February 2016

Millcreek Mining hired to study “reserve” status for Enefit’s oil shale resource

29 Feb 2016

Enefit American Oil (EAO) has hired Millcreek Mining to conduct an assessment of whether the Utah Project’s known oil shale resources and the associated project design and engineering can be validated as “Reserves,” which would increase the Project’s value.

 

Classifying mineral deposits as “Reserves,” rather than simply “Resources,” means that they have been validated as bankable assets and can be listed on the company’s books.

 

To the best of EAO’s knowledge, the Project would be the first oil-shale-to-shale-oil project in the world to qualify as a reserve. EAO’s parent company has successfully received a Reserve Statement for its Jordanian oil shale-to-electricity project, and in 2012 its Estonian oil shale deposits were classified as reserves.

 

The Utah Project is somewhat unique with regard to the reporting standards for reserves as it is contemplated primarily as a mining, material handling, and ore processing operation with the end product being oil and other hydrocarbon-based streams, rather than a more traditional metal or aggregate mining product.

 

The resulting reserve report is anticipated to be used for raising private equity for the Project and/or to inform valuation as part of a future financial transaction.

EAO extracts two new oil shale core samples for continued test work

29 Feb 2016

Enefit American Oil recently began an important new geologic research program on its Enefit South private property, about 45 minutes southeast of Vernal, Utah, near the Colorado border.

 

Working together with Himes Drilling Company and Norwest Corporation, EAO extracted two new oil shale core samples in late 2015 from the company’s bulk research site (known as ‘the box cut’) for additional test work.

 

The core samples will undergo laboratory analysis for oil shale grade, mineralogy and other characteristics that are key to helping EAO better model design alternatives for the Utah project. This new dataset will help inform mine planning and engineering as EAO continues to move the Utah Project forward.

 

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Energy Companies Worldwide Retrench in Wake of Low Oil Prices; Enefit Also Cuts Back, But Remains Committed to Utah Oil Shale Project

25 Feb 2016

Crude oil prices hovering at around $30 a barrel continue to bedevil the world’s oil producers, leading to dramatic cuts in investment by companies large and small. The Financial Times reported Feb. 14, 2016, that about $400 billion in expected oil development projects worldwide have been canceled or delayed due to low prices, and many companies are also slashing dividends.

 

What’s more, Morgan Stanley analysts predict that only nine large projects globally, out of more than 230 awaiting a green light, are “realistic candidates” for approval this year. Several of the industry’s majors, including Total of France, say they won’t be approving any new projects at all in 2016.

 

It’s definitely a time of retrenching in the energy industry. Shell alone, for example, announced an $8 billion write-down last October. Chesapeake Energy posted a $15 billion loss for 2015; Apache Corp., another large oil and gas company, announced a $23 billion loss.

 

Enefit is experiencing these economic realities as well. The Estonia-based company wrote down the book value of several of its investments in Europe and the U.S. Enefit’s financial adjustment of 66 million euros (approximately $72.7 million, of which $28.7 million applies to the Utah Project) pales in comparison to the tens of billions of dollars written down by the energy industry’s major producers.

 

Enefit Continues to Pay Dividends & is Committed to Utah Project

 

Despite the financial adjustment and industry downturn, Enefit has continued to pay a significant annual dividend to its owner, the Estonian government. In 2015, Enefit paid the government a dividend of 62 million euros (approximately $68 million). Estonia’s largest employer, Enefit also paid the government 65 million euros ($71.7 million) in labor taxes and excise duties, 28 million ($30.8 million) in resource charges, and 30 million ($33 million) in environmental taxes.

 

Despite the write-downs and other belt-tightening moves, Enefit leadership remains committed to the Utah Project, says Enefit CEO Hando Sutter. “We will continue our work to seek environmental approval for a utility corridor over federal land to serve the Project, to adjust our engineering processes to be as efficient and cost-effective as possible for the Utah resource, and to move forward with other activities that will maintain and add value to the Project.”

 

Recent activities at the Project site include a new geologic research program to extract new oil shale core samples for additional test work. This is part of ongoing work to help fine-tune the engineering of Enefit’s oil-production process and evaluate alternative mining horizons.

 

Enefit will also soon begin an assessment of whether the Utah’s Project’s known oil shale resources can be validated as “reserves,” which would increase the Project’s value. It’s anticipated that the resulting reserve report could be used to help raise private equity investment and/or to inform valuation as part of other potential future financial transactions.

 

Finally, after a few months of delay, Enefit is pleased that the Bureau of Land Management will soon release a Draft Environmental Impact Statement (DEIS) on establishing a corridor across federal land to accommodate the extension of utilities to Enefit’s project site. The BLM will receive and respond to public comment on the DEIS before releasing a Final EIS and decision about whether to allow the utility corridor later this year.

 

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Utahns View Mining Positively, Citing Economic Value and Jobs

25 Feb 2016

copper mine

The overall public perception of mining among Utah residents is very positive, according to a new online and telephone opinion survey conducted by the Utah Mining Association.

 

Nearly 90 percent of Utahns 18 and older – who say they have no connection to the mining industry – reported having a favorable view of mining. Utahns say they value mining because it delivers necessary resources, is good for the local economy, and provides good-paying jobs.

 

Last year Utah’s 291 mining operations directly employed 16,450 people and indirectly supported an additional 33,390 jobs statewide. The industry accounts for 4.59 percent of the state’s GDP, and Utah mining operations create over $2.9 billion worth of mineral, metal and fuel products.

 

The Utah Mining Association survey also reported that respondents believe mining to have a great deal of influence in their daily lives, seeing value not only in its economic impact but in the many ways that products mined in Utah are used in the products they use daily including jewelry, electronics, toys, money, plumbing fixtures and wires.

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Most survey participants could only name four locally mined minerals – copper (Utah’s state mineral), coal, gold, and silver – although more than 25 different minerals are mined throughout Utah. Twenty-four of the state’s 29 counties have at least one mine. Lesser-known products mined in Utah include lead, zinc, oil shale, gilsonite, phosphate, aluminum, lime, salt, and potash.

 

The survey also found that, while people are aware that coal is mined in Utah and is used in power generation, only 33 percent of responders were aware that Utah coal accounts for 76 percent of our current electricity generation.

 

So, while Utahns are aware of and very supportive of mining operations in Utah, they are less aware of the variety of materials mined here and the scale at which some of these materials benefit them and allow for the high quality of life we all enjoy. Education and communications to improve Utahns’ connection between mining and its role in their day-to-day lives will be a key effort of UMA in 2016 and beyond – an effort strongly supported by Enefit.

 

 

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