Oil Shale Development Agreement with EOT

RNS Number : 9400K

San Leon Energy PLC

29 August 2012

 



29 August 2012

San Leon Energy Plc

("San Leon" or the "Company")

San Leon and Enefit Outotec Technology ("EOT") start cooperation in oil shale development

San Leon has commissioned EOT to conduct a study of an oil shale retorting project in a newly awarded onshore shallow oil shale mining area in Morocco, in addition to San Leon's Tarfaya In Situ oil shale acreage of 6,000 km² which will be pursued in parallel.

A study by Shell (SHELL INTERNATIONALE PETROLEUM MAATSCHAPPIJ 8.V., THE HAGUE) in 1985 of an open pit mining project located on a site adjacent to the newly awarded blocks established that mineable reserves from this location  were more than sufficient for a 50,000 bbl/day production over 30 years.

The recent award, following the amendment of the Memorandum of Understanding between San Leon and the Office National des Hydrocarbures et des Mines ("ONHYM"), in Morocco of the additional mining blocks with low over burden and easy access will allow San Leon to test the suitability of the Tarfaya oil shale for EOT's proprietary process which is successfully used by Eesti Energia in Estonia.  If found suitable, San Leon envisages a commercial retort operation for the production of oil, gas and electricity.

Under the cooperation agreement, EOT will undertake a staged development programme to perform test work and feasibility studies in order to assess the project's technical and commercial viability. In subsequent stages further engineering studies will be carried out before the start of construction of the first Enefit 280 shale oil production plant in Morocco.

Oisin Fanning, Chairman of San Leon, commented:

"We are delighted by the recent shallow blocks awarded on our Tarfaya oil shale project area in Morocco and to be able to announce our cooperation with Enefit Outotec Technology with a view to licensing its state of the art Enefit 280 ex situ retorting process. The dual strategy of applying Enefit's proven ex situ retorting technology to the shallow resource while we pursue, in parallel, our current in situ program in the deeper zone will ensure maximum early commercialisation of the Tarfaya oil shale resource. Morocco has one of the largest oil shale reserves in the world and these projects will help the Kingdom initiate development of its oil shale deposits to meet its domestic energy needs for oil and electricity."

Alo Kelder, CEO of Enefit Outotec Technology, commented:

"Production of liquid fuels from oil shale rock is an emerging industry worldwide that has great potential in providing an alternative supply of oil to both regional and global markets. We have developed a technology that is both efficient and clean based on several decades of oil shale industry experience from Estonia. Our cooperation with San Leon brings EOT technology even more widely into the international oil shale arena".

San Leon Energy plc is focused on the exploration and production of oil and gas projects in Europe and North Africa. The Tarfaya oil shale in situ pilot aims to prove the concept of heated gas injection into oil shale beds allowing in-situ oil to be released and produced to surface. San Leon drilled two test wells to ~200m depth located just 10m apart. Step 1 of this pilot established hydraulic connectivity between the wells via pressurised water injection in 2011. San Leon intends resuming the in situ project operations after completing a comprehensive hydrogeology analysis of the area.

Enefit Outotec Technology, a joint venture of Estonian energy group Eesti Energia and Outotec - a global provider of minerals and metals processing solutions, is a leading supplier of oil shale technology for production of oil, gas and electricity out of oil shale. Eesti Energia (internationally known as Enefit) currently supplies more than 90% of Estonia's electricity from the world's largest oil shale fired capacity power plant and has more than fifty years of surface retorting experience. The first Enefit 280 plant utilising scaled-up Enefit technology is under commissioning in Narva, Estonia. The new plant will double the shale oil production capacity of Eesti Energia to 10,000 barrels per day.

For further information contact:

San Leon Energy Plc	Tel: [phone]
Oisin Fanning, Executive Chairman
John Buggenhagen, Exploration Director
Enefit Outotec Technology	Tel: [phone]
Alo Kelder, Chief Executive Officer
Macquarie Capital (Europe) Limited	Tel: [phone]
Paul Connolly
John Dwyer
Fox Davies Capital	Tel: [phone]
Daniel Fox-Davies
Richard Hail
FirstEnergy Capital LLP	Tel: [phone]
Hugh R. Sanderson
David Van Erp
Westhouse Securities (Nominated Advisor) Richard Johnson	Tel: [phone]
Antonio Bossi
College Hill Associates	Tel: [phone]
Nick Elwes
Alexandra Roper

Qualified person

John Buggenhagen, who has reviewed this update, has over 15 years' experience in the oil & gas industry. He has a Ph.D. and M.Sc. in Geophysics from the University of Wyoming and a B.Sc. in Geophysics from the University of Arizona. He is currently the Director of Exploration for the San Leon Energy Group and based in San Leon's Warsaw office in Poland.

 

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