Questions, questions: CBJ is on project watch for 2011


Whatever your game in international energy and resources this year, there are numerous projects where the outcome will affect everyone. From oil majors, to solar giants; from mining conglomerates to nuclear policy, as the market demands more uranium, more lithium, greater renewable investment in line with legislation or enhanced cooperation between energy industry heads, it is time to draw up some of the projects that the world is watching in 2011. There are a lot of questions, and a lot of answers to come in time, as we look at the projects coming into production, falling by the wayside, realizing their full potential, and maybe—just maybe—surprising us all.

Will the Aynak copper mine reach production?

Situated 30 kilometres south of Kabul, in Afghanistan’s Logar province is the region of Aynak; home to the Aynak copper deposit, estimated to contain 5.5 million metric tonnes of copper. The region of Mes Aynak has been a famed copper region for centuries, but war since the 1980’s has made advancing any project on the deposit practically impossible. News of development at the mine has streamed in since November 2007 when the Afghan government announced that the China Metallurgical Group (MCC) was its intended winning bidder for the 30-year long lease for the mine. Some six months later, in April 2008, the contract was signed accordingly, and reports stated that it looked set to bring annual revenues of US$1.2 billion to the ruling government.

Just over a year later, in July 2009, construction began onsite. It is considered to be one of the largest ever infrastructure projects the country has seen, and includes the building of a coal-fired electrical power plant and Afghanistan’s first freight railway. The Aynak deposit is also the second largest untapped copper deposit in the world, but it is not without its own challenges—both political and geographical. The Chinese company has ploughed more than $4 billion dollars into the mine to date, and because there was no transportation links or access to electricity, the company has reportedly agreed to invest $3 billion dollars to tackle this. The project’s historical prospectivity and size are huge draws, as is its location in relation to Kabul; the largest city in Afghanistan could be set to benefit greatly from both the economic and infrastructural investments made.

Going into 2011

In August 2010, the Jiangxi Copper Co., China’s largest copper producer, announced that it plans to raise US$1 billion to focus on a number of its projects, including advancing the Aynak copper mine.

Fears that mining development might threaten the nearby ancient Buddhist site called Tepe Kafiriat, just 800 metres away from the minesite, have been ongoing. In November 2010, it was reported that archaeologists were fighting against the massive investments already made for the mine by MCC. However, also in November, the Afghan mines ministry stated that it does not expect mine development to be delayed or held off by the nearby ancient site. Through the joint venture between MCC and Jiangxi Copper Corporation, the companies reportedly plan to have the Aynak mine in production by the end of 2011.

Will the Iran LNG project construction be near-complete, or well-advanced?

Described by some media outlets as somewhat of a ‘wildcard’ amongst the massive scale LNG projects underway worldwide today, the Iran LNG project, otherwise known as NIOC LNG, situated in the port of Tombak, 15 kilometres southeast of Kangan, began plant construction in 2007. The project will comprise of two LNG trains using the Linde Liquefaction Process. Each one will have a capacity of 5.4 million tonnes of LNG per annum, and two further trains of the same capacity have been proposed later on down the line, with provisional startup dates in March 2014. The project is made up of a number of direct construction aspects and has been designed by a consortium of companies: Linde, Hyundai, and Snamprogetti. These construction aspects include liquefaction units, treating units, LNG storage tanks, utilities, a harbour with jetty and a power station. The project is being developed by the Iran LNG company, a subsidiary of the National Iranian Oil Company (NIOC) in the main. This company holds 49 per cent of the project, and the other 51 per cent is controlled by the Oil Industry Investment Company (OIIC) (50 per cent) and Oil Industry Pension Fund (one per cent). To date US$1.3 billion has already been spent on the project and the total project costs will be about $5 billion over the three packages or phases of construction outlined by the company.

Going into 2011

In 2011, the Iran LNG project’s construction is expected to be completed on track for first cargo targeted in October 2012. By late March, the company expects that more than half of the project’s work will be complete. Currently, two thirds of the work on the harbour and jetty has been completed, the final two turbines are due for completion in October, and the gas sweetening facility is due to be finished in December. In recent reports, the feed source for the project has once again altered, and now aims for the gas produced at the South Pars phase 11 field in the Persian Gulf, joint operated by Pars Oil and Gas Company (POGC) of Iran. And regarding construction, the project’s LNG storage tanks have begun build as of December, 2010.

Will the Horizon Oilsands Project continue on track (for final phase in 2012)?

The C$10.8 billion project Horizon oilsands project, 70 kilometres north of Fort McMurray Alberta, is being developed by Canadian Natural Resources Limited. Leading up to the company’s sanctioning of the project in 2005, CNR spent years reviewing and planning the proposed operation. The first barrels of high quality, low-sulphur, 34° API, sweet synthetic crude oil (SCO) were produced from the project in early 2009, and operations within the four planned development phases rolling out have been going well since this time. The ultimate goal is to bring the project to 500,000 barrels of SCO per day. The project’s importance to energy sources in North America has been well outlined, and Alberta alone has very significant potential, said to contain around 300 billion barrels worth of oil reserves. First full start up in 2012 is aimed at 232,000 barrels per day of SCO, and as a result the project’s penultimate year leading to production at capacity is going to prove pivotal in staying on track.

