Israel Looks to Oil Shale for Energy Security

Shooting out of a pipe at the Zoharim oil shale drilling site southwest of Beit Shemesh on Wednesday morning was the first shale sample from the location – an 80-centimeter-long, 15-centimeter-diameter, grayish cylinder of sediment – that had just been shuttled 331 meters upward by a sweating, hard-hat-outfitted crew.
“It’s like a birth,” Dana Kadmiel, environmental engineer for Israel Energy Initiatives, told The Jerusalem Post from the sidelines.
Though not even yet in its official pilot phase, IEI’s shale extraction process aims to produce 40 billion barrels of oil in its currently licensed jurisdiction, which covers 16 percent of Israel’s oil shale stores, according to Kadmiel.
To create oil from shale – which is dark sedimentary rock containing hydrocarbons – workers must drill as far as 400 meters down through an impermeable layer to reach the shale, Kadmiel explained.
Surrounding the production pipeline, the company must also drill a ring of heating wells, which gradually heat the rock to 300º C and thereby transform it into lightweight oil in situ.
In this pre-pilot phase, rather than using heaters, the company is removing pieces of shale for analysis in Ben- Gurion University laboratories.
“It’s a little bit lean, but the lower section is good,” Yoav Dror, a geologist for IEI, which in based in the capital, told the Post, as he wrapped up the sample.
“I’m pleased that something came out, but most of the time they recover 100% of the material,” he said, noting that 80 centimeters was only 50% of their aim.
The technology for drilling into Israel’s apparently ample shale stock only arrived here recently, through the expertise of Brooklynite Dr. Harold Vinegar and his experience gained working for 32 years at Shell Oil, where he eventually became chief scientist.
“In 1980, I became involved in unconventional oil shale development in Colorado, and we did our first pilot – the Red Pinnacle pilot – in 1981, in a small place in the Piceance Basin, where the oil shale is very close to the surface,” he told the Post during an interview last week ahead of the Israeli Presidential Conference. “We did this mostly out of the back of a pickup truck.”
After years of pioneering the industry and creating over 200 patents of his own, Vinegar left Shell in 2008 to come to Israel – which after the US, Canada, China and Jordan probably has the fifth-largest oil shale deposits in the world, according to experts.
“[Shell] doesn’t want to deal with Israel – they deal with OPEC – and for them an investment here would be small,” said Kadmiel, noting that Shell has, however, started to do extractions in Jordan.
Vinegar joined with Dr. Yuval Bartov to build IEI, which is today owned by International Discount Telecommunications and chaired by American philanthropist Michael Steinhardt.
Back at the President’s Conference interview, Vinegar produced a slab of oil shale rock and a vial of reddish liquid.
“It looks like something you might drink, a wine, a rosé, perhaps,” he said. “It’s hard to believe that from a rock like this you can make an oil of such high quality.”
For Vinegar, not only is shale oil a much cleaner alternative to crude, it’s also a matter of “energy security.”
Israel imports 270,000 barrels of petroleum per day of oil and needs 50,000 of that for routine military operations – exactly what IEI aims to produce – according to the scientists.
“This will be a source of thousands of skilled jobs and an enormous GDP growth for the country,” Vinegar said.
To make a profit, IEI needs to produce 50,000 barrels per day of oil, which costs $40 per barrel to produce, as long as oil prices remain above $80 per barrel, Kadmiel said.
“Oil shale is such a dense resource that of the 238 square kilometers on our license, we are going to use less than half of 1% in total,” Vinegar explained.
Kadmiel added, “It’s enough for us, for Israel to be independent.”
As soon as IEI receives approval from the local district committee and the Water Authority, the company will start its 2.5-year pilot project near the Ha’ela junction, which will include a production well and six or seven surrounding heating wells, according to Kadmiel.
A “demonstration phase” will follow the pilot, and then the commercial phase can take place. Optimally, the heating wells would run on natural gas, but the pilot will use electricity from the national grid and require about 75,000 kilowatts per day, she explained.
Even in the smoothest of scenarios, however, Vinegar said that no oil is likely to start flowing until 2018-2020. And IEI is facing a plethora of environmental objectors, who say that natural resources will be destroyed and that increased production of fossil fuels is unnecessary.
Both Vinegar and Kadmiel stressed that the company is striving to leave as small a surface footprint as possible, with most work occurring underground and no gas escaping to the air. The aquifer runs 200 meters below the shale, with an impermeable rock layer in between, according to Kadmiel.
“From the moment you enter the ground, it will take about five to seven years to restore [the land] to its original state,” she said. “The land we’re using will become a field again.”
But Kadmiel acknowledged that the company must make stronger efforts to engage with environmentalists and the local community and “prove” that its methods are environmentally sound. “It’s our responsibility,” she said.
Source: The Jerusalem Post

