July 21, 2011

Fueling Israel's Future

By Alex Joffe

Are abundant natural resources a blessing, or a curse? This is the sort of question that economic theorists love to play with, usually concluding that, depending on other factors, they can be either or both. Israel, thus far burdened with a crippling dependency on