Israel: IEI's Land Of Oil And Money

By: Joshua HammerAugust 8, 2011

Israel may be the world's next energy superpower. But is this good for the Jews?

Illustration by Justin Metz

In Central Israel, not far from Jerusalem lies the Valley of Elah, a fertile region of oak forests and checkerboard fields bordered by limestone hills. In the Book of Samuel it is described as the place where David slew Goliath, thereby securing the future of the ancient Israelites. Seventy million years ago, the Mediterranean Sea washed over this area. When the water receded, it left behind sediment that eventually hardened into a thick layer of shale laced with hydrocarbon-rich kerogen. And that is why, if you ask the 41-year-old Israeli geologist Yuval Bartov, the Valley of Elah is now the place that could secure the future of the modern Israelites.
On a recent June afternoon, Bartov drives me to an overlook here, and points off in the distance, beyond the field of red peppers, to a shed half-concealed behind greenhouses. "That's where our pilot project will take place," he tells me. Some time in the next few months--barring bureaucratic delays or roadblocks thrown up by Israel's feisty environmental movement--Bartov plans to drill several wells into the bedrock here, going down 1,000 feet. His target: a potential mother lode of fossil fuels.
Bartov works for Israel Energy Initiatives (IEI), a Jerusalem-based startup with Goliath-size ambitions. In July 2008, the company obtained a license to explore 92 square miles of rural land in southern Israel. According to a 1980 study by the Geological Survey of Israel, the land may contain one of the world's largest deposits of kerogen-rich oil shale. Had the same rock been buried thousands of feet deeper, where temperatures range between 158 and 338 degrees Fahrenheit, it would have converted over millions of years into liquid crude. But no matter: In the past century, scientists discovered that by heating such rock to extremely high temperatures, they can transform the kerogen into oil--in effect, speeding up geological time.
Infographic: Oil Vey! 
How much crude could there be here? Bartov and I drive from the Valley of Elah to a wheat field at the edge of a road near the town of Kiryat Gat. This is the site of one of seven exploratory holes that IEI has drilled over the past two years. The rock samples were analyzed by IEI chemists at Ben Gurion University in Be'er Sheva and at Weatherford Labs in Houston. Bartov says their estimates matched the company's "highest expectations"; if so, the equivalent of 500 million barrels of oil may lie beneath this wheat field. "What you see here would supply Israel's needs for five years," he says. And that's just a tiny percentage of the territory controlled by IEI. According to Bartov and other IEI geologists, oil-shale deposits in Israel could produce as much as 250 billion barrels of crude. That's roughly equal to the total reserves of Saudi Arabia.

IEI's leaders, including chief geologist Yuval Bartov and CEO Relik Shafir, believe they're on the verge of transforming Israel into an energy power. | Photo by Yoray Liberman

The IEI oil-shale scheme is just one of several ongoing projects that have dramatically changed the prospects for Israel, which has dreamed for decades of becoming self-sufficient in fossil fuels. IEI's project is entering the pilot stage just as Israel is gearing up to produce natural gas from two giant offshore fields in the Mediterranean Sea, Tamar and Leviathan, which were discovered in 2009 and 2010, respectively. Israeli government officials, economists, and geostrategic thinkers are just beginning to contemplate what the wealth of these new fossil-fuel sources could mean for the country. Energy independence could mitigate the existential dread that Israelis suffer as citizens of a small nation threatened repeatedly. "As a person who used up a lot of fuel during his military career, I am very sensitive to the threat of embargoes," says Relik Shafir, IEI's CEO, who served as a fighter pilot in the Israeli Air Force and retired as a brigadier general. "This innovation will allow Israel to overcome one of its worst strategic deficits--having no energy supply of its own."
The potential changes go beyond economics. With both Europe and the U.S. seeking to reduce their dependency on Arab-world crude, an oil-and-gas-rich Israel could arguably reshape the balance of power in the region. "Look at how Russia established its power in Europe and the world," says Gideon Tadmor, CEO of Delek Energy, an Israeli partner in the offshore gas fields. "Its clout is not due to weapons or military capability, but to its energy supplies." Dore Gold, Israel's former ambassador to the United Nations and president of the Jerusalem Center for Public Affairs, says Israeli clout as an energy exporter could reshape Israel's relationship to Europe.
Significant obstacles stand in the way of this potential revolution. In January, Israeli Prime Minister Benjamin Netanyahu drove legislation to end the country's dependence on oil by developing alternatives. More significantly, extracting crude from oil shale is difficult and fraught with peril. For nearly three decades, Royal Dutch Shell has been trying to heat shale below ground in Colorado, with limited success. A coalition of Israeli environmental groups has filed a lawsuit calling the project potentially hazardous, even though IEI's process is nothing like the oil-shale "fracking" that has riled U.S. environmentalists.

Israel's former UN ambassador, Dore Gold, says the discovery of oil could reshape Israel's relationship to Europe. Knesset member Einat Wilf agrees: "It could be a real game changer."

And yet, the prospect of all that oil and gas has begun attracting the attention of many big investors. Since the January 2009 discovery of the Tamar gas field, shares of Israeli oil-and-gas companies have soared. Last November, Rupert Murdoch and Jacob Rothschild, the British financier, teamed up to buy a 5.5% stake in Genie Oil and Gas Inc., the division of IEI's parent company, IDT, that holds its energy assets. Other investors and board members include former U.S. Vice President Dick Cheney and hedge-fund billionaire Michael Steinhardt, who is now IEI's chairman. The infusion of cash has been a vindication for Bartov, a former research professor in Colorado, whose studies of oil shale were funded by Shell. "This deposit was known but neglected for decades," the IEI geologist tells me. "The right side of the brain knew, but the left side of the brain didn't connect. Nobody took it seriously. But that's changing."
Harold Vinegar, the alchemist behind IEI's oil-shale project, holds up a glass vial to the late afternoon sunlight that pours through his office window in the hills of western Jerusalem. An ebullient man with a mad scientist's shock of white hair, he's showing me some fine-quality light crude that he distilled seven years ago, from Colorado oil shale. Like an oenophile, he swirls the translucent fluid. "See how clear it is?" says IEI's chief scientist, a Harvard physics PhD who was once the chief scientist for physics at Royal Dutch Shell.

For more than 25 years, Harold Vinegar extracted oil shale from Colorado rock for Royal Dutch Shell. Now, as IEI's chief scientist, he wants to do the same in, and for, his newly adopted country. | Photo by Yoray Liberman

Vinegar starts off by telling me about a group of scientists who were dispatched in the mid-1980s by Shell to Kvantorp, Sweden, to investigate a curious oil-shale project started during World War II. Desperate to find secure energy supplies during the conflict, Sweden had mined and baked oil shale at 600 to 800 degrees Centigrade for 20 to 30 minutes in ovens known as retorts. The resulting vapor was distilled and refined into transportation fuels."They'd cook the stuff and make a really crappy oil," says Vinegar. "It was a dirty operation." But Swedish engineer Fredrik Ljungstrom refined the process, drilling holes 80 feet deep and heating the rock in situ. Vapors were funneled to the surface through a perforated production well, condensed into crude oil, and refined into kerosene, diesel, and gasoline. The 500,000 barrels of crude oil Ljungstrom produced "were better than what was coming out of the oven, because he was cooking the rock more slowly, at lower temperatures," Vinegar explains. Ljungstrom died in 1964, but he left behind voluminous records. Shell conducted simulation tests of his method in its labs. The results were intriguing.
Vinegar improved upon the Swedish results while working on Shell's fledgling projects in the Piceance Basin of northwestern Colorado, starting around 1980. Here, oil-shale deposits up to a thousand feet below the surface are thought to hold 800 billion barrels of recoverable oil--among the richest deposits in the world. Vinegar developed horizontal heaters that could generate high temperatures for months without burning out. With these, geologists could target the richest part of the oil-shale bed while leaving a minimal footprint on the surface. Heated correctly, the surrounding rock would take roughly three years for total molecular conversion of the kerogen into light crude. "After a few years of heating, the product was mostly clear," says Vinegar, who worked on seven Colorado projects for Shell over more than a quarter century.
The oil-shale industry in Colorado never really got off the ground. The high costs of heating and drilling wells made commercial oil-shale production unprofitable, especially when the price of oil fell. There were also environmental concerns, some involving the fact that the main aquifer in northwest Colorado runs through the oil-shale bed. While commercial production stalled around 1990, Shell has continued its R&D efforts there. Shell is now also taking its technology overseas. In August 2009, Jordan's King Abdullah granted the company oil-shale exploration rights to an 8,600-square-mile territory.
In October 2008, Vinegar retired from Shell. He and his wife emigrated to Israel, where he planned to take a teaching post. That really was the plan, he insists. But then Bartov, who had met Vinegar years before in Colorado, persuaded IDT chief Howard Jonas to ask the Shell veteran to bring his alchemy to IEI. Bartov was convinced that if anyone could get oil from the ancient shale in the Valley of Elah, it was Vinegar.

Turning Oil Shale
Into Oil

Harold Vinegar's oil-shale extraction process for IEI is nothing like the "fracking" that some U.S. states are trying to curb. Here's how it works:

