 4.46 3.21 9.38 9.49
23.3 4.38 5.0 3.74 7.89 9.47
5.1 4.38 4.45 8.96
5.2 4.67 4.42 8.88
4.9 6.42 4.24 8.85
4.7 7.86 4.2 8.79
E N E R G Y P O L I C Y June 1993
Oil shale production and power generation in Estonia r
30
I ~ ~Ing
OI en cast
i!ii!i!iiiijiii!!ii '""iii:!iii!iiiiiiii' ii!iiiiiiiiiiiiii ,....................... ,
i
iiiiiiiiiiiiiiiil '!i!i!i!i!i!i!i!i!i!i!i' 'ii!iliiiiii!iiii!i!ii' i3!!!?i!i?i!3!?i?i?i~ 'iiiiili!iiiiiii!i!iiii'
iiiiiiiiiil
~!i!i!i!i!iiiiliiiiiiil iiiiiiiiliiiiiii~i~i~i
10
0
1960
1965
1975
1970
1980
1985
1991
Figure 2. Oil shale production in Estonia 1960-91. E n v i r o n m e n t a l aspects
Between 200 and 300 million m 3 of water is annually pumped out of the oil shale mine and sections. The mine and open pit waters have above standard hardness, with a high suspension content. They drain mainly to the Gulf of Finland and Peipsi Lake. Pumping out the underground waters causes depression around the mines and, as a result, a water deficit is created and the level of water in nearby lakes is sinking. The water pumped out contains up to 500 milligrammes per litre (mg/l) of sulphates, 40 mg/l of chlorides and up to 200 mg/l of suspensions. The oxygen deficit in the reservoirs causes the sulphates to be converted into hydrogen sulphide, which has a destructive effect on the flora and fauna. 2 As can be seen from Table 2, about 85% of all the water consumed in the Republic is used by the oil shale mining industries. In addition to this, power plants account for 99% of the water used by the oil shale complex. The oil shale complex contributes 83% of the total amount of waste water in the Republic, including a 75% share from power engineering.
Shale mining activities are extremely damaging to the environment: both extraction and consumption of oil shale cover a relatively small area, which accounts for the high concentration of pollutants. Shale fired power plants cause the greatest damage to the atmosphere, while the mining and processing facilities disturb and pollute the water systems. Oil shale mines and sections damage forestry and agriculture and peat extraction. Industrial development of the oil shale basin without the necessary environmental protection has rapidly degraded the state of the environment. The air in the towns of the shale mining region is polluted beyond any permissible standard by volatile ash and dust, by nitric and sulphuric compounds, phenols, and noxious organic substances. Of all the pollutants from stationary sources in the Republic, 85-87% come from this region. In 1987 emissions from oil shale industries amounted to 347.6 thousand tonnes, 323.7 thousand tonnes came from power plants, 21.5 thousand tonnes from shale processing industries and 2.4 thousand tonnes from mining activities, a
20 18 16
0 x
Mining Open cast
(
c
E ~ _~ o ..Q D
12 lO 8
6 4[ ~ 2 L 0 1960
O ~
x
-
I 1965
-
x
O _ I 1970
_
x
/ I 1975
I
I
1980
1985
1991
Figure 3. Oil shale production cost in Estonia 1960-91. ENERGY POLICY June 1993
705
Oil shale production and power generation in Estonia Table 2. Waste water output in Estonia in 1987 (m 3 x 106).
Total Oil shale industry activities Mining Processing Power generation
Total output 3226.0 2682.5 260.3 16.2 2406.0
Without purification 203.0 21.1 5.8 15.2 0.1
The technology for underground oil shale mining causes subsidence, which in turn leads to the formation of hollows, cracks and moulds. In the process of stripping works in the sections the topsoil is eroded and hydrological systems disturbed. The rock slagheaps occupy ever larger areas, topsoil is covered, forests and natural landscapes die. To reduce the negative influence of oil shale extraction on the environment, a combined approach to the utilization and preservation of natural resources is needed, which would include the extraction of oil shale and its attendant minerals with a minimum of loss; protection of timber and peat resources within the area of oil shale extraction; recultivation and reclamation of the exhausted soil around mines; and utilization of the wastes from mining activities and concentrating facilities. A number of measures to reduce emissions of liquid and gaseous pollutants, to use wastes or render them harmless, have been carried out in the oil shale basin. The recultivation of exhausted areas is also in progress. However, this is not enough to reduce the pressures on the environment. The share of funds for nature protection amounts to as little as 4-6% of all fixed assets. According to domestic and overseas experience, expenditures of not less than 20% of the total cost of capital are required to ensure effective protection of the environment against noxious emissions from the power generation and chemical industries. Research on industrial development in northeastern Estonia 4 shows that the region's chances of withstanding technogenic pollution are rather limited. This is why the continued use of outdated oil shale extraction and utilization technologies in new and refurbished facilities must not be tolerated. Power generation capacity should not be expanded unless methods of shale burning are changed.
