TALLINN - Eesti Energia, the state owned oil-shale energy company, has announced it will commission a new 3 billion kroon (190 million euro) plant that should open in 2011.
In a company statement Juri Kao, chairman of the Supervisory Board of Eesti Energia, said the project would help boost the local economy and ensure the company's future.
"With this decision, we are making an investment which will enliven the regional economy of eastern Estonia, ensure the sustainability of the company and guarantee jobs," Kao said.
Minister of Economic Affairs and Communications Juhan Parts also backed the move.
"These investments principally mean three things for Estonia 's jobs in the energy sector, future exports and energy security. I deem the development of shale oil production technology to be of importance, since it is a prerequisite for the future export of not simply oil, but also the technology. It is clear that these investments require a substantial contribution from the state in order to ensure well-considered financing," he said.
The new oil-shale plant will use a more environmentally friendly and dependable technology, developed through Eesti Energia's cooperation with the international engineering company Outotec.
The technique is widely considered to be the most efficient commercially utilized oil shale fuel production technology and a significant advancement on the solid heat carrier process currently used.
The new plant will use 2.26 million tons of oil shale per year, producing 290,000 tons of shale oil and 75 million meters cubed of retorting gas, which is used in electricity generation. A 35 MW steam turbine will also be integrated with the oil plant, which utilizes the residual heat from the oil production process.
Commenting further on the new technology Kao said: "The new technology is brought about by serious, continuous research and development right here in Estonia, which is especially commendable for increasing our international competitiveness."
Industry figures say the development, which will consist of the oil plant and up to two new power units, is a major statement on the long term direction of energy production in Estonia.
"Eesti Energia's strength lies in its comprehensive value chain from mining to customer services, and the oil shale industry has a fundamental role in this chain. With these decisions, we assert that besides a long history, the oil shale industry also has a great future for Eesti Energia," Eesti Energia's CEO Sandor Liive said.
"Construction of the new oil plant is another step taken by Eesti Energia to establish a high-quality oil shale fuels industry in Estonia. It is also a precondition for offering our technology elsewhere in the world," he said.
In the coming years Eesti Energia plans to develop a liquid fuels industry, producing oil up to twice the value of the current shale oil that could be used as motor fuel.
"High-value liquid fuels are more valuable than any other oil shale product and by taking this step, we give the maximum value to oil shale, while guaranteeing Estonia's energy security," said Liive.
In global terms oil-shale reserves currently exceed that of crude oil, fueling significant interest in the development of technology that would allow these reserves to be exploited in the future.
Currently crude oil remains cheaper to convert into energy than oil shale.
In addition the environmental effects of oil shale extraction and production are still considered more damaging than the crude oil alternative.
The construction of the Estonian plant will commence later this year, with the start-up of the facility expected to take place in 2011
Eesti Energia currently employs more than 8,000 people and is one of the major employers in Estonia.