Infographic: Turning Oil Shale Into Oil 

Infographic by Bryan Christie Design

While scientists from the Geological Survey of Israel had identified the Elah lode in 1980, not a single oil company had bothered to pursue it. Instead, they focused their energies on modest deposits of oil shale that lay just beneath the surface in the Negev Desert. "People said, 'Three hundred meters down? Nobody is going to go to that level,' " remembers Vinegar.
Above the Valley of Elah, Bartov walks me over to an outcropping that he says mimics the geological strata deep below ground. He points out a layer of chalk above a layer of porous limestone. The chalk is light and breaks apart easily, but it has small pores and low permeability, which keeps liquids from seeping through it. Beneath the earth, Bartov tells me, the chalk layer is 600 feet thick, forming an impermeable barrier between the oil shale above and the limestone below. So even though one of Israel's main aquifers runs through the limestone, this one is "completely isolated from the oil shale," he insists. "There is no danger," claims Bartov, that the groundwater will be contaminated by hydrocarbons expelled during the heating process.
Bartov and Vinegar promise that the heating process will be clean, energy efficient, and economical. Early on, IEI will heat the oil shale with electricity provided by natural gas, which is plentiful and cheap, and emits relatively low amounts of carbon dioxide. Eventually, says Bartov, electricity could be replaced by molten salt, a more energy-efficient technology widely used, above ground, in chemical and solar plants. By 2021, IEI could provide enough diesel and jet fuel from the Shfela Basin to cover Israel's military and civil aviation needs. After that, IEI would ratchet up crude-oil production to 270,000 barrels a day--the total amount of oil consumed in Israel--"if the country wants it," Vinegar says.
Exultant in his office in the affluent Tel Aviv beach suburb of Herzliyah Pituach, Delek Energy's Tadmor proudly claims that Israel has never been in such a strong position. Three years ago, Delek Energy teamed up with Yossi Langotsky, a pioneering Israeli geologist, and Noble Energy, a midsize American oil-and-gas company, to explore a tract of territory deep underwater in the Levantine Basin of the Mediterranean Sea. About 56 miles offshore, the tract was farther out than any ever plumbed by an Israeli company. But in late 2008, the partners began drilling the Tamar well--named after Langotsky's granddaughter--in 5,500 feet of water. Two months later, at a depth of 16,076 feet, they hit huge reservoirs of natural gas. Less than two years later, they found Leviathan, with an estimated 16 trillion cubic feet of gas--the richest offshore gas discovery of the past decade. The total value of the gas in Leviathan alone could reportedly reach an astonishing $95 billion. Tamar should begin producing gas in 2013; Leviathan will follow a few years later. Given that demand for natural gas is soaring following the disaster at Fukushima Daiichi, it should come as no surprise that Tadmor is sitting on a hot stock: Delek shares are up 987% since January 2009. "We are in the middle of huge change," says Tadmor, reflecting the prevailing view in Israel's energy community, "and it's a great opportunity for Israel."
It is a chance Israelis have been awaiting--even praying for--for more than half a century. As far back as the 1930s, in the decade before Israel became a country, British geologists searched futilely for oil and gas. When a team from the Lapidot Oil Co. and the Israel Prospectors Corp. finally did hit oil on September 25, 1955, the country's optimism was unleashed. "The energetic search for oil in Israel, carried on chiefly by American-financed corporations, marked its first success," reported the American-Israel Chamber of Commerce and Industry news bulletin. "Oil from the well gushed 65 feet in the air before it could be capped." The grade, the organization reported, "[was] better than average," and raised the hope "that eventually Israel will be able to meet its fuel needs from local sources."
Engineers and geologists searched everywhere for the next big strike. "The government supported oil exploration with good sums of money," says geologist Eliezer Kashai, a Hungarian who emigrated to Israel after World War II. But the Heletz-Kokhav field has produced just 17.5 million barrels of oil--less than Saudi Arabia produces in three days. Momentum petered out. For decades, the Israel National Oil Co. seemed a joke. Five hundred wells were drilled across Israel between 1960 and 1985, almost every one dry. In 1986, the national oil arm suspended drilling.

In the Bible, the Valley of Elah is the site of the battle between David and Goliath. Today, it's the site of a battle between IEI and the environmen­talists who want to preserve its beauty. | Photo by Yoray Liberman

Just a few true believers remained, their faith backed by the Bible, not geology. In 1981, Ohio-born evangelical minister Jim Spillman published a book, The Great Treasure Hunt, which argued that certain Old Testament verses, including references to "a fountain" and "a well," and to Joseph receiving from God "blessings of heaven above [and] blessings of the deep that lieth under," pointed to vast oil wealth hidden in the Holy Land. Michigan tool company executive John Brown, a reformed alcoholic and born-again Christian, was so taken with Spillman's vision that he founded Zion Oil and Gas and obtained rights to drill on a large plot in northern Israel. "Brown knew nothing about oil and gas," says Richard Rinberg, Zion's CEO, who works from an office in Caesarea. "At the beginning, [the search] was 100% faith-based." But now geologists on Zion's payroll--including Kashai--believe Brown might have been onto something, citing a Triassic reef found deep below the surface, a strong indication of fossil fuels. Since 2007, Zion has raised nearly $90 million in funding. It has drilled three wells so far, finding only traces of fossil fuels.
After all this, the discoveries of Leviathan and Tamar seem like answered prayers. Yet, as the saying goes, be careful what you wish for. Israeli environmentalists warn that the natural-gas fields, which are being drilled under less stringent regulations than American sites, are a Gulf of Mexico–like nightmare in the making. "Aside from the Strait of Gibraltar and the Suez Canal, the Mediterranean Sea is a lake," says Dov Khenin, a Knesset member who is introducing legislation for stricter regulations on drilling. "If an environmental disaster happens there, we face a grave problem." Then there's the government of Lebanon, which claims Leviathan and Tamar extend into its own maritime borders; in the war of words between the two countries, the threat of actual war has been raised.
The biggest barrier to Israel's energy bonanza, however, is not geopolitics or technology; the true enemy of what has traditionally been seen as progress--a discovery of fossil fuels that might turbocharge the economy--is the country's own citizenry. Israel is something of a small village in global terms--you could fit 13 Israels into Colorado, despite Israel having 50% more inhabitants. But it is a noisy village, and many Israelis have raised rancorous opposition to IEI. They view IEI's project as a threat to their very lifestyles; they question everything that Vinegar, Shafir, and Bartov tout as benefits. In doing so, they raise interesting questions about drilling in the 21st century.
The day after my visit with Bartov, I drive back down to the Shfela Basin region and join three citizen-activists from Bishvil Adullam, a local advocacy group. We pass through a forest reserve called Britannia Park, filled with grottoes that protected Jewish warriors during the Second Jewish-Roman War, fought between AD 132 and 135. At the end of a dirt road we reach a different plateau overlooking the planned pilot project. "We don't want to be guinea pigs," says Chagit Tishler, a geologist who lives on a nearby moshav, a cooperative village, and who organized a December protest that drew 1,500 people. "There are so many uncertainties and unknowns. They are not being completely honest with us."

IEI's site is near a geological fault. If a major quake hits while the oil shale is being heated, says environmentalist Arye Wanger, "it could be like spilling a few tankers of crude" into Israel's main aquifer.

Tishler and other environmentalists, including Arye Wanger of the Israel Union for Environmental Defense, have a litany of fears. Tishler disputes the idea that a chalk layer will protect the aquifer. She believes pollutants will be expelled into the atmosphere during the refining process, despite the insistence of IEI officials that sulfur and other contaminants will be captured and managed. And she worries that oxygen could seep into fissures below the surface, ignite under extreme heat, and explode.
Wanger, whose group has filed a petition with the Israeli Supreme Court to halt the pilot, questions virtually all the project data, because, he says, every qualified Israeli geologist is in some way connected to IEI. (The Geological Survey of Israel, for example, employs the country's best geologists; it is part of the Ministry of National Infrastructures, a strong backer of IEI.) He points out that the drilling will take place not far from a Rift Valley fault zone, which has experienced the effects of several moderate earthquakes in recent years. If a major quake hits while the oil shale is being heated, says Wanger, "it could be like spilling a few tankers of crude oil. It is simply not logical to allow a pool of oil above the major aquifer in Israel."
Most tangibly of all, Bishvil Adullam fears the oil wells, pumps, refineries, access roads, and other blight that comes with a booming oil-and-gas business. Its members don't want to see a pastoral corner of Israel transformed into an industrial wasteland. Tishler's colleague, Orit Skutelsky-Bahat, vows a campaign of civil disobedience if IEI moves forward. "We'll bring a lot of people here. We're going to sit on the ground, and they're not going to get anywhere," she tells me. "They don't have a chance."
Not a single claim of the pro-development faction is taken for granted in this debate. Government boosters such as Minister of National Infrastructures Uzi Landau contend that the new fossil-fuel finds will give Israel a geopolitical heft well beyond its minuscule size. And Einat Wilf, a Knesset member from Ehud Barak's newly formed Independence Party, says, "It could be a real game changer" in the United Nations, where the country can only count on the backing of one global power, the U.S.
Brenda Shaffer, an energy expert at the University of Haifa, finds such promises overblown. The experience of other countries with comparable amounts of natural gas gives her pause. "Azerbaijan produces a lot more gas, but their conflict with Armenia hasn't been resolved," Shaffer says. "Gas flows from Egypt won't preserve peace with Israel. Libya brings more gas to market in Western Europe than Israel ever will, but that doesn't mean that NATO won't bomb it." Only the powerhouses in natural gas, Russia and Saudi Arabia, have translated economic might into political muscle.
Like many natives, Shaffer wonders why Israel needs fossil-fuel development at all. The country has vibrant tourism and thriving high-tech and bio-med industries; it weathered the 2008 global recession far better than most developed nations. "Still, [some officials] are saying, 'We want to be Saudi Arabia,' " she says. "I look at Saudi Arabia's low education [rates], and lack of democracy, and think, Why would you want that? This oil will not change anything in a good way."
"We are a country where everybody knows everybody," says Wanger, "where environmentalists can talk to ministers, to members of parliament, and express our views. That's the good thing. On the other hand, the economic forces here are very powerful, and I wouldn't gamble on the final result. It's going to be a hard battle."
In April, IEI celebrated a partial victory: The Israeli Supreme Court tabled a petition by a coalition of environmental groups to stop the pilot wells, agreeing only to hear the case before a full body of three judges in April 2012. In the interim, the court said, the pilot may move ahead as planned. Still, IEI faces numerous bureaucratic delays. The company hopes to drill three 1,000-foot-deep wells 3 meters apart from one another, and heat the rock for 270 days as part of a demonstration project that would produce 2,000 barrels of crude oil a day. But even though IEI has obtained the license necessary for drilling, it cannot move ahead until it gets a land-use permit from Israel's minister of the Interior. And the final go-ahead won't come just from that ministry, but in concert with a district planning and building committee that includes representatives of local communities and officials from the Ministry of Environmental Protection.
"We don't think the environment ministry wants this project to happen," says Bartov with frustration. "By killing this kind of project you are not advancing the world's green-energy research." The ministry has not yet issued an official position. When I ask Bartov how long he thinks it will be before the pilot starts, he shrugs. "I never believed this would be so difficult," he says. "I thought people would be thrilled."
Vinegar is willing to be patient; the oil shale, after all, is not going anywhere. Besides, IEI's chief scientist has a vague sense that his project may even have been sanctioned from above. "Deuteronomy has a section about the tribe of Asher, where it says, 'and you shall produce honey from the rock, and oil from the flinty rock,' " he tells me. In the Shfela Basin, he points out, "there is a 2-meter-thick layer of flint that just runs continuously. How could they possibly have known that? How could they have?" Vinegar cackles. "It's just spooky."

A version of this article appears in the September 2011 issue of Fast Company.