Utilization of geological reserves The close connection between the poor quality of oil shale and inefficiency in all aspects of its recovery and utilization and environmental degradation has been proved. The increasing inefficiency of oil shale
706
in the combustion process is caused directly by deterioration in the quality of the fuel itself. As well as a deterioration in economic efficiency, the combustion of low-grade oil shale in power plants is accompanied by an increase in both ash slagheaps and emissions of particulate and gaseous substances into the atmosphere. Oil shale losses are in many ways connnected with the need to provide users with good quality raw materials and to preserve the earth's surface in the excavation area. Losses will continue to grow with the need to increase the quality of the extracted oil shale and leave the low-calorific layers of the seam unexploited. The pillars left to prevent roof collapse and surface subsidence also contribute to production losses. As any comparison of the various excavation technologies shows, the most efficient extraction technologies are characterized by the highest rate of change (damage) to the earth's surface; but the higher combustion heat of the rock mass is accompanied by an almost proportional increase in operational losses. 5 The level of operational losses during oil shale extraction in the Baltic basin averages 21-22%, although this figure fluctuates between 6% and 45% according to the excavation method and technology used. Together with all losses during mining, and the exclusion of oil shale reserves which for various reasons cannot be processed, losses total 50% This explains why it is extremely urgent to develop and apply efficient technologies in this field. As these new technologies involve the planned collapse of pillars the benefits of cost reduction and production efficiency must be balanced against the environmental damage. Until recently the prospects for the development of oil shale were based on the assumption that production in the Estonian deposits would be maintained at a level of 23 Mt per year until 2005. This included building a new mine with a capacity of 5.8 Mt, and including 21-22 Mt for power generation. In this context, the production of electricity was also assumed to stay at the present level of 17.5 TWh per year, of which the share of shale fired power plants would amount to 16 TWh. In 1989 the difference between the amount of oil shale production (23.3 Mt) and demand (26 Mt) was met by imports from the Leningrad region (2.0 Mt), and by reducing the residues of unsold oil shale at the mines (0.8-1.0 Mt per year). However, after 1995 the oil shale balance will change considerably. First, residues will have been consumed. Four mines and one section will cease production because their reserves will be exhausted. The volume of open pit mining in
ENERGY POLICY June 1993
Oil shale production and power generation in Estonia Table 3. Oil shale reserves of the Estonian and Leningrad deposits. Reserves as of 1 J a n u a r y 1989 Estonian Leningrad deposit deposit Operating mines Operating open cast pits Reserve explorations Total explored areas Prospective areas O t h e r possible areas Total
(Mt) 408.8 321.2 1510.0 2236.0 769.2 869.8 3875.0
(%) 10.4 8.3 39.0 57.7 19.8 22.5 100.0
(Mt) 188.2 455.2 643.6 413.0 38.0 1094.6
(%) 17.2 41.6 58.8 37.7 3.5 100.0
the other three sections will also decrease because of unresolved economic problems in the industrial areas and the absence of sufficiently powerful equipment to process the oil shale seam (the bedding of these seams is larger in the new operational units than in the old, exhausted ones). The production of this necessary equipment in Estonia is insufficient, and in any case it is made mainly for coal extraction. If the short-term prospects for the industry are determined by the level of investment available, its further development will depend upon recoverable oil shale reserves and the possibility of developing them. Oil shale reserves in the Baltic basin in January 1989 amounted to 4.97 Gt. Table 3 shows the reserves by deposit. The higher the degree of exploration of the reserves, the more reliable the forecasts of recoverable fuel will be. For the presently operating mines and sections of the Estonian deposit the extraction to reserves ratio has been determined at the level of 70%; for the explored reserves the figure is 50%, and for the rest it is 3 0 - 4 0 % . According to these figures, the reserves of the Estonian mines currently in production might ensure oil shale extraction at the level of 23 to 24 Mt per year up to 2010-2011, and taking into account the reserves, perhaps up to 2045. This reserve estimate is based on their quality, degree of exploration and, to some extent, on the mining conditions. The potential reserves were confirmed under past scenarios and do not correspond to contemporary requirements from the standpoint of industrial development, and further exploration and evaluation is needed. The Estonian Geological Service has recently carried out an estimation of oil shale reserves based upon their environmental characteristics, such as their possible influence on the terrestrial surface and water systems. According to these characteristics the reserves are divided by the survey into three categories: first, the environmentally suitable reserves held in mines and sections already in opera-
ENERGY POLICY June 1993