GLOBAL VIEW

APRIL 5, 2011

Could Israel Become an Energy Giant?

The Jewish state has 250 billion barrels of oil shale.

Jerusalem
"That is beautiful product."
Harold Vinegar is holding a little vial of oil, light-brown in color, with a look of paternal pride. "It's much lighter than typical crude," he says, describing it as "the equivalent of Saudi extra-light."
Maybe somewhere else this would be no big deal. But this is Israel—a country that's been drilling dry holes for six decades in a famously fruitless quest for oil. And the liquid Mr. Vinegar is holding has been extracted from a nearby deposit of shale oil, which Israel has in abundance.
What kind of abundance? The World Energy Council estimates Israel's shale deposits, located some 30 miles southwest of Jerusalem, could ultimately yield as many as 250 billion barrels of oil. For purposes of comparison, Saudi Arabia has proven reserves of 260 billion barrels. The United States consumes about seven billion barrels a year.
Mr. Vinegar works out of a small Jerusalem office for a start-up called Israel Energy Initiatives (IEI). Until recently he was a chief scientist at Shell in Houston, with a remarkable 266 patents to his name. Many of those patents are connected to his quest to develop "unconventional" energy sources such as shale (a grayish sedimentary rock) that are abundant in North America but pose major technological hurdles and are uneconomical to extract when oil prices are low.
Shale is much in the news in the U.S. thanks to discoveries of huge natural-gas resources—estimated at 2,500 trillion cubic feet—in our own shale rock that can be extracted by a newish version of a method called hydraulic fracking. And natural gas is much in the news in Israel, thanks to the discovery last year of a major offshore deposit estimated at around 16 trillion cubic feet.

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Bret Stephens

Drilling for shale oil in Israel.

Yet shale does not only contain natural gas. The U.S. is thought to have 1.5 trillion barrels of shale oil, while China has some 355 billion barrels. Israel ranks third, just ahead of Russia. Most of the U.S. deposit is in Colorado, where Mr. Vinegar spent much of his career perfecting various techniques that involve sinking electric heaters into the ground, warming the shale for as long as three years, and then extracting the oil that's released, roughly as one would from a regular well.
But there's a problem with the Colorado resource: "In Colorado the aquifer runs right through the oil shale," says Mr. Vinegar. One advantage of Israel's shale, he explains, is that the aquifer runs several hundred feet below it. A second advantage is the richness of the deposits, which he believes yield between 23 and 25 gallons of oil per ton of shale. A third is Mr. Vinegar's estimate of $34-$40 per barrel cost of commercial production—roughly comparable to the cost of deepwater drilling today.
Mr. Vinegar thought there would be one more advantage to working on shale extraction in Israel: Less bureaucracy, more can-do. But nimbyism, the permitting rigmarole, and a powerful environmental lobby are facts of life in Israel too, and Benjamin Netanyahu's government hasn't helped matters by jacking up taxes on energy companies now that sizable resources have been discovered.
For now, all this is far afield for IEI, which is still waiting on a permit for its first pilot project. Beyond that lie years of lead time and billions in investment to bring the project to commercial scale. The history of oil prospecting, even when the technology is right and the resources proven, abounds with failures. This could well be one of them (a point I hasten to underscore since Rupert Murdoch, chairman of this newspaper, has a 0.5% stake in Genie Energy, IEI's U.S.-based parent company.)
But regardless of whether IEI is destined for rags or riches, its efforts raise important issues about both Israel's and the world's energy future.
Israel currently imports nearly all of its oil by tanker, mainly from Russia and the former Soviet republics. Those imports were abruptly cut off during the 2006 war with Hezbollah, which brought the country perilously close to running out of fuel. More recently, there has been talk in Egypt of raising the price on its natural-gas supplies to Israel and perhaps cutting it off entirely. Energy independence may be a chimera for the U.S. For Israel, some measure of independence is a strategic imperative.
As for the rest of the world, it is steadily depleting its reserves of conventional oil even as demand continues to skyrocket. Biodiesels and other enviro-fads will not make up the shortfall. But unconventionals could, provided we get over our hypochondria about exploiting them and our illusions about downside-free sources of energy. At least there's no question about where the shale deposits lie.
There would be much surprise—and some justice—if Israel were someday to become the Mideast's newest energy giant. Then again, who would have predicted a decade ago that Iraq would be the Arab world's first democracy? The Middle East always retains its capacity to shock—and sometimes even delight.
Write to bstephens@wsj.com