Israel’s new oil could provoke next war

Israel’s new oil could provoke next war

June 15, 2011   Terry A. Hurlbut   24 Comments

Does Israel have oil? The very phrase Israel’s oil could change the game in the Middle East—and provoke all-out war.

Could Israel really have oil?

The Zion Oil and Gas Company has been looking for oil along the Mediterranean coast, and just south of the Sea of Galilee, for several years. Two days ago they announced that they had drilled a test well in their Joseph License lands (between Haifa and Tel Aviv) to 5900 meters. They earlier found large hydrocarbon deposits at the site, usually a good sign.

In August of 2010, the Givot Olam company announced a find of 1.5 billion barrels near Rosh Ha’Ayin (literally “head of the spring”). But the Israeli newspaper Ha’Aretz (“The Land”) pointed out that the reserve would be far too small, and Givot Olam could never hope to pump the oil out fast enough to make a dent in Israel’s oil imports.
But Israel has discovered two huge fields of natural gas:

1. The Tamar field, off the Mediterranean coast south of Jaffa, and
2. The Leviathan field, offshore near the 1949 armistice line between Israel and Lebanon.

Then on April 9, 2011, came this stunning announcement. The Israel Energy Initiative now hopes to extract oil from shale near the Shfela Basin, southwest of Jerusalem. Harold Vinegar, formerly of Royal Dutch Shell, guesses that the Shfela shale sands hold 250 billion barrels of oil. That’s almost as much as the proved reserves in Saudi Arabia (260 billion barrels). (More here.)

Biblical support for Israel oil

John Brown of Zion Oil and Gas, and Tovia Luskin of Givot Olam, both cite the Bible for clues. Specifically, they cite Deuteronomy, Moses’ farewell to the Israelites before he died.
Blessed of the LORD be [Joseph’s] land, with the choice things of heaven, with the dew, and from the deep lying beneath… [ch. 33:13]
[T]hey will draw out the abundance of the seas, and the hidden treasures of the sand. [ch. 33:19]
May [Asher] dip his foot in oil. [ch. 33:24]
Those verses have come true, though not exactly as Brown and Luskin guessed. Shale oil is surely a “hidden treasure in the sand.” The offshore natural gas wells are “abundances of the seas.”
If Israel’s oil existed as shale, that would be enough. But the original Hebrew verb in verse 19 speaks of sucking, not merely drawing. Israelis often speculate that the Saudi oil reserves lie in a pool that extends under Israeli territory. They dream of drilling a well into that pool and “sucking out” Saudi Arabia’s vaunted reserves.

How long have Israelis looked for oil?

The Orot Rabin power station, south of Caesaria Maritima. Israel’s oil might make this obsolete. Photo: CNAV

Israeli Jews tell a standing joke: Moses took a wrong turn, because he led his people to the one place in the Middle East with no oil. In 1967, Israel captured the Sinai Peninsula from Gamal Abdel Nasser. For ten years Israel did have oil. But in 1977, Israel gave the Sinai back to Egypt, in return for a right of first refusal on oil from the Sinai. That agreement, part of the peace treaty with Egypt, will not last, if the “Freedom and Justice Party” (a Muslim Brotherhood movement) has its way.

Almost since the Camp David Accords, Israelis have longed for a reliable energy source of their own, or at least any energy source other than oil. (The Israel Electric Company has one power plant along the Coastal Road between Caesaria Maritima and Tel Aviv that can burn coal, and has no commercial nuclear program.)
Hosni Mubarak signed another agreement in 2008 to supply Israel with natural gas. When American and Israeli gas explorers found the Tamar and Leviathan fields, business experts said that the Egyptians would undersell them anyway, so that they wouldn’t make any money from them. That was before the “Arab Spring.” Terrorists have sabotaged the Egyptian gas pipeline twice. The gas is back on, but it will not stay on. And the government knows it.
But if Israel has oil, none of that need matter anymore.

Where is Israel’s oil?

The best part of this news is: Israel’s oil lies west of the 1949 Armistice Line.

The Shfela Basin lies well to the west of the Jerusalem-Bethlehem road and hence outside the “West Bank” region. Nevertheless, multinational oil companies have never wanted to help develop Israel’s oil resources. They have not wanted to lose their connections to Arab oil. And on that account, they are walking away from an oil reserve almost as large as that of Saudi Arabia.
IEI is a subsidiary of the American telecommunications company IDT (Newark, NJ). IEI hopes to extract the shale oil at a surprisingly low cost: $35 to $40 a barrel, or about the same as it costs to pump oil from some offshore wells. Moreover, Vinegar believes that he can take this oil without harming the environment. The well also produces natural gas, which he will burn on-site to heat the rocks to release the oil. So IEI will not have to dig a big hole in the ground or have any wastes to dispose of.

Would Israel’s oil mean peace or war?

It will probably mean war, for two reasons. First, the West Bank and Gaza lands have none of this shale. So the “Palestinian” Arabs would get no royalties. All the royalties would flow to Israel.
Second, the Arabs always threatened to shut off oil to the West if they either stopped the Arabs from wiping out Israel, or didn’t stop Israel from wiping them out. They did it in and after the Yom Kippur War. But this time, Israel would not only have all the fuel it needed, but would be able to make up the difference, or close to it, by selling oil directly to America and Europe.
Obviously, the Arabs would not want to lose their strategic advantage. Lawrence Solomon of Energy Probe is confident that Israel’s oil would buy peace. But your editor is not so confident. Expect more and bolder terrorist attacks against the Shfela Basin oil field. The terrorists might stage out of Gaza, which is very close to Shfela.
Remember, also, that the Leviathan field is near the Lebanon side of the Armistice Line. Not only Israel’s oil, but Israel’s gas could be a target of an all-out attack by Syria and Hamas (the group that runs Gaza).

How might Israel’s oil change Israel’s relationships with its friends?

The F-16 Fighting Falcon. Israel’s oil could replace this with an Israeli version. Photo: T. M. Wolf. CC BY-SA 2.0 Generic License.

The phrase Israel’s friends is almost oxymoronic today. Israel’s oil would change that. For one thing, Israel would stop depending on American foreign aid. (They might even be more likely to lend us help!) An independent—and independently wealthy—Israel could at last build its own aircraft industry. Israel already exports high technology, and famously exports small arms. Now imagine Israel exporting jet fighters. The only reason that Israel does not build a plane equal to the General Dynamics F-16 is that the US State Department told them to stop developing it, or America would cut off its funds. Israel’s oil would mean that Israel’s own money could help build that plane after all.
In Europe, motor fuel prices are even higher than they are here. Israel’s oil could bring those prices down, and at least let Europe choose whether to depend on the Arabs—or not. (The Arabs surely know this, and cannot welcome this news.) But they might not make the wise choice. Anti-Jewish sentiment is building in Italy, Turkey, and elsewhere. The idea of Israel having oil might foster resentment, not a friendly attitude.

How soon might Israel’s oil come on-line?

Howard Vinegar guesses that he can deliver shale oil from the Shfela Basin by 2017. War might break out sooner than that, if the Arabs decide that they don’t want to risk losing their edge over Israel. The ancient Philistines tried hard to keep the Israelites dependent on Philistine metalworkers, in fear that Israel would develop its own armament industry. (I Samuel 13:19) Today the Arabs will lose their oil weapon—and they might not take that loss gracefully.
Featured image: the Flag of Israel.

Israel’s oil could provoke next war

Israel’s oil could provoke next war
June 15, 2011   Terry A. Hurlbut   24 Comments
 Does Israel have oil? The very phrase Israel’s oil could change the game in the Middle East—and provoke all-out war.
Could Israel really have oil?
The Zion Oil and Gas Company has been looking for oil along the Mediterranean coast, and just south of the Sea of Galilee, for several years. Two days ago they announced that they had drilled a test well in their Joseph License lands (between Haifa and Tel Aviv) to 5900 meters. They earlier found large hydrocarbon deposits at the site, usually a good sign.
In August of 2010, the Givot Olam company announced a find of 1.5 billion barrels near Rosh Ha’Ayin (literally “head of the spring”). But the Israeli newspaper Ha’Aretz (“The Land”) pointed out that the reserve would be far too small, and Givot Olam could never hope to pump the oil out fast enough to make a dent in Israel’s oil imports.
But Israel has discovered two huge fields of natural gas:
1.The Tamar field, off the Mediterranean coast south of Jaffa, and
2.The Leviathan field, offshore near the 1949 armistice line between Israel and Lebanon.
Then on April 9, 2011, came this stunning announcement. The Israel Energy Initiative now hopes to extract oil from shale near the Shfela Basin, southwest of Jerusalem. Harold Vinegar, formerly of Royal Dutch Shell, guesses that the Shfela shale sands hold 250 billion barrels of oil. That’s almost as much as the proved reserves in Saudi Arabia (260 billion barrels). (More here.)
Biblical support for Israel oil
John Brown of Zion Oil and Gas, and Tovia Luskin of Givot Olam, both cite the Bible for clues. Specifically, they cite Deuteronomy, Moses’ farewell to the Israelites before he died.
Blessed of the LORD be [Joseph’s] land, with the choice things of heaven, with the dew, and from the deep lying beneath… [ch. 33:13]
[T]hey will draw out the abundance of the seas, and the hidden treasures of the sand. [ch. 33:19]
May [Asher] dip his foot in oil. [ch. 33:24]
Those verses have come true, though not exactly as Brown and Luskin guessed. Shale oil is surely a “hidden treasure in the sand.” The offshore natural gas wells are “abundances of the seas.”
If Israel’s oil existed as shale, that would be enough. But the original Hebrew verb in verse 19 speaks of sucking, not merely drawing. Israelis often speculate that the Saudi oil reserves lie in a pool that extends under Israeli territory. They dream of drilling a well into that pool and “sucking out” Saudi Arabia’s vaunted reserves.
How long have Israelis looked for oil?


The Orot Rabin power station, south of Caesaria Maritima. Israel’s oil might make this obsolete. Photo: CNAV
Israeli Jews tell a standing joke: Moses took a wrong turn, because he led his people to the one place in the Middle East with no oil. In 1967, Israel captured the Sinai Peninsula from Gamal Abdel Nasser. For ten years Israel did have oil. But in 1977, Israel gave the Sinai back to Egypt, in return for a right of first refusal on oil from the Sinai. That agreement, part of the peace treaty with Egypt, will not last, if the “Freedom and Justice Party” (a Muslim Brotherhood movement) has its way.

