NEWS NOTES — ENERGY & RESOURCES
Iran faces petroleum woes
Mineral resource of the month: Zirconium and Hafnium
Iran contains the world’s second- largest reserve of conventional crude oil, trailing only Saudi Arabia (and Canada, if including oil sand reserves), according to a survey in the Dec. 18, 2006, Oil & Gas Journal. Despite this strong oil reserve position, however, new research suggests that Iran could run out of exportable oil within a decade.
This projection comes from a new survey of Iran’s oil economy conducted by Roger Stern, an economic geographer at Johns Hopkins University. Stern based his finding on the simple economic principle of supply and demand: If domestic demand for oil grows faster than the growth of production, then the amount of oil available for export will decrease.
Indeed, Iranian oil exports have been decreasing since 1980, as previously noted by industry analysts. But the downward trend is picking up speed, and exports could hit zero in the next seven to eight years, Stern reported Jan. 2 in Proceedings of the National Academy of Sciences. Such a forecast could have implications for Iran’s push to become a nuclear state, Stern says, proclaiming that nuclear power may be necessary to resurrect a slumping energy economy.
To figure out when Iran may no longer be an exporter, Stern combined the rate of domestic demand growth with the rate at which oil reserves are being depleted. The annual demand growth rate is 5 percent, according to data published in the Feb. 10, 2003, Oil and Gas Journal. For the depletion rate, Stern used numbers from current and former Iranian oil ministers, which they placed at about 8 percent. (The U.S. Energy Information Administration, or EIA, puts the annual oilfield decline rate at 8 to 10 percent.) Compiling those numbers, Stern concluded that the export decline rate falls between 10 and 12 percent per year.
Stern took the research a step further, however, putting forth possible future scenarios that lay out potential contributions from foreign investors, which Iran will need to build enough production capacity to offset the decline of exportable oil, he says. Iranian oilfields are in need of upgrading, modernization and enhanced oil recovery efforts, according to EIA, as current recovery rates are 10 percent lower than the world average. The country also needs to step up its exploration for new oil. “Foreign investors are important to Iran for the same reason they’re important anywhere else — to get the oil or gas out of the ground at least cost,” Stern says.
Foreign investors are difficult to come by, however, due to restrictions, such as the Iran-Libya Sanctions Act that prohibits U.S.-based energy companies from doing exploration and development work in Iran. (Sanctions against Libya were lifted in 2004, but are still in place in Iran.) Limits to foreign investment combined with the estimated export depletion rate led Stern to estimate that Iran will most likely run out of exportable oil by 2014 or 2015.
Others suggest otherwise, however, including Jahangir Amuzegar, an economist and former director of the International Monetary Fund. Amuzegar says that while oil reserves indeed suffered damage from the Iran/Iraq war, they maintain enough oil for Iran to continue exporting oil for another 70 years, calling the ominous outlook for depleted mineral resources an “old story,” in an article that appeared Jan. 29 in Middle East Economic Survey.
Stern says that some of the debate stems from uncertainty over the actual depletion rate. While Stern conducted his study based on the 8 to 10 percent oilfield decline rate described by Iran’s oil ministers, there is “no way to know whether that was right,” he says.
If an export decline crisis is indeed in the near future for Iran, then nuclear power as an additional source of energy could prove alluring, Stern says. Too many other factors exist, however, that prevent nuclear power from being economical, Amuzegar said. Still, nuclear power can also convey “prestige and technological prowess,” Stern says, “which Iran might want whether or not its petroleum industry was in a mess.”
As of Jan. 1, 2006, Iran’s proven reserves were 132.5 billion barrels of oil, which account for about 10 percent of total global proven reserves, according to EIA. From those reserves, Iran produced an average of 4.1 million barrels per day in 2005, exporting 2.5 million barrels per day. Meanwhile, Iran’s domestic consumption is about 1.5 million barrels per day, according to the EIA, a number that is quickly growing.
Joseph Gambogi, the zirconium and hafnium commodity specialist for the U.S. Geological Survey, has prepared the following information on the two elements.
Zirconium and hafnium are corrosion-resistant metals that are grouped in the same family as titanium on the periodic table. The two elements commonly occur in oxide and silicate minerals and have significant economic importance in everything from ink, ceramics and golf shoes to nuclear fuel rods.
Zirconium and hafnium are found primarily in the zirconium-silicate mineral zircon, typically in a zirconium to hafnium ratio of about 50-to-1. Zircon itself is produced as a byproduct of the mining and processing of heavy-mineral sands containing the titanium minerals ilmenite and rutile.
Zircon ceramics, opacifiers, refractories and foundry applications are the leading end uses for zircon. Other end uses include abrasives, chemicals and welding rod coatings. The leading markets for hafnium metal are in superalloys, nuclear control rods and high-temperature ceramics. Additionally, superalloys can operate in temperatures as high as 1,100 degrees Celsius and are used in the hot sections of aircraft and industrial gas-turbine engines.
Zircon increases resistance to metal penetration and gives a uniform finish to castings, so milled or ground zircon is often used in refractory paints for coating the surfaces of molds. Zircon, in the form of refractory bricks and blocks, is used in furnaces and hearths for containing molten metals.
The zirconium-oxide mineral baddeleyite is used principally in the manufacture of alumina-zirconia abrasives and in ceramic colors and refractories. Stabilized zirconium oxide exhibits high light reflectivity and good thermal stability and is primarily used as an opacifier and pigment in glazes and colors for pottery and other ceramic products.
Yttria-stabilized zirconia is used in the manufacture of oxygen sensors that control combustion in furnaces and automobile engines. It is also used to make a diverse array of products, including high-temperature, high-strength structural ceramics, heat- and break-resistant shirt buttons, golf shoe spikes, golf putters, fiber-optic connector components, coatings for the hot sections of jet engines, and cubic zirconia, a gemstone replica for diamonds and colored gemstones. Yttria-stabilized zirconia is also increasingly used in dental applications as inlays, crowns and bridges because it has higher fracture resistance than similar alumina products.
Ammonium- and potassium-zirconium carbonates are used as paper and board coatings. Zirconium chemicals are also used in inks to promote adhesion to metals and plastics and as links in polymers and printing inks.
Because of its low thermal neutron absorption cross section, hafnium-free zirconium metal is used as a shield for nuclear fuel rods. Commercial-grade zirconium, unlike nuclear-grade, contains hafnium and is used in the chemical process industries because of its excellent corrosion resistance.
In 2006, world production of zircon was 870,000 metric tons; there are no available statistics on world production of zirconium and hafnium metal. World reserves of zircon are estimated to be 38 million tons of zirconium oxide. Identified world resources of zircon exceed 60 million tons, of which the United States has about 14 million tons. Leading producers include the United States, Australia and South Africa. World resources of hafnium are associated with those of zircon and baddeleyite and exceed 1 million tons, of which the United States holds about 130,000 tons.
Because of increased demand for zircon by ceramics and chemicals industries, the heavy-mineral sands industry continues to be active in the global exploration and development of mineral deposits, particularly in Australia, Kenya, Mozambique, South Africa and the United States.
Visit http://minerals.usgs.gov/minerals for more information on zirconium and hafnium.