tion, amounting to 0.7 Gt; second, the reserve deposits environmentally suitable for exploitation, amounting to 1 Gt; and, third, the reserves, amounting to 2.1 Gt, not recommended for exploitation as this would cause a rapid deterioration of the environment. 6 Thus, only 1.7 Gt out of the 3.8 Gt of Estonian reserves are in the first and second categories where exploitation will not cause any vital damage to the environment. With the contemporary state of technology the mining of environmentally suitable reserves in existing mines and sections will give an output of 550 Mt of oil shale, with 660-770 Mt from potential future mines. 7 If annual production remains at the level of 23 Mt, environmentally suitable reserves of oil shale might meet demand for 50-55 years. This level is only possible with the timely introduction of new capacity to replace the exhausted mines. In the meantime the problem of building new oil shale mines is very urgent. The Kuremfie mine, with a capacity of 5.8 Mt per year, has been considered the premier candidate for substitute capacity because of its level of geological and project preparedness. But the building and operation of the Kuremfie mine could cause irreparable damage to the Kurtna lakes system because of the inevitable formation of powerful depression hollows formed by the pumping out of shaft waters. The water system will be disturbed not only within the bounds of the shaft field, but far beyond it. The shaft waters are characterized by a high degree of hardness caused by the presence of sulphates and chlorides: the water will naturally drain into the Peipsi Lake and will have a negative influence on the quality of water of this unique reservoir. Similar negative effects will affect the ground above the shaft wastes which will subside; and the peat reserves in turn will also suffer, leading to their underdevelopment. According to the Geological Service, the Kuremfie reserves are among those not recommended for development on environmental grounds.
The prospects of oil shale based power generation Given the current situation it has become important to consider ways of developing oil shale resources without relying on the reserves of the Kuremfie field. Excluding Kuremfie, oil shale production may amount to 13-14 to 18-19 Mt per year by 2005; this will depend on solving the economic problems of the industry and providing some sections with new excavators. The decrease in shale extraction will lead to a situation in which both the production and
707
Oil shale production and power generation in Estonia
export of electricity will have begun to decline by 1993. After 2005 electricity generated in Estonia will not even meet domestic demand. With this in mind, possible solutions to these problems are now being discussed, including: • • • •
importing electricity; developing nuclear energy; development of gas fired power generation; and building new mines to supply oil shale power generation.
According to most analyses of the energy situation in the north-west and indeed the whole European part of the CIS, importing electricity cannot be considered a realistic consideration. It is our opinion that development of nuclear energy in Estonia cannot be relied on, at least in the near future. Its long-term environmental consequences are unpredictable and have not been thoroughly studied. The high capital intensity of nuclear power plants - 400-700 roubles/ kW (at 1990 prices), s also needs to be considered; this cost far surpasses the costs of retrofitting existing shale fired power plants. The development of gas fired power generation means substituting gas as fuel at one of two working oil shale power plants. The problems of importing additional volumes of natural gas, presumably from West Siberia or the Barents Sea on a contractual (perhaps concessional) basis with Russia, and methods of payment, are under discussion. The scenario has obvious environmental and social advantages and, further, it creates the potential of linking the Estonian energy system into the transEuropean energy and gas networks. The option does not exclude oil shale utilization for energy production in Estonia; it means a partial substitution of the less environmentally sound oil shale fuel by more environmentally friendly gas. Reducing both oil shale extraction and electricity production will impact on the on-going structural changes in the Republic's economy, which as a whole needs urgent capital investment. To preserve and/or develop oil shale power generation both the rise in power plant costs and oil shale will have to be considered. The costs of oil shale production in new mines will increase about 1.4-1.5 times in comparison with existing facilities; and construction costs (with equal capacity) will increase four or five times. A draft has been drawn up outlining plans to expand Baltic power plant by installing four baseload generators with a capacity of 200 MW. The cost of the new construction is estimated at 308 million roubles. However, in view of the need to upgrade the fuel used in the Baltic power plant, the total cost
708