Almost since the Camp David Accords, Israelis have longed for a reliable energy source of their own, or at least any energy source other than oil. (The Israel Electric Company has one power plant along the Coastal Road between Caesaria Maritima and Tel Aviv that can burn coal, and has no commercial nuclear program.)
Hosni Mubarak signed another agreement in 2008 to supply Israel with natural gas. When American and Israeli gas explorers found the Tamar and Leviathan fields, business experts said that the Egyptians would undersell them anyway, so that they wouldn’t make any money from them. That was before the “Arab Spring.” Terrorists have sabotaged the Egyptian gas pipeline twice. The gas is back on, but it will not stay on. And the government knows it.
But if Israel has oil, none of that need matter anymore.
Where is Israel’s oil?
The best part of this news is: Israel’s oil lies west of the 1949 Armistice Line.

The Shfela Basin lies well to the west of the Jerusalem-Bethlehem road and hence outside the “West Bank” region. Nevertheless, multinational oil companies have never wanted to help develop Israel’s oil resources. They have not wanted to lose their connections to Arab oil. And on that account, they are walking away from an oil reserve almost as large as that of Saudi Arabia.
IEI is a subsidiary of the American telecommunications company IDT (Newark, NJ). IEI hopes to extract the shale oil at a surprisingly low cost: $35 to $40 a barrel, or about the same as it costs to pump oil from some offshore wells. Moreover, Vinegar believes that he can take this oil without harming the environment. The well also produces natural gas, which he will burn on-site to heat the rocks to release the oil. So IEI will not have to dig a big hole in the ground or have any wastes to dispose of.
Would Israel’s oil mean peace or war?
It will probably mean war, for two reasons. First, the West Bank and Gaza lands have none of this shale. So the “Palestinian” Arabs would get no royalties. All the royalties would flow to Israel.
Second, the Arabs always threatened to shut off oil to the West if they either stopped the Arabs from wiping out Israel, or didn’t stop Israel from wiping them out. They did it in and after the Yom Kippur War. But this time, Israel would not only have all the fuel it needed, but would be able to make up the difference, or close to it, by selling oil directly to America and Europe.
Obviously, the Arabs would not want to lose their strategic advantage. Lawrence Solomon of Energy Probe is confident that Israel’s oil would buy peace. But your editor is not so confident. Expect more and bolder terrorist attacks against the Shfela Basin oil field. The terrorists might stage out of Gaza, which is very close to Shfela.
Remember, also, that the Leviathan field is near the Lebanon side of the Armistice Line. Not only Israel’s oil, but Israel’s gas could be a target of an all-out attack by Syria and Hamas (the group that runs Gaza).
How might Israel’s oil change Israel’s relationships with its friends?

The F-16 Fighting Falcon. Israel’s oil could replace this with an Israeli version. Photo: T. M. Wolf. CC BY-SA 2.0 Generic License.
The phrase Israel’s friends is almost oxymoronic today. Israel’s oil would change that. For one thing, Israel would stop depending on American foreign aid. (They might even be more likely to lend us help!) An independent—and independently wealthy—Israel could at last build its own aircraft industry. Israel already exports high technology, and famously exports small arms. Now imagine Israel exporting jet fighters. The only reason that Israel does not build a plane equal to the General Dynamics F-16 is that the US State Department told them to stop developing it, or America would cut off its funds. Israel’s oil would mean that Israel’s own money could help build that plane after all.
In Europe, motor fuel prices are even higher than they are here. Israel’s oil could bring those prices down, and at least let Europe choose whether to depend on the Arabs—or not. (The Arabs surely know this, and cannot welcome this news.) But they might not make the wise choice. Anti-Jewish sentiment is building in Italy, Turkey, and elsewhere. The idea of Israel having oil might foster resentment, not a friendly attitude.
How soon might Israel’s oil come on-line?
Howard Vinegar guesses that he can deliver shale oil from the Shfela Basin by 2017. War might break out sooner than that, if the Arabs decide that they don’t want to risk losing their edge over Israel. The ancient Philistines tried hard to keep the Israelites dependent on Philistine metalworkers, in fear that Israel would develop its own armament industry. (I Samuel 13:19) Today the Arabs will lose their oil weapon—and they might not take that loss gracefully.
Featured image: the Flag of Israel.

This Novel Technology Could Unlock a Saudi-sized Oil Find

This Novel Technology Could Unlock a Saudi-sized Oil Find
Posted by Andy Obermueller, Game-Changing Stocks on December 15, 2011 3:15 pm
A Saudi-Sized Oil Find… And a Rupert Murdoch-Backed Company Is in the Middle
What I’m about to say might shock you… Israel sits on nearly as much oil as Saudi Arabia.
You read this correctly, Israel — a country the size of the state of New Jersey — sits atop an estimated 250 billion barrels of oil.
To put the sheer volume of Israel’s reserves in perspective, take a look at the chart below.

As the chart shows, that’s roughly the same as Saudi Arabia, which is the 13th largest country in the world and almost exactly 100 times larger than Israel. If oil is worth $100 a barrel, then Israel has the ability to tap into $25 trillion worth of crude.

How did a country that’s historically struggled to meet its energy demands stumble into one of the largest known petroleum reserves on the planet?
Trapped beneath Israel’s famed Shefla basin, rests a special type of shale called kerogen. Kerogen contains bitumen, the petroleum-rich substance that the Canadians extract from the tar sands to make oil.
Like the bitumen in the oil sands, the shale in Israel is not particularly deep, and that’s the rub. Were Israel’s kerogen further below the surface, where the Earth’s crust reaches 160 to 340 degrees Celsius, it would have been crock-potted into crude by now.
Had this happened, drilling a Saudi-scale gusher of a well would be about as challenging as digging an artisan well in a very shallow aquifer. But, alas, the kerogen is not quite deep enough, so it holds onto its bitumen like an oyster holds a pearl, and thus one of the largest petroleum deposits in the world has sat unmolested for 70 million years.
Until now.
See, Israel relies on imports for 99% of their energy consumption. Consequently, it direly needs energy. As an attempt to become more energy-independent, Israeli Prime Minister Benjamin Netanyahu has backed an extraction project hosted by Genie Energy (NYSE: GNE) to recover petroleum from Israel’s bitumen rich shale.
Their plan? Expand on a procedure that Royal Dutch Shell (NYSE: RDS-B) created in 1997 called the in-situ conversion process (ICP).
Shell’s ICP basically creates a giant oven beneath the earth, encircling the petroleum-laden shale. Once the shale is hot enough (650 degrees Fahrenheit), given enough time, the shale oil and gas will be released from the rock whereby it can be extracted and refined into fuel.
Now you may be thinking this recovery method sounds expensive… but you’d be wrong.
Thanks to the engineer heading the project, Harold Vinegar, Ph.D, the ICP is cheap. By using the formation’s own natural gas to generate heat, Vinegar and his crew have made the process relatively clean and inexpensive. The cost of extracting the crude could be as little as $35 a barrel.
Of course, this project is entirely dependent on the successful adoption of the ICP technology. If the method isn’t viable, then the petroleum could sit for another couple million years or until someone else finds a better way to retrieve it.
That’s why Genie Energy has devoted an entire division dedicated solely to the development of unconventional shale extraction methods like the ICP. This division, known as the Israeli Energy Initiatives (IEI), is working around the clock to get its alternative extraction processes up and running.
If the IEI can prove its methods are successful, then Genie Energy should be in the money. And I’m not the only one who thinks so… media mogul Rupert Murdoch recently reported he holds a 0.5% stake in Genie.
But don’t get me wrong, I’m not saying Israel will become the next Saudi Arabia of oil. Even if they do come online, I’d be surprised if Israel, despite its gargantuan resources, ever exported much of its crude. The country’s plan is to be energy-independent… not to be a major petroleum exporter.
So buying Genie isn’t as much as a bet on Israeli shale as it is a bet on IEI’s technology. Which, given the recent shale boom in the United States, has some pretty big implications. If IEI’s production techniques work, then Israel will certainly benefit… but it will also be a boon to one of their biggest allies.
You see, there are 250 billion barrels of oil in Israel’s shale. But there are an estimated 2 trillion barrels here at home. If the same recovery methods that are being used in Israel can be applied to the shale deposits in our own back yard, then that, my friends, would be a game-changer.
But let me warn you, a dark cloud currently resides over IEI’s project in the Shefla basin.
Underneath the massive shale deposits lies one of Israel’s most valuable commodities… water. Consequently, the environmental community has begun to voice opposition.
For Israel, water security is no laughing matter… If Israel’s aquifers were threatened for any reason, then Israelis would likely leave the shale be and continue to import petroleum.
But fortunately, there’s a massive layer of impenetrable rock — hundreds of feet thick — between the oil-bearing shale and the aquifer… this should keep the water from getting contaminated.
Risks to Consider: Even with the natural barrier though, the risk still remains that environmental backlash could shut the project down. That’s why it’s essential IEI continues to sell this proposal as the clean, safe and abundant energy source that it is.
Action to Take — > But even with the risk, I still like Genie Energy. Its IEI initiative, the potential for short-term stock gains, and the potential for long-term results for investors willing to hold the shares as the shale boom takes off in this country are more than enough reasons to buy in.