Imagine a world where Israel was respected, a world where US Jews want to make Aliyah to Israel.

Imagine a world where Israel was respected, a world where US Jews want to make Aliyah to Israel.

There’s a fascinating article by Dore Gold in today’s Jerusalem Post.

He states that Dr. Yuval Bartov, chief geologist for Israel Energy Initiatives, at the yearly symposium of the prestigious Colorado School of Mines claims that Israel has 250 billion barrels of oil reserved locked in oil shale. That, to top off the US Geological Survey estimates that there are 122 trillion cubic feet of gas in the whole Levant Basin, most of which is within Israel’s jurisdiction.

The study places Israel as the world’s third largest holder of oil shale reserves.

Dore Gold tells us that Israel is working on technology that will not only cleanly extract the oil from shale, but provide water while doing so.

Gold tells us that these technologies are being tested right now.

Dore Gold is not a man led to exaggeration. If he’s telling us this, then there is strong basis for it in fact. Updated studies this coming year will tell us more about the extent of these finds and technologies.

That's not to say that the idea doesn't have its Green detractors.

But aren't environmentalist always party poopers? They'd prefer to fly in their jets, while the rest of us give up our cars.

Anyway, back to the subject on hand..

When I read this, my first thought was that as a primary supplier of global oil for the next few decades, this would completely alter the way the world deals with Israel.

When I told this to my wife, her first response was that American Jews might actually decide to make Aliyah to a wealthy country like Israel.

Imagine…

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Labels: Oil. Gas. Oil Shale. Extraction. Barrels. Aliyah

Israel’s Gas and Oil Shale Bonanza May Have Strategic Implications

Two new developments in the Israeli energy sector could well help offset the West’s growing dependence on potential problematic sources of energy.
The Tamar field, which should begin production in 2013, is expected to supply all of Israel’s domestic requirements for at least 20 years.
The Economist suggested in November 2010 that the recently discovered Leviathan field, which has twice the gas of Tamar, could be completely devoted to exports.
All the undersea gas fields together have about 25 trillion cubic feet of gas, but the potential for further discoveries is considerably greater, given that the US Geological Survey estimates that there are 122 trillion cubic feet of gas in the whole Levant Basin, most of which is within Israel’s jurisdiction.
What is less well-known, but even more dramatic, is the work being done on the country’s oil shale.
The British-based World Energy Council reported in November 2010 that Israel had oil shale from which it is possible to extract the equivalent of 4 billion barrels of oil. Yet these numbers are currently undergoing a major revision internationally.
A new assessment was released late last year by Dr. Yuval Bartov, chief geologist for Israel Energy Initiatives, at the yearly symposium of the prestigious Colorado School of Mines.
He presented data that Israels’ oil shale reserves are actually the equivalent of 250 billion barrels (that compares with 260 billion barrels in the proven reserves of Saudi Arabia).
Independent oil industry analysts have been carefully looking at the shale, and have not refuted these findings. As a consequence of these new estimates, Israel may emerge as the third largest deposit of oil shale, after the US and China.
New technologies, being developed for Israeli shale, seek to separate the oil from the shale rock 300 meters underground; these techniques actually produce water, rather than use it up.
The technology will be tested in a pilot project followed by a demonstration stage to show that the underground separation of oil from shale is environmentally sound before going to full-scale production.
The present goal is to produce commercial quantities of shale oil by the end of the decade.
Read the Full Article from the Jerusalem Post HERE

Can Israeli Oil Shale Outsize Saudi Arabia?