of equipping this plant with more efficient baseload rises to more than 450 million roubles. To conform with international agreements on reducing sulphur dioxide (SO2) emissions, the plant will have to be equipped with the gas desulphurization equipment, this would further increase plant construction costs by about 250/0.9 Thus, implementation of the draft proposal at an approximate cost of 600 million roubles will not ensure either a change in the type of station (they will continue to generate baseload electricity) or elminate the oil shale deficit problem. The expansion of the Baltic power station and building the necessary infrastructure in the town of Narva will require an additional 4000 construction workers, their families making a total of 12 000 people. In a further contribution to the debate on the development of the Estonian power system, the Institute of Thermophysics and Electrophysics of the Estonian Academy of Sciences suggests that by the year 2000 oil shale power plants should perform the role of switching to meet semipeak load. The Institute also suggests retrofitting key equipment during the normal periods of shutdown for repairs. This will prolong the operational life of plants by up to 10-15 years and will be three to four times less expensive. 10 The Institute further recommends that the process should begin soon to prepare oil shale power plants for switching to a semipeak load working pattern. In the long term this move is the more economically viable option given electricity price changes. The restraints on building new oil shale mines will result in a reduction in electricity production to volumes which will only meet domestic demand. The loss of electricity export revenue will impact on domestic prices and also affect imports of gas, oil shale from the Leningrad deposit and oil. This problem needs urgent research, particularly given the various options discussed concerning Estonian energy supply. One of the options, in our opinion, might be to construct small oil shale mines with an annual production of 2.0-3.0 Mt in the vicinity of existing mine fields, where the harm to the environment may be significantly reduced in comparison to the Kurem~ie mine, with an annual capacity of 5.8 Mr. Table 4 gives an approximate economic comparison of the two routes for the development of the fuel and energy system: the first the construction of Kurem~ie mine, and expansion and renovation of the Baltic power plant; and second, the construction of two small mines with a total annual capacity of 4.6 Mt, and the replacement of basic equipment during capital repairs at the Baltic power plant. The
ENERGY POLICY June 1993
Oil shale production and power generation in Estonia Table 4. Economic comparison of the options for the development of the Estonian oil shale industry for 2005.
Oil shale production (Mt) Oil shale imports (Mt) Total oil shale input (Mt) Including power generation Electricity production (TWh) Including oil shale fired plants Power plant use and network losses (TWh) Marketed electricity (TWh) Domestic consumption Exports Estimated total capital investment (million roubles) Oil shale production share Construction of mines Additional costs of pollution control Power generation Expansion of Baltic power plant Renovation of Baltic power plant Replacement of basic equipment at the Baltic power plant during capital repairs Filtering pollutants
With Kurem&e mine 22.0 2.0 24.0 21.5 17.5 16.0 3,0 14,5 10,4 4.1
With small mines 20.8 2.0 22.8 20.3 16.6 15.1 2.8 13.8 10.4 3.4
970--1040 350-370 290 60-80 620-670 310 160
480-530 150 150 330-380 -
150-200
180 150-200
approximate cost of environmental measures omitted in the draft proposal have been taken into consideration in both options. According to the first option, which includes the construction of the Kuremfie mine, with production amounting to 22 Mt, plus imports of 2 Mt and a thermoprocessing rate of 2.5 Mt, some 21.5 Mt of oil shale is available for generation, which will produce
ENERGY POLICY June 1993
16 TWh of electricity. Taking into account the 1.5 TWh of electricity generated at the power plant fuelled by natural gas, network losses, and the station's own power requirements (17.3%), commercially available electricity will amount to 14.5 TWh; 10 TWh will meet domestic demand, leaving 4.1 TWh for export. In the second option the production of electricity decreases by only 5-5.5%, but capital investment requirements decrease considerably. ~'Carrying out of measures for the protection and rational utilization of the natural resources in the Estonian SSR in 1987', Statistics, State Committee of Statistics of the Estonian SSR Tallinn, 1988, p 68 (in Russian). 2E.T. Lippmaa and M.M. Mytus, 'The effect of oil shale power engineering on the environment', Efficiency and Functioning of the Oil Shale Power Engineering Complex of the Region, Institute of Thermophysics and Electrophysics of the Academy of Sciences of the ESSR, Tallinm Estonia, 1989, pp 39-45 (in Russian). 30p cit, Ref 1. 4I.Z. Kaganovich, Macroeconomic and Sectoral Systems Research, Valgus, Tallinn, Estonia, 1979, p 188 (in Russian);
Analysis of the Multisectoral Complex under Uncertainty (On the Example of the Fuel-Energy-Chemistry Complex), Institute of Economics of the Academy of Sciences of the ESSR, Tallinn, Estonia, 1980, p 184 (in Russian). 5E. Reinsalu, Optimal Development of Oil Shale Mining, Valgus, Tallinn, Estonia, 1984, p 120 (in Russian). 6The 13th Session of the l l t h Convocation of the Supreme Soviet of the ESSR, Soviet Estonia, 14 October 1989 (in Russian).
71bid. SM.E. Mihkalev and G.N. Puzin, 'The research of the economic efficiency of the use of nuclear power stations', Energy Building, No 8, 1989, pp 46-48 (in Russian). 90p cit, Ref 2.
I°lbid.
709