Israel's Energy Security, Kinetic Energy and Innovations

Israel's Energy Security, Kinetic Energy and Innovations - 05.15.2011Length 28:29Created 05.14.11Air Date 05.13.11.Video Transcript (opens in a new window)
[ASSURAS] A country without oil of its own, Israel is inventing unique ways for powering its vehicles.
[SHAI AGASSI] You see, the full battery is waiting and the empty place for the battery comes underneath the car.
[SUITERS] So, instead of plugging in and charging overnight, you drive into a station, your electric car gets a full, fresh battery, and off you go.
[ASSURAS] A look at Israel's quest for energy independence and security and what America might learn. Plus, the power of motion -- kinetic energy, and the innovative ways to capture it. From producing electricity through brakes to shock absorbers, American inventors are coming up with ways to harness otherwise wasted energy.
And in our MIX, a mix of innovations.
[MAN] Since butanol can work with gasoline engines, I can put this fuel into the car and make it go.
[ASSURAS] Revving up America's energy future with new ideas. This is "energyNOW!"
Hello, everyone. I'm Thalia Assuras. Welcome to "energyNOW!", a weekly look at America's energy challenges and what we're doing about them.
Figuring out how to decrease our dependence on foreign oil is one of the biggest challenges the U.S. faces. In large part, the country's national security depends on finding the answers. And no other nation understands those security concerns better than Israel, which just celebrated the 63rd anniversary of its independence. But Israel is still very dependent on other countries for almost all its energy needs. As one Israeli government official put it, "We don't have diplomatic relations with most of the countries from which we import oil." And that makes Israel's energy challenges especially profound, oil and beyond.
For example, in April, the pipeline that carries natural gas to Israel from Egypt was shut down after an attack in Egyptian territory, the second attack since the uprising in Egypt. It's this kind of external turmoil that has Israelis searching in every direction for alternatives to foreign fuel, alternatives that may end up helping the United States. "energyNOW!" Chief Correspondent Tyler Suiters recently traveled to Israel to explore "The Israel Connection."
[SUITERS] For every ancient overlook in Israel, a battle over land. Almost every adult, a soldier in the past or the present. For all the cars that need gasoline, tanks that demand diesel...
[UZI LANDAU, MINISTER OF NATIONAL INFRASTRUCTURE] Energy here is something that we have to fight for, energy independence.
[SUITERS] Uzi Landau learned the value of energy serving in several Israeli governments.
[LANDAU] We have been promised that this is not only holy land, the promised land, but this is the land of milk and honey, but I am the minister responsible for water and for oil -- we have no water; we have no oil.
[SUITERS] And yet, an international metropolis like Tel Aviv still runs 24/7, gobbling down energy, almost all of it coming from somewhere else. The Egyptian pipeline carries almost half of Israel's natural gas. Almost all of its coal comes from places like Australia and South Africa. And close to 100% of Israel's oil is imported. Of course, you also need electricity.
[KOBBI YAHAV, ISRAEL ELECTRIC CORPORATION] You can see the colors representing which feeder...
[SUITERS] Kobbi Yahav took me behind the scenes at Israel Electric, into one of its transmission nerve centers. The corporation powers about 2 1/2 million Israeli homes, all of them living under a constant threat from Middle East neighbors that can't abide Israel's very existence.
[YAHAV] We are used to this situation. It's not new for us. We know that we have to build a system that is very resilient to attacks -- cyber attacks and all other kinds of attacks.
[SUITERS] In the U.S., if we have really high demand for power during a heat wave, or something goes wrong, like a blackout, well, we can always pull power from Canada. Israel is no bigger than New Jersey. It has just the one grid system. The problem is, Israel has no other country connected to its grid.
[AMOS LASKER, FORMER CEO, ISRAEL ELECTRIC CORPORATION] We are not like the U.S. or Europe where you can take energy from other countries when you have shortage, so basically we rely on our own generation.
[YAHAV] I think it's affecting the reliability in the transmission level, because we don't have any interconnections between us and other countries.
[SUITERS] Does that mean no backup?
[YAHAV] No backup for generation.
[SUITERS] But now, more and more of Israel's generation is coming from its own resources. After burning oil products for decades to get electricity, Israeli power plants, like this one in Ashdod, they're using more and more natural gas -- from Israel -- to generate that electricity. Deep in the Mediterranean Sea, Israel has discovered huge natural gas reserves. The Leviathan Field. The only significant fossil fuel in the entire country. Some of these fields have been in development for a decade now, but the most recent discovery, made just last year, it may be the biggest field yet.
[LANDAU] The major objective is to, as quickly as we can, develop those natural gas fields and connect them to the state gas pipeline.
[SUITERS] Within two decades, Israel should have enough to eliminate the need for Egyptian supplies, to ease Israeli reliance on another country for energy.
Israel also has another domestic energy resource even more ancient than fossil fuels -- the Sun -- ever abundant in Israel's desert. This is the country's very first solar panel field ever to deliver electricity to Israel's grid system. Promising, yes; practical, no, not yet. Not enough to make Israel energy secure. Not enough to significantly boost Israel's reserves of electricity.
[LASKER] Our reserve is very, very low. Our reserve is about... 8% to 9%.
[SUITERS] By "reserve," you mean the difference between supply and demand?
[LANDAU] Between peak demand and supply.
[SUITERS] Demand that will grow exponentially, under one potential energy solution. Israeli entrepreneur Shai Agassi envisions millions of electric cars on Israel's roads.
[AGASSI] The passion that I started from was peace in the Middle East.
[SUITERS] For Agassi, Israel's conflict became a crucible. Like Uzi Landau, he understands that oil is power.
[AGASSI, FOUNDER, BETTER PLACE] We were the first ones who actually looked at the systems question -- how would you run a country without oil?
[SUITERS] And that's a question the U.S. is asking as well. The company Better Place is Agassi's answer, his effort to get Israel's cars off of foreign oil and onto electricity.
[AGASSI] It's all automated.
[SUITERS] And this is the key to Agassi's objective -- a system of charging stations. Not just re-energizing electric car batteries, but actually trading them out for you when you're running out of juice.
[AGASSI] As you see, the full battery is waiting and the empty place for the battery comes underneath the car, and you'll see it coming up to the bottom of the battery.
[TEXT ON SCREEN] See Agassi's demonstration of the battery replacement at energyNOW.com.
[SUITERS] So, instead of plugging in and charging overnight, you drive into a station and your electric car gets a full, fresh battery and off you go.
What will the turnaround time be for this?
[AGASSI] In Tokyo, we did it in 59 seconds. 59.1 seconds.
[SUITERS] So less than a minute.
But if Better Place gets its battery stations all over Israel, the effect on imported oil could be enormous.
[LANDAU] If they're successful, then, obviously, this is going to pick up elsewhere in the world, as one of the possible answers to the dependence on oil.
[SUITERS] And an answer, Landau believes, to questions about energy security in both Israel and America.
[LANDAU] It's basically a way by which one can defeat terror, defeat Al-Qaeda, defeat the Iranians without basically shooting one bullet.
[SUITERS] No bullets, no bombs, but a fight for independence nonetheless.
[ASSURAS] Tyler Suiters joins us now to sum this up. Tyler, what is the connection between the U.S. and Israel on a practical level toward solutions?
[SUITERS] Thalia, I think there are several at play right now. For one, Noble Energy, based in Houston, Texas -- this is the company that's helping develop Israel's offshore gas fields. Also, Israeli solar energy companies, they are very eager to prove their technologies here in the U.S. market. They consider this hitting the big time. And Kobbi Yahav, from Israel Electric's nerve center, he is working with U.S. companies on improving grid security. In fact, Yahav told me he is in Minnesota so often right now, Thalia, he's actually becoming a Vikings fan.
[ASSURAS] Should I say "poor guy"? You got to do what you got to do.
[SUITERS] Depends on what your team is, right?
And I do want to mention, Thalia, in the weeks ahead, I'll be taking a more in-depth look at the huge natural gas finds off of Israel's coast and what that means for the country. Also, Israel's push to solar energy and what is some very cool energy innovation taking place in Israel right now.
[ASSURAS] Looking forward to all of it. Thanks, Tyler.
And, as you heard in Tyler's piece, Israel considers itself a desert island amid oil-rich nations. But there was a time when oil looked promising for Israel when it hit black gold, inspiring nationwide celebrations. Check out this energyTHEN from 1955.
[Movie projector plays]
[ANNOUNCER] Now for Israel's good news. They've struck oil. The word spread rapidly and people were soon on the spot to see if the rumor were true. After years of search, Israel's first gusher has produced oil, from a depth of about 4,000 feet. If its promise is fulfilled, the discovery will have vast economic and political importance. Too early to judge yet, but let's have a couple of pints.
[ASSURAS] Well, the euphoria didn't last long, and Israel's oil production really only amounts to a trickle. According to the CIA World Fact book, Israel produced only 3,800 barrels of oil per day in 2009, but it used 231,000 barrels every day.
Coming up, energy innovations here at home. We'll show you some of the ideas which were declared winners in a national contest and talk to one man who has a plan to change the way you power your home.
But first, all that bouncing up and down when you're driving that seems to shatter your bones -- it's actually a powerful source of energy. As we generate electricity from bumps in the road,
[SHAKEEL AVADHANY] we use that electricity for fuel economy gains.
[ASSURAS] Capturing the kinetic energy of a bumpy ride. That's next.
[BREAK]
[ANNOUNCER] How can we reduce our dependence on oil?
[ZEPPS] Imagine if we could harness all this kinetic energy.
[ANNOUNCER] Who is shaping our energy future?
[SUITERS] China will produce more than half the solar panels in the entire world.
[RICHARD BRANSON] If you've got good quality batteries, you could store the wind when there's no wind, store the solar when there's no solar.
[ANNOUNCER] "energyNOW!" is the only TV news magazine exploring our challenges.
[SULLIVAN] Hybrid technology saved the military $250 million.
[WOMAN] It makes sense to make this shift now.
[ANNOUNCER] "energyNOW!" on ABC-7.
[ANNOUNCER] The Asthma and Allergy Foundation of America has important information for the millions of people with asthma. You may not know there are two main causes of asthma symptoms -- airway constriction you feel and inflammation you may not feel. Learn how to better manage your asthma by treating both main causes of asthma symptoms. Treating both causes can help prevent symptoms before they even start and preventing symptoms could mean a smoother ride. For more information, go to asthma.com.
[END BREAK]
[ASSURAS] The high gas prices we're seeing across the country are causing a lot of frustration, and, not to make you even more angry, but here goes -- did you know that only about 15% of that liquid gold actually spins the wheels? Sad but true. Combustion engines are so inefficient that the rest -- 85% -- is lost as heat or friction. Still, there might be some changes coming for vehicles, and trains, too. New technologies that capture the energy of motion. More from "energyNOW!"'s Josh Zepps in this energyNEXT.
[ZEPPS] Have you ever been on a train and accidentally spilled your coffee on a total stranger? I know I have. It happens because the train moves around in all kinds of ways that have nothing to do with actually getting you where you want to go. But imagine if we could harness all this kinetic energy and use it to light the train's lights and maybe even brew more coffee to throw on yet more strangers? Would you like that idea, huh?
Kinetic energy is the energy of motion. We generate a lot of it in this hectic, modern world. And almost all of it goes to waste. But a new class of crafty kinetic capturers is changing that.
Philadelphia's metro system is run by SEPTA, the Southeastern Pennsylvania Transportation Authority. Chief Power Officer Andrew Gillespie wanted to save a buck on the $12 million in electricity his trains guzzle every year, so he modified the train's brakes to generate electricity as they slow down.
[GILLESPIE] We probably use 30% of the regenerated power. Existing trains can use it to power lights, heaters and such.
[ANNOUNCER] Doors are closing.
[GILLESEPIE] What we want to do now is take that energy, which is electricity, send it back through the power distribution system, which supplied the power to the train in the first place, and store it.
[ZEPPS] That's the key -- storing it. See, normally, when you capture a train's kinetic energy, you can either use it to power onboard systems or feed it back into the supply system to be sucked up by another train that needs it in that same split second. But, if it isn't used instantly... it's gone.
So, in this cavernous room at the Letterly Power Substation, SEPTA is installing an enormous 1,000-kilowatt battery to store the energy harvested from its braking trains. Whenever it's needed, that stored energy can be sent to other trains, reducing energy waste, reducing costs, and reducing emissions.
Is this kind of technology going to be widespread through transit systems in the United States?
[GILLESEPIE] I'm sure it will be. We're not the only ones who are looking at this. It's a technology that's just in its infancy, but there's so much power that's not being captured right now.
[ZEPPS] Now, stopping and starting are not the only ways we waste kinetic energy. Any time you move fast over an unsmooth surface, you bounce up and down. Vehicles are bumpy -- it's why shock absorbers were invented. And now they're being reinvented by a pair of kinetically inspired M.I.T. grads at Levant Power in Massachusetts.
[SHAKEEL AVADHANY, CEO, LEVANT POWER] Essentially, what we do is, we generate electricity from bumps in the road. We use electricity for fuel economy gains.
[ZACKARY ANDERSON, COO, LEVANT POWER] The system works by actually shuttling fluid through a hydraulic motor that spins a generator. So as your wheel moves up and down, it spins an electric generator, and that generates electricity.