Maurice Picow | July 7th, 2011 | 7 Comments | Email this

An oil shale trial plant in Colorado. Does Israel want its Negev and Galilee regions torn up for “black gold”?
Until recently, Israel has been an energy poor country, with nearly all its energy needs having to be supplied by importing both petroleum – bought mainly on the international Spot Market – and coal. Previous attempts to find oil in Israel have only been marginally successful, with small amounts discovered outside the city of Ashdod, and on the shores of the Dead Sea. But following the discovery of large amounts of natural gas in offshore Mediterranean  fields, such as the Tamar and Leviathan gas fields off the coast of Haifa, Israel has begun to become a potential world player in energy production, with ideas to export natural gas to Europe in an undersea pipeline, despite security and environmental implications. But these finds could be nothing, compared to vast amounts of oil shale waiting to be processed.
Lawrence Solomon
All of this, including the natural gas finds, are small in comparison to estimates of as much as a half trillion barrels of  oil in the form of oil shale, that has been estimated to be lying under parts of Israel’s Negev and Galilee regions; and just waiting for the proper technology to extract it.
Extracting liquid petroleum from rock-hard oil shale (which looks and feels like solid rock) is not an easy task, however.
The process involved is very expensive as well as not very environmentally friendly. This has been already found out in locations like Alberta Canada, where Israeli geothermal energy company Ormat Industries teamed up with Canadian company Opti Canada Inc. to extract oil from shale-like tar sands by using high pressure steam.
But despite the drawbacks, there are now research teams working on ways to be able to extract oil from these large Israel oil shale reserves as reported recently on Canada’s Sun News Service, environmentalist Lawrence Solomon told Sun’s reporter that Israel’s oil shale reserves “may be as much or more than all of those in Saudi Arabia”.
Some “big gun” energy investment players appear interested in the Israel oil shale venture, including media mogul Rupert Murdoch, former US Vice President Dick Cheny, and business planning strategist Barry Rothschild.
Solomon believes  that oil can be produced from Israeli oil shale for a price of between US $35 and 40 per barrel. The idea, according to the SUN News video clip, is to break OPEC’s control of the world energy market, particularly the portion in the hands of Arab countries.
If this is true, and if Israeli geologists and energy production experts are successful in extracting this energy, OPEC’s global influence may be severely damaged, if not broken entirely.
Hearing this kind of prediction from a person like Solomon is a bit strange, however. His Energy Probe NGO has spoken out against causes of global warming (of which over use of fossil fuels has been blamed), extraction of oil from the Alberta Tar Sands, and use of nuclear energy.
For a small country like Israel, with limited geographical space compared to Canada, intense production of oil from oil shale could be very environmentally damaging. This has already been seen on a lesser extent by a pilot oil shale production project Mishor Rotem that is being shut down due to environmental concerns.
If oil shale production by Israel may be eventually profitable, and even turn Israel into a major energy exporter, what environment price will have to be paid in order to become a world energy player? Tearing up large portions of the Negev and the Galilee to extract this energy does not sound very environmentally plausible. And despite all this “black gold” , the Israeli public will not benefit as the government seems bent of adhering to the “Norwegian Plan” of levying high energy taxes despite the availability of oil .
Read more on Israeli energy issues, including oil shale:
Israel’s Leviathan Gas Finds Will Have Widespread Repercussions on World Power
Who’s Testing Environmental Impact as Israel Drills for Oil at the Dead Sea?
Is Israel’s Oil Shale Pie Big Enough to Shift World Politics?
Negev Oil Shale Plant to Shut Down and Switch to Natural Gas

Looking for an Oil Boom in Israel's Napa Valley

IEI, a branch of U.S. telecom company IDT, is trying a new technique to extract oil from Israel's huge oil shale deposits