Going into 2011

The Horizon project is rarely out of the news, given its huge potential to revolutionize the North American energy map, its potential to generate thousands of jobs and the obvious attention it attracts as one of the oil industry’s major mega-structure  builds today. Most recently, as what has been perceived as an era of mega-projects appears to come to an end, CNR announced in early December 2010 that it will approach Horizon’s next stage of development quite differently, in 46 smaller projects which are more flexible in terms of the project economy and future demand.

“We’re doing it the way we are, with smaller projects, so we can stop and start and stand aside if we see a rapid inflation in costs, and drops in productivity,” Steve Laut, President and CEO told press.

“We are positioning ourselves to ensure we do not become schedule-driven on future expansions.”

In November 2010, the company announced its budget for 2011 with as much as $1.2 billion of this is planned to go on the Horizon project.The coming year is an interesting one for the project, where mass expenditure has been committed, but the company is working against being “schedule-driven,” and Laut says it aims on “spreading the work out over a longer period of time.”

How will Nevada’s Copper Mountain solar facility fare in its first year of operation?

California’s ongoing pledge to generate 20 per cent of its power needs using renewable energy before 2010 ends has been big news all year, with many projects in the state gaining in development. But a key breakthrough outside of the state has been the largest Photo Voltaic (PV) solar facility in the U.S.; the Copper Mountain solar project in Boulder City, Nevada. The project has managed to get up and running just before we called time on 2010 and now since December 1, with 775,000 CdTe thin-film photovoltaic solar panels, capable of producing 48 megawatts (or powering on average 14,000 homes) across its 380 acre stretch, the project is all set to contribute during the coming year. Construction commenced in January, and was carried out by U.S. solar giant Sempra Generation of San Diego. The company oversaw 350 construction workers across the project, who installed panels made by First Solar of the U.S., the largest manufacturer of thin film solar modules. Along with the nearby El Dorado Solar Power Plant, which has a capacity of 10 megawatts and was completed in 2008, Copper Mountain Solar’s power generated will be sold to Pacific Gas & Electric with each facility holding a 20-year contact. The bringing online of Copper Mountain has surpassed the previous largest solar plant in the U.S.—the DeSoto PV plant in Arcadia Florida which has a capacity of 20 megawatts.

Going into 2011

Sempra has big plans for other renewable facilities in the coming year. It will begin its first phase of construction on a 600 megawatt solar energy project in Arizona, and it has also been granted approval for a 200 megawatt facility in Kent County, California, and will partner with BP Wind Energy on a 250 megawatt wind project proposed for Colorado. The Copper Mountain solar facility has already made PV Power Plant’s 2010 top five largest solar plants in the world. Copper Mountain’s first year in operation will be a telling and landmark year for this and every project following in its footsteps.

What does the agreement for the Jaitapur nuclear project mean for India’s projected nuclear market growth?

As many companies throughout CBJ in 2010 have testified, uranium has proved to be a star performer throughout the past year, and the surging growth of investment in nuclear power is ever-present in India, where analysts predict that the market will grow by $40 billion by 2020, with 18 nuclear plants proposed throughout the next decade and quite possibly more on the way.

As we leave 2010, India has 20 nuclear power plants in operation generating 4,560 megawatts and a further four currently in various stages of construction worth more than 2,500 megawatts. Recently, India’s nuclear power share has been estimated at 25 per cent by 2050, in large part due to its fast breeder reactors (FBRs), and it is reported that within two years the world’s only FBR in operation will be in India. A flurry of recent deals with leading nuclear power countries and major companies has bolstered these predictions, and the largest deal ever signed between the two nations in the civil nuclear energy sector was recently made.

Going into 2011

On December 6, 2010, India and France penned an agreement for power major Areva of France, to build two pressurised reactors of 1,650 megawatts, worth $9.3 billion, as part of the 10,000 megawatt-equivalent nuclear project at Jaitapur in Maharashtra. This deal is the upshot of a meeting which took place in India between the nation’s Prime Minister Manmohan Singh and French President Nicolas Sarkozy. It is aimed at increasing bilateral cooperation and partnerships within the nuclear sector. These builds are part of the general framework signed under the agreement between the Nuclear Power Corporation of India Limited (NPCIL) and Areva. The pair also signed an ‘Early Works Agreement,’ which is crucial for the commencement of construction for the project. Initial reports state that Areva will begin preliminary work on site excavation and the approvals process in early 2011. This is the latest development to boost India’s nuclear power generation predictions which have been mounting for some time, and most recent reports on India’s five-year plans have given great standing to nuclear power.