[ZEPPS] Electricity that can power the vehicle's headlights, stereo, GPS, butt-warmer in the seat if you're lucky -- all things that would ordinarily drain power from the engine. They call this shock absorber "GenShock," and its output ranges from tens of watts to several kilowatts. That translates to gas savings of 1% to 5%, depending on the type of vehicle and terrain.
This is mimicking the motion of a road. As you drive faster and go over all kinds of potholes, this is generating power, which is going to a bank of lights behind me that you can see flashing. When the car's going really fast... you can almost have a rave.
Of course, the heavier the vehicles, the bigger the energy return. So Levant is getting a lot of interest from heavy fleet operations.
[ANDERSON] So we're working with the U.S. Army, and they shipped us a military Humvee, an 1152, that we're actually doing an installation on, so we have the Humvee out back.
[ZEPPS] You have a Humvee here? Wow.
[ANDERSON] Yep.
[ZEPPS] It's amazing to think that this could be the prototype vehicle from which all of the Army's Humvees could be fitted so they need to use less power, less energy, be more efficient, and also a nicer ride, which would be nice -- this is no Lexus.
And in the context of capturing energy, that's a good thing. The beauty of kinetic energy is that, because it's everywhere, you can capture it in myriad ways. If you're dealing with urban rail, which stops and starts all the time, harness the brakes. If you're dealing with a workhorse that bounces along rough terrain, harness the shock absorbers. The modern world's incessant bouncing, braking, and bumping is an almost unlimited energy source going to waste right under our nose. Thankfully, not for much longer.
[GILLESPIE] I think when we look back on it, we're going to realize how inefficient we were.
[AVADHANY] At some point, it will be illegal to waste energy as heat.
[ZEPPS] But don't go using GenShocks as a reason to get a Hummer. I'm just sayin'. [Alarm chirps] In Cambridge, Massachusetts, Josh Zepps, "energyNOW!"
[ASSURAS] Levant Power expects to have a product on the market in 2012 and tells us that it has also figured out how to use some of GenShock's power for a smoother ride and better handling performance, so, you can save on gas and prevent coffee spills.
Coming up, more energy innovators.
[MAN] Can a microscopic, one-cell plant create gas on a commercial scale?
[ASSURAS] And the results of a national contest to determine America's energy innovators of the year.
[TEXT ON SCREEN] Lord Kelvin, and Irish born mathematical physicist and engineer, is given credit for coining the term "kinetic energy," around 1849-1851. "Energy and Empire: A Biographical Study of Lord Kelvin."
[BREAK]
[ED BEGLEY JR.] I'm Ed Begley, Jr., and I remember what my lungs felt like as a kid growing up and playing outside in polluted air. I'm concerned about air pollution, and I'm fighting for our right to breathe healthy air. That's why I volunteer with the American Lung Association. Imagine how bad our air would be without the American Lung Association. Get involved. Contact your nearest American Lung Association at LUNGUSA.ORG, OR 800-586-4872.
[TEXT ON SCREEN] What if every child was given an opportunity? What if every child's potential was fulfilled? What could that start? Donate money or t:me to Big Brothers Big Sisters Start Something at BigBrothersBigSisters.org
[END BREAK]
[ASSURAS] Welcome back to "energyNOW!" You know, ridding the country of its dependence on oil will largely depend on new energy ideas and inventions and whether they can succeed off the drawing board. That promise of innovation is why Planet Forward, a Web site and TV show dedicated to energy and sustainability, recently held a nationwide contest to determine the country's top energy innovators. The brains and spirit behind Planet Forward joins us for theMIX. Frank Sesno is here to talk about some of those innovations and their potential -- Good to have you.
[SESNO] It's great to be here.
[ASSURAS] We've all covered this, "energyNOW!" I mean, that's our mandate as well. These innovations, there are so many out there, but how would you describe the breadth and the scope of the innovations out there?
[SESNO] Oh, it's really breathtaking. And that's what's exciting about it, because the innovations range from the technology to the policy behind them to the behaviors that they would instigate. And I think that's where you get real hope. When you see the kinds of things that people are coming up with, to change a business model to make something gain traction better, to investigate a new technology to take us into a new energy field. Most of these are not going to be overnight, flip the switch and it's suddenly a new day. We are in this transition phase, as we know. But we are such a remarkably innovative species, to see it unleashed like this is very exciting.
[ASSURAS] Absolutely true, and we're going to look at a couple of your finds, so let's look at one. Some of Planet Forward's top innovators had to do with algae and the production of kinds of fuel. So, one of the organizations that put together a plan essentially created gas, so let's take a look.
[TEXT ON SCREEN] "Green Crude" PLANET FORWARD FINALIST.
[MAN] Once the algae matures in ponds, it's separated from water by a centrifuge... creating a thick algae paste. And that paste gets fed into this test plant extractor that uses green solvents to crack open the algae cells and release oil. The result is green crude, but is it cost-effective? Right now, algae costs roughly $7 per gallon, or $300 a barrel.
[TEXT ON SCREEN] ALGAE OIL: $7.14/GAL. $300/BARREL. CRUDE OIL: $3.50/GAL. $100/BARREL.
[MAN] But Sapphire will open a new 300-acre test plant in 2012, the largest in the nation. By producing one million gallons per year, they predict the price will drop.
[ASSURAS] So, Frank, that's green crude, which is going to become, essentially, gasoline into our cars, which is what I meant before. What do you think really is the possibility that this is going to go into a grand scale? Your opinion?
[SESNO] My opinion is it's got a long way to go, and what they're saying and what they freely admit is they've got to get it to scale. They've got to turn out hundreds of thousands of barrels to bring the price way down to make it competitive. Now, Bill Gates is an investor in this thing, and so they've got some powerful money.
[ASSURAS] That means a lot.
[SESNO] Powerful money and powerful brains behind it. Algae biofuel is very attractive. It roughly can put out 15 times more oil, or the equivalent of oil, as other biofuels -- corn or even cellulosic ethanol. So there's a lot of up side to it.
[ASSURAS] There are a lot of factors in here. I'm going to stick with algae because one of your other findings actually produced a type of alcohol fuel. We've taken a look at this as well, but I want to show that clip, and this is really fascinating.
[TEXT ON SCREEN] "Algae to Butanol" PLANET FORWARD FINALIST.
[MAN] This is our prototype butanol production unit that is currently under construction. It's really as simple as loading algae into this component here, pressing a red button, and three days later you'll have finished butanol coming out of this valve.
[MAN] And since butanol can work with gasoline engines, I can put this fuel into the car and make it go.
[MAN] For farmers and others, maybe, a lean, green revenue stream.
[ASSURAS] So that was fun, I like the little Go Kart, but wait a minute, there's not much leg room.
[SESNO] It's a little cramped, but it's easy to park.
[ASSURAS] No kidding. This goes to viability -- Your thoughts?
[SESNO] Well, first of all, I love this team. This is a team that's working with a professor, Jamie Hestekin, out of the University of Arkansas. And they're like a bunch of detectives. And they are getting into the science of this stuff in such a great way, that they are filling their brains with knowledge while they're trying to crack a code here. They're trying to create this machine -- it would cost about 25 grand. You're a farmer, you have dried algae. You can shovel the stuff into this thing and it will ferment and you'll get this butanol fuel out of it. Their objective here is to work on the pricing of this thing, so there's payback on the unit within about five years -- that would make it competitive.
[ASSURAS] I'm glad you brought up pricing, because we're going to bring up your Innovator of the Year. He is Danny Kennedy. He is in San Francisco. And he is the founder of Sungevity, which actually leases the Sun. Pretty good deal there. Explain that to our audience for us, Danny. Congratulations.
[KENNEDY] Thank you very much. Thanks to Frank and Planet Forward, too. Basically, we're able to lease you a solar system, make it really easier to actually get it. One of the innovations we were recognized for is software that allows us to design and engineer the system remotely through satellite and aerial photographs before even having to come to your house. And then when you get the system on the house, you pay us monthly. Like your electricity bill now, you just have to put no money down, and instead, take on a contract with us for solar electricity.
[ASSURAS] Let me interrupt you, because you said "no money down." And that's the key, because you're depending on tax credits. What happens if that money runs out, Danny?
[KENNEDY] Those tax credits are in law until 2016, and you've heard President Obama talking about shifting the subsidies that the oil and gas boys get towards clean energy. We're pretty confident those will remain. And the other driver is simply economics. The fact of the matter is, grid electricity is rising in cost for a variety of reasons. Solar electricity is falling in cost. And financing it is actually the key. The way it will get ubiquity like cell phones is being able to pay for the service on a contract rather than having to pay for it up front. That's kind of like buying your electricity for 25 years in one hit. Instead, we make it a no-deposit proposition that you can pay as you go forward with the solar lease.
[ASSURAS] Frank is nodding his head. Is that the key? What did you think of this?
[SESNO] I think the idea is a very interesting one because what Danny has done -- and this is what the audience recognized and why the Planet Forward audience voted for this to be the most innovative idea of the finalist ideas that were presented -- is that Danny has tackled both the financing innovation and a technology innovation in one package. But the big thing is, if I want to buy a solar system and panels for my roof, depending on where I live, I'm going to need to shell out somewhere between maybe $10,000 and $20,000. That's a very substantial barrier to entry.
[ASSURAS] The key thing, it's all about cost. Danny, again, congratulations. Frank, very quickly, what's next for you?
[SESNO] We're going to start looking at what smart communities need to do to build and adapt to a changing planet. That's energy, that's transportation, that's technology, that's architecture, that's infrastructure, and we're looking for innovations across the board, and we'll be doing more shows and picking more innovators.
[ASSURAS] We'll have you back.
[SESNO] I look forward to it.
[ASSURAS] Thank you very much to both of you.
And one more innovation -- something that did not get submitted to Frank's challenge but something that hit our radar screen and made it into the "energyNOW!" hotZONE.
[TEXT ON SCREEN] Friedrichshafen, Germany
[ASSURAS] This is a battery-powered plane. It's called the Elektra One, and its batteries are charged by solar panels on the roof of its hangar. Made by Germany's PC Aero company, the one-seater has completed a successful 30-minute test flight. But the goal is to have it fly up to five hours. Not only that, the company is working on versions that the CEO says he plans to offer as the world's first electric business flights. So, maybe a flight of fancy or maybe the future of corporate executive travel.
And that's it for this week's "energyNOW!" Remember, you can follow us on YouTube, Facebook and Twitter by searching energynownews. I'm Thalia Assuras. We'll see you next week. And we leave you with one more innovation that was up for consideration for Planet Forward's Innovators of the Year but didn't quite make it. The sustainable dance floor, developed four years ago in the Netherlands. Dance moves are converted into electricity which powers the lights and the stereo system, actually, and you guessed it -- the more people, the more jumping up and down, the more power. Hope you enjoy your weekend.
[END SHOW]
First up this week, Chief Correspondent Tyler Suiters kicks off his series, "The Israel Connection" A small country amid hostile neighbors, Israel is used to turmoil. It affects every aspect of life there, and none more than the country's need for energy. In the first installment, "Energy Security," Tyler digs into the issue of how the country can flourish economically while importing almost all its fuel. He interviews government leaders, officials who supply the country's electricity and entrepreneurs who are looking for new ways to develop energy there.
This week's "Energy Then," takes us back in time to 1955, when Israel's first oil well was completed. There was celebration at the time, with hope that Israel would turn out to be an oil-rich nation. Those dreams faded, however, when it was discovered that the country does not sit on major oil reserves. Today, Israel uses about 60 times more oil than it produces.
Next, a jostling, bumpy look at how we can harness the kinetic energy our trains, cars and other vehicles produce every day.  Only 15 percent of the gasoline pumped into a car actually spins your wheels. Other forms of transportation are just as inefficient, losing vast amounts of energy to heat and friction as they roll along. But new technologies may capture and redirect energy that otherwise would be lost as waste. Special Correspondent Josh Zepps explores how the energy of motion can save money and energy, make rides smoother and reduce emissions for everyone from car and train commuters to the military.
On "The Mix,"America’s push toward energy independence largely depends on bringing new clean energy ideas and technology from the drawing board to commercial viability. But why do some innovations succeed while others never get off the ground? Anchor Thalia Assuras joins Frank Sesno, creator and host of Planet Forward, a website and television show dedicated to clean energy and sustainability. They highlight Planet Forward’s recent nationwide contest to identify and promote America’s top energy innovators. The contest’s winner, Sungevity founder Danny Kennedy, also joins the discussion to talk about his company’s solar leasing program.
Finally, on the "Hot Zone," the world's first battery-powered plane takes off. The German-built one-seater made a successful 30-minute test flight, and now the makers hope to get one to fly for more than five hours. The battery is charged by solar panels on the roof of its hangar. The makers are hoping to build larger models that could make the first all-electric business flights.