Workers at IEI's drilling site in Adullam, an important grape-growing region Ahikam Seri for Bloomberg Businessweek

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In a golden wheat field set among the green hills of Israel's Adullam region, Harold Vinegar gestures to a drilling rig as it pulls up core samples of oil shale from some 400 meters (1,312 feet) down. "Israel has one of the largest deposits of oil shale rock in the world, enough to produce 250 billion barrels," says the 62-year-old geologist, who spent three decades at Royal Dutch Shell (RDS.A), eventually becoming Shell's chief physicist. "Saudi Arabia has reserves of 260 billion barrels. Most people don't realize yet that Israel has the potential to be one of the world's major oil producers."
They sure don't. An old joke has Moses making a wrong turn after leaving Egypt and leading the Israelites to the only land in the Middle East without oil. Over 400 wells have been dug in Israel over the past six decades with little success, some by wildcatters claiming divine guidance from scripture and rabbinical advisers.
Vinegar, who moved to Israel from the U.S. almost three years ago to become chief scientist for a company called Israel Energy Initiative, is leading an effort to find—and extract—the oil Israelis have long sought. Israel's sedimentary rock contains solidified hydrocarbons called kerogen. If heated to 600F the kerogen release their oil, as well as gas. IEI, a branch of the U.S. telecom company IDT (IDT), may have found a cost-effective way to heat the kerogen enough to bring the oil to the surface. This vision has entranced Israeli officials and investors including News Corp. (NWS) Chairman Rupert Murdoch, British financier Lord Jacob Rothschild, and hedge fund manager Michael Steinhardt.
The dream of an energy-independent Israel has taken a giant leap forward since the 2009 discovery of substantial natural gas fields off its coast. The strategic value of those finds was confirmed when the uprising in Egypt disrupted its gas exports to Israel. Since Israel must import all its oil and coal and 70 percent of its gas, tapping the oil shale successfully could be a game-changer for the Jewish state.
First, though, Vinegar has to prove the oil can flow easily. The traditional way to extract shale oil is through open-pit mining, with production costs ranging from $70 to $100 a barrel. Vinegar says a more economical alternative with less damage to the landscape involves slowly and uniformly heating rods made of molten salt that are sunk into the shale deposits. Heat from the rods, which are kept at up to 600F, spreads through the shale slowly, over three to five years. The resulting oil and gas are then pumped to the surface. Vinegar is a pioneer in developing this technology, which he says could produce oil for as low as $35 a barrel.
Israel's shale oil deposits have remained untapped largely for geopolitical reasons. "None of the major oil companies are willing to do business in Israel because they don't want to be cut off from the Mideast supply of oil," says Howard Jonas, chief executive officer of IEI's corporate parent, IDT, in Newark, N.J. Investor excitement over the shale ventures has helped push IDT's stock, which fell to 66¢ a share in late 2008 on its struggling prepaid calling card business, to about $30.
By yearend, IEI plans to start a small pilot project in Adullam to show how the conversion from kerogen to oil works on-site. That prospect has alarmed environmentalists, who argue that IEI risks contaminating Israel's main aquifer. Adam Teva V'Din, head of the Israel Union for Environmental Defense, has petitioned the High Court of Justice to halt the pilot, arguing the government wrongly granted IEI a permit under a 1952 petroleum law that does not apply to unconventional extraction methods.
Concerns about aquifer contamination have dogged other shale oil efforts, including an IDT project in Colorado. Vinegar says contamination is not an issue in Israel because an impermeable, 200-meter-thick rock layer separates the Adullam oil shale deposits from the aquifer. Israel's National Infrastructures Ministry says IEI has a license solely for the pilot project, and commercial development will proceed only after the environmental impact has been evaluated.
These reassurances don't satisfy all the residents of the Adullam region's grape-growing Elah Valley, which is marketed as Israel's answer to California's Napa Valley. On Apr. 22 a protest took place in an archeological park amid 2,000-year-old ruins. It featured children playing in a pool of "oil" simulated by black plastic tarpaulins. "They are planning an experimental, hazardous, and dirty oil industry," says Orit Skutelsky, an ecologist with the Society for the Protection of Nature in Israel. "Israel is not the place for this kind of industry, especially this part of it."
If the pilot project is allowed to proceed this year, says IDT's Jonas, oil could be produced as early as 2017. Shale oil expert Jeremy Boak at the Colorado School of Mines believes the project "is something they can achieve and make profitable at the kind of oil prices we have right now." Boak also says that since the technique releases natural gas as a byproduct, the gas can be used to heat the rods and keep costs down.
For investors such as Steinhardt, a leading philanthropist for Jewish causes, the possibility of an energy-independent Israel is as much of an attraction as any possible profit. The hope, says Steinhardt, also IEI's chairman, is "that this will turn into something very important for the state."
The bottom line: New technology could heat Israel's shale deposits into 250 billion barrels of oil. Environmental concerns linger.

Israel May Hold the World’s Third Largest Reserve of Shale Oil

Israel May Hold the World’s Third Largest Reserve of Shale Oil      
Written by David Caploe PhD    
Friday, 15 April 2011 14:02 

Message :
Investors: Free Shale Oil Investment Report – The Shale revolution is just getting started and we have prepared a free report which shows 3 stocks that could soon find their share prices soaring. Click here for your Free report. Last summer huge deposits of natural gas were found along Israel's northern coastline.
As with almost everything having to do with that controversial country, both Israelis and others found this "revelation" a mixed blessing, to say the least. On the one hand, it certainly eases concerns about Israel's energy viability, with enough not just for its own needs, but sufficient quantities to become a major exporter as well.
At the same time, many Israelis feared the effect such "easy money" would have on the country's already significant elite corruption problem, and its proximity to Lebanese territorial waters raised once again the question of the wisdom of Israel's 2006 invasion, which alienated many previously pro-Israeli elements in Lebanon, and seemed sure to fuel a national consensus to contest any easy access for which Israelis might be hoping.
Hmmmm ... sounds a bit like BP and their Arctic drilling problems in Russia ... ;-) ...
Now, it turns out, even more fuel is being added to Israel's energy fire -- so to speak --  with the equally stunning news that the country may hold the world's third largest quantities of shale oil - behind the US and China, both of whom would consume almost all of their own production - meaning Israel could indeed become the world's largest exporter of shale oil -- hence the comparison to Saudi Arabia.
Israel a global super power in energy ??? The mind boggles.
But the same sort of technological revolution that has made previously inaccessible on-shore natural gas suddenly available - via a process of hydraulic fracturing, or fracking, an environmentally destructive process whose impact on the global natural gas scene we discussed last week - is now apparently transforming the extraction of shale oil as well - and in so doing, shaking up the energy dynamics of the entire world, including Israel.
How did all this come to be ???
The most recent developments in this story start with Dr Harold Vinegar, the former chief scientist of Royal Dutch Shell,  who is at the center of an ambitious project to turn Israel into one of the world's leading oil producers. Israel Energy Initiatives, or IEI, where Vinegar is chief scientist, is working on projects to extract oil and natural gas from oil shale from a 238sq km area of the Shfela Basin, to the south and west of Jerusalem.
Oil shale mining is often frowned upon by environmentalists for many of the same reasons as fracking: it's a dirty process that is both energy and water-intensive.
IEI, which is owned by the American telecom group IDT Corp, believes its technique will be cleaner than that of other operators because the oil will be separated from the shale rock up to 300m beneath the ground.
Water will be a by-product of the process, rather than being consumed by it in large volumes. Vinegar says Israel has the third-biggest oil shale deposits in the world, outside the US and China:
"We estimate there is the equivalent of 250 billion barrels of oil here. To put that in context, there are proven reserves of 260 billion barrels of oil in Saudi Arabia."
And not to upset too many people, but we also ran an item earlier this year about Arab scientists working for ARAMCO who argue that the Saudis have, in fact, systematically OVER-estimated their proven reserves.
IEI estimates the marginal cost of production will be between $US35 - 40 per barrel.
This, Vinegar points out, is cheaper than the $US60 or so per barrel that it costs to extract crude from inhospitable locations such as the Arctic - wow, if BP CEO Dudley isn't gnashing his teeth when he reads this ;-) - and compares with $US30 - 40 per barrel in some of the deepwater oilfields off the coast of Brazil.
"These Israeli deposits have been known about, but have never been listed before. It was previously assumed there was not the technology to deal with it."