Israel - The Natural Gas Solution

Israel - The Natural Gas Solution

Photo by: Marc Israel Sellem
 Israel - The Natural Gas Solution 
By SHLOMO MAITAL12/05/2011  

Long before piping gas onshore is done, Israel must plan strategically how to exploit optimally its gas resources. Here are some options. 

  
“IF MOSES HAD TURNED RIGHT instead of left when he led his people out of the Sinai Desert,” goes an old joke, “the Jews would have had the oil and the Arabs would have ended up with the oranges.” We can’t tell that joke any more. And you can blame oil geologist Joseph Langotsky.
Langotsky insisted for years there was oil and gas offshore in Israel’s territorial waters. Few listened. Finally, exploratory drilling commenced. Now, two major gas fields have been discovered in the Mediterranean, named Tamar and Leviathan. The latter is said to be the biggest gas find in the world in a decade. Tamar is named for Langotsky’s granddaughter. Leviathan means “whale” in Hebrew and indeed is a whale of a find – new estimates show Leviathan has some 16 trillion cubic feet of gas, worth (at current European market prices, one cent per cubic foot) over $160 billion.
Tamar has an estimated eight trillion cubic feet of gas, and production will begin in 2013. Moreover, the American firm Noble Energy, which owns 40 percent of Leviathan, is now running drilling tests for what it believes could be three billion barrels of oil or more around Leviathan, worth over $300 b. in today’s prices, or 1.5 times Israel’s annual Gross Domestic Product. The question is – what should Israel do with this new, incredible windfall? In March, the Knesset passed legislation approving the Sheshinski Committee recommendations for taxing profits of the natural gas companies. The tax rate will be 52-62 percent and will generate additional tax revenues, according to Finance Minister Yuval Steinitz, of about NIS 1 b. yearly, for 30-40 years, starting in 2015.
Steinitz told “The Jerusalem Post,” “This annual amount will not change the world, but altogether, it is an enormous sum that can serve education, welfare, defense and the entire Zionist endeavor. Our children and maybe our grandchildren will benefit.”
Steinitz and Prime Minister Benjamin Netanyahu fought a valiant battle against the gas companies, led by billionaire Yitzhak Tshuva, who lobbied fiercely to defeat the gas tax law and escape the higher tax payments.
Now that the tax issue is settled, a major dilemma is emerging – how to optimize the use of the gas. If our children and grandchildren are truly to benefit, Minister Steinitz, you and your government must think out of the box. Think “GasTech” – fund and build technology- intensive industries that use natural gas, rather than just export the raw gas. Why should Israel behave like a Third World nation that can only export cheap raw commodities, instead of high-priced industrial products? TO UNDERSTAND WHY GASTECH makes sense, some background information is useful. Worldwide, 29 billion barrels of crude oil are consumed yearly, along with three trillion cubic meters of natural gas, equivalent to 18 billion barrels of oil. In addition, seven billion tons of coal are produced, equal to 35 billion barrels of oil.
Natural gas is 87 percent methane, CH4, a hydrocarbon. When burned, methane produces much less carbon dioxide than other fossil fuels, per unit of heat. Hence, a shift to natural gas can forestall the pace of global warming and climate change, especially when gas replaces dirty coal. (The Israel Electric Corporation currently uses imported coal to make half of its electricity.) The proportion of fossil fuel energy derived from gas worldwide is likely to rise – gas burns cleaner than coal or oil, it is relatively cheaper (as oil prices rise) and there are proportionately more gas reserves than oil. According to British Petroleum, the world has 46 years’ worth of proven oil reserves (at current usage rates), but 60 years’ worth of gas reserves, and the latter number rises daily. We have 130 years’ worth of coal reserves, but burning coal to make electricity is increasingly ruining our climate. Burning a ton of coal generates 4-5 tons of carbon dioxide. Natural gas generates half that, for the same heat equivalent.
Huge amounts of oil and natural gas are trapped in shale – rock in which oil and gas are trapped. Anew way to extract oil and gas from shale called “fracking” is now feasible and widely used, especially in America. By this method, small explosions create fractures in the shale, into which oil and gas seep and are then pumped to the surface. America has large oil and gas shale deposits. In the long run, America’s dependence on oil will diminish as “fracking” boosts both gas and oil production and gas provides 40 percent of America’s energy needs, compared with 20 percent today.
Israel too has shale oil deposits in the Negev. But more immediately, the Tamar gas field is 90 km (54 mi) offshore, in the Mediterranean, and three miles deep, and its gas will reach Haifa in 2013. Leviathan is 130 km (78 mi) offshore. It will take longer to develop.
Piping the gas onshore from both fields will cost billions of dollars. Long before this is done, Israel must plan strategically how to exploit optimally its gas resources. Here are some options.
LNG (Liquid Natural Gas): Israel can act like Algeria, Trinidad and Qatar and build plants that cool the gas to minus 260 degrees F, liquefy it to 1/600th of its volume and ship it abroad in special LNG ships. I asked Prof. Yehuda Hayut, former Haifa University president and an expert on shipping, whether LNG is safe in a terrorridden Mideast.
“LNG is a viable and very efficient way to transport gas,” he answered. “LNG ships ply many trade routes from the Middle East and North Africa to the U.S. and Europe.
There are special safety measures when these vessels enter a port and the record is very safe.” In 50 years of LNG use, no accidents have been recorded. Constructing an LNG plant and building or leasing LNG ships takes enormous resources. And it is still raw gas that is being sold. LNG’s price is less than the crude-oil energy equivalent.
GTL (Gas to Liquid): Qatar has gas reserves larger than Leviathan. It is also a benchmark leader in gas-based industry and technology. Qatar has a revenue-sharing deal with global oil giant Royal Dutch Shell to produce 140,000 barrels a day of clean diesel, and 120,000 barrels of gas condensate, from offshore natural gas. Israel should seek a similar deal, or build a GTL plant on its own. The Qatar process is said to be secret, based on cobalt catalysts. Israel’s creative chemical engineers should be set to work at once to develop our own version.
Strategically, an Israel self-sufficient in gasoline and diesel fuel is a powerful advantage in the unstable Mideast. With gasoline now priced at 7.39 shekels per liter (or $8.15 a gallon), there is no time to waste.
CNG (Compressed Natural Gas): Bottled compressed natural gas can run cars and trucks, in place of gasoline. This could reduce Israel’s crude oil imports sharply.
Petrochemical Industry: Natural gas can become the basis of an expanded profitable petrochemical industry, producing fertilizers and plastics, for example. Such industry already exists in Haifa. Some experts think the gas can be piped to this existing site, where new plants can be built.
Haifa residents recall, however, that a Katyusha rocket hit the refineries in 2006, in Lebanon War II. Others think the gas should be piped to a new, safer petrochemical site in the Negev, far from population centers.
At present there is global overcapacity in petrochemicals and prices are low. Again, creative ideas are needed to add value to raw natural gas, through technology, in ways other countries find hard to imitate.
A Neaman Institute report shows that Israel has 400 chemical plants, generating about a third of all industrial production and exports and employing 30,000 workers.
There is also a strong supply of chemical engineers. Yet only 4 percent of the Chief Scientist’s R&D grants for innovation go to this industry, compared with over a third for communications. This imbalance must be repaired. Sharon Kedmi, Director General of the Ministry of Industry, told me his ministry is actively studying so-called “Newtech” projects, including how best to use natural gas in industry. Both the Finance and Industry Ministries must plan carefully to avoid “Dutch disease” – the Netherlands’ currency appreciated when huge gas reserves were discovered, ruining its industrial exports.
Almost everything in the Mideast becomes a political dispute. Gas is no exception. There are conflicting claims over rights to the offshore gas. Lebanon claims Israel is stealing its gas. So does Gaza.
Wisely, Israel signed an agreement with Cyprus last December, clearly delineating the sea border between the two nations.
Cyprus stands to benefit a lot from Leviathan, because part of the gas field belongs to it. Hopefully Israel and Cyprus will collaborate to develop the field. Turkey strongly protests, claiming the Greek Cypriots are scalping the rights of Turkish Cypriots. And in the background lurks the shaky supply of Egyptian gas to Israel, halted by a saboteur’s bomb, and recently threatened again by a bomb that luckily failed to explode. Though the flow of Egyptian gas to Israel has resumed, it is unclear whether Egyptian gas will continue to flow unhindered, in the wake of the deposing of President Hosni Mubarak. Any delay in developing Tamar and Leviathan will thus be dangerous.
Perhaps the only loser in this story is Langotsky. He had to drop a limited partnership formed to finance exploration, when his partner, mining tycoon Benny Steinmetz, bailed out, only two months before exploratory drilling began. Langotsky will ironically not profit at all from the gas wealth he was instrumental in generating. • The writer is senior research fellow, at the S. Neaman Institute, Technion.