IEI hopes to begin production on a commercial basis by the end of the decade, with a view to producing 50,000 barrels per day at the outset. This would be a fraction of the 270,000bpd consumed daily by Israel, but would be a significant step towards making the country energy-independent. With one barrel of oil comprising 42 gallons, Vinegar estimates each ton of oil shale contains approximately 25 gallons.
The extraction process involves heating the rock underground, using electric heaters, to approximately 325C, the level at which the carbon-carbon bonds in the rock start to "crack".
Wow, this really DOES sound like the shale oil equivalent of "fracking". The oil produced by the process is light and easily refined to a range of products, including naphtha, jet fuel and diesel.
This is significant, since light oil -- like that produced in Libya -- is considered "sweet" and much less costly to refine than the heavier crude found in Saudi Arabia.
Given the importance of political receptivity to outside investors in the energy business, it's not surprising the project is attracting serious interest from outside investors. In November, 2010, an 11% stake in Genie Oil & Gas, the division of IDC that is the parent company of IEI, was acquired for $US11m by Jacob Rothschild, the banker, and Rupert Murdoch, chairman of News Corporation and promoter of right-wing lunacy throughout the English-speaking world.
Genie's advisory board includes impressive figures such as Michael Steinhardt, the hedge fund investor, and more frightening ones, like Dick Cheney, former US vice-president, and co-founder of the Shiite Islamic Republic of Iraq, along with his running buddy George W Bush.
An appraisal is now under way that would be followed by an 18-month pilot stage, according to Vinegar. Among the issues this will address will be concerns raised by environmental groups, including an examination of IEI's claims that the process does not require excessive use of water or energy.
Reassurance will also be sought that a local aquifer, which is several hundred metres below the shale deposits, will not be contaminated by the work. This is key, because, while the Middle East may have an abundance of fossil-fuel energy, it has a decided shortage of water, so any process that is a major net consumer of water may not be cost-effective from an overall point of view.
Assuming these early stages are completed successfully, a demonstration phase would then take place over three to four years, during which the work completed in the pilot phase would be continued on a larger scale. Only then would the commercial operations begin.
By that time, up to 1000 people would be employed on the project, many of them specialist engineers from outside Israel, says Vinegar, who adds:
"Funding is not needed for the pilot and demonstration, although once we get to 50,000 barrels per day, we would want to have a partner. We have been approached by all the majors."
Not surprisingly, the project still faced a number of significant issues, as Vinegar points out:
"There is a geological risk:
- Is the resource there?
- What is the risk to the aquifer?
- We have no doubts here, in particular that the resource is there and is of good quality,
- but the pilot can prove these things.
"Then there is the technological risk:
- Can we drill long horizontal wells?
- Can the heaters be placed in them?
- And can they last?
"And finally there is the economic risk, what the price of oil does. But I think the price is going to continue rising, to the extent that, by 2030, we will be at around $US200 per barrel."
And while this seems to have escaped Vinegar's attention, which is not a great sign, there is a fourth potential risk for the project: whether it is capable of sufficiently overcoming substantive objections from environmentalists to win popular support - perhaps the most important challenge facing him and his colleagues.
If they are successful, though, it will probably mean an end to one of the most humorous stories in Jewish culture about fossil-fuel energy: During a crowded Passover service, a rabbi telling the story of the Exodus from Egypt was interrupted by an old man, who kept shouting, "Moses was a schmuck, Moses was a schmuck."
Of course, the congregation was shocked, and the stunned rabbi finally asked the old man why he was criticizing the great hero of Judaism / Christianity / Islam. The old man replied without hesitation: "He said when they come out of Sinai, turn left. If he had any brains, he should have told them, "Turn right.'"
David Caploe PhD
Chief Political Economist
EconomyWatch.com