Photo by: Marc Israel Sellem
 The Natural Gas Solution 
By SHLOMO MAITAL12/05/2011  

Long before piping gas onshore is done, Israel must plan strategically how to exploit optimally its gas resources. Here are some options. 

  
“IF MOSES HAD TURNED RIGHT instead of left when he led his people out of the Sinai Desert,” goes an old joke, “the Jews would have had the oil and the Arabs would have ended up with the oranges.” We can’t tell that joke any more. And you can blame oil geologist Joseph Langotsky.
Langotsky insisted for years there was oil and gas offshore in Israel’s territorial waters. Few listened. Finally, exploratory drilling commenced. Now, two major gas fields have been discovered in the Mediterranean, named Tamar and Leviathan. The latter is said to be the biggest gas find in the world in a decade. Tamar is named for Langotsky’s granddaughter. Leviathan means “whale” in Hebrew and indeed is a whale of a find – new estimates show Leviathan has some 16 trillion cubic feet of gas, worth (at current European market prices, one cent per cubic foot) over $160 billion.
Tamar has an estimated eight trillion cubic feet of gas, and production will begin in 2013. Moreover, the American firm Noble Energy, which owns 40 percent of Leviathan, is now running drilling tests for what it believes could be three billion barrels of oil or more around Leviathan, worth over $300 b. in today’s prices, or 1.5 times Israel’s annual Gross Domestic Product. The question is – what should Israel do with this new, incredible windfall? In March, the Knesset passed legislation approving the Sheshinski Committee recommendations for taxing profits of the natural gas companies. The tax rate will be 52-62 percent and will generate additional tax revenues, according to Finance Minister Yuval Steinitz, of about NIS 1 b. yearly, for 30-40 years, starting in 2015.
Steinitz told “The Jerusalem Post,” “This annual amount will not change the world, but altogether, it is an enormous sum that can serve education, welfare, defense and the entire Zionist endeavor. Our children and maybe our grandchildren will benefit.”
Steinitz and Prime Minister Benjamin Netanyahu fought a valiant battle against the gas companies, led by billionaire Yitzhak Tshuva, who lobbied fiercely to defeat the gas tax law and escape the higher tax payments.
Now that the tax issue is settled, a major dilemma is emerging – how to optimize the use of the gas. If our children and grandchildren are truly to benefit, Minister Steinitz, you and your government must think out of the box. Think “GasTech” – fund and build technology- intensive industries that use natural gas, rather than just export the raw gas. Why should Israel behave like a Third World nation that can only export cheap raw commodities, instead of high-priced industrial products? TO UNDERSTAND WHY GASTECH makes sense, some background information is useful. Worldwide, 29 billion barrels of crude oil are consumed yearly, along with three trillion cubic meters of natural gas, equivalent to 18 billion barrels of oil. In addition, seven billion tons of coal are produced, equal to 35 billion barrels of oil.
Natural gas is 87 percent methane, CH4, a hydrocarbon. When burned, methane produces much less carbon dioxide than other fossil fuels, per unit of heat. Hence, a shift to natural gas can forestall the pace of global warming and climate change, especially when gas replaces dirty coal. (The Israel Electric Corporation currently uses imported coal to make half of its electricity.) The proportion of fossil fuel energy derived from gas worldwide is likely to rise – gas burns cleaner than coal or oil, it is relatively cheaper (as oil prices rise) and there are proportionately more gas reserves than oil. According to British Petroleum, the world has 46 years’ worth of proven oil reserves (at current usage rates), but 60 years’ worth of gas reserves, and the latter number rises daily. We have 130 years’ worth of coal reserves, but burning coal to make electricity is increasingly ruining our climate. Burning a ton of coal generates 4-5 tons of carbon dioxide. Natural gas generates half that, for the same heat equivalent.
Huge amounts of oil and natural gas are trapped in shale – rock in which oil and gas are trapped. Anew way to extract oil and gas from shale called “fracking” is now feasible and widely used, especially in America. By this method, small explosions create fractures in the shale, into which oil and gas seep and are then pumped to the surface. America has large oil and gas shale deposits. In the long run, America’s dependence on oil will diminish as “fracking” boosts both gas and oil production and gas provides 40 percent of America’s energy needs, compared with 20 percent today.
Israel too has shale oil deposits in the Negev. But more immediately, the Tamar gas field is 90 km (54 mi) offshore, in the Mediterranean, and three miles deep, and its gas will reach Haifa in 2013. Leviathan is 130 km (78 mi) offshore. It will take longer to develop.
Piping the gas onshore from both fields will cost billions of dollars. Long before this is done, Israel must plan strategically how to exploit optimally its gas resources. Here are some options.
LNG (Liquid Natural Gas): Israel can act like Algeria, Trinidad and Qatar and build plants that cool the gas to minus 260 degrees F, liquefy it to 1/600th of its volume and ship it abroad in special LNG ships. I asked Prof. Yehuda Hayut, former Haifa University president and an expert on shipping, whether LNG is safe in a terrorridden Mideast.
“LNG is a viable and very efficient way to transport gas,” he answered. “LNG ships ply many trade routes from the Middle East and North Africa to the U.S. and Europe.
There are special safety measures when these vessels enter a port and the record is very safe.” In 50 years of LNG use, no accidents have been recorded. Constructing an LNG plant and building or leasing LNG ships takes enormous resources. And it is still raw gas that is being sold. LNG’s price is less than the crude-oil energy equivalent.
GTL (Gas to Liquid): Qatar has gas reserves larger than Leviathan. It is also a benchmark leader in gas-based industry and technology. Qatar has a revenue-sharing deal with global oil giant Royal Dutch Shell to produce 140,000 barrels a day of clean diesel, and 120,000 barrels of gas condensate, from offshore natural gas. Israel should seek a similar deal, or build a GTL plant on its own. The Qatar process is said to be secret, based on cobalt catalysts. Israel’s creative chemical engineers should be set to work at once to develop our own version.
Strategically, an Israel self-sufficient in gasoline and diesel fuel is a powerful advantage in the unstable Mideast. With gasoline now priced at 7.39 shekels per liter (or $8.15 a gallon), there is no time to waste.
CNG (Compressed Natural Gas): Bottled compressed natural gas can run cars and trucks, in place of gasoline. This could reduce Israel’s crude oil imports sharply.
Petrochemical Industry: Natural gas can become the basis of an expanded profitable petrochemical industry, producing fertilizers and plastics, for example. Such industry already exists in Haifa. Some experts think the gas can be piped to this existing site, where new plants can be built.
Haifa residents recall, however, that a Katyusha rocket hit the refineries in 2006, in Lebanon War II. Others think the gas should be piped to a new, safer petrochemical site in the Negev, far from population centers.
At present there is global overcapacity in petrochemicals and prices are low. Again, creative ideas are needed to add value to raw natural gas, through technology, in ways other countries find hard to imitate.
A Neaman Institute report shows that Israel has 400 chemical plants, generating about a third of all industrial production and exports and employing 30,000 workers.
There is also a strong supply of chemical engineers. Yet only 4 percent of the Chief Scientist’s R&D grants for innovation go to this industry, compared with over a third for communications. This imbalance must be repaired. Sharon Kedmi, Director General of the Ministry of Industry, told me his ministry is actively studying so-called “Newtech” projects, including how best to use natural gas in industry. Both the Finance and Industry Ministries must plan carefully to avoid “Dutch disease” – the Netherlands’ currency appreciated when huge gas reserves were discovered, ruining its industrial exports.
Almost everything in the Mideast becomes a political dispute. Gas is no exception. There are conflicting claims over rights to the offshore gas. Lebanon claims Israel is stealing its gas. So does Gaza.
Wisely, Israel signed an agreement with Cyprus last December, clearly delineating the sea border between the two nations.
Cyprus stands to benefit a lot from Leviathan, because part of the gas field belongs to it. Hopefully Israel and Cyprus will collaborate to develop the field. Turkey strongly protests, claiming the Greek Cypriots are scalping the rights of Turkish Cypriots. And in the background lurks the shaky supply of Egyptian gas to Israel, halted by a saboteur’s bomb, and recently threatened again by a bomb that luckily failed to explode. Though the flow of Egyptian gas to Israel has resumed, it is unclear whether Egyptian gas will continue to flow unhindered, in the wake of the deposing of President Hosni Mubarak. Any delay in developing Tamar and Leviathan will thus be dangerous.
Perhaps the only loser in this story is Langotsky. He had to drop a limited partnership formed to finance exploration, when his partner, mining tycoon Benny Steinmetz, bailed out, only two months before exploratory drilling began. Langotsky will ironically not profit at all from the gas wealth he was instrumental in generating. • The writer is senior research fellow, at the S. Neaman Institute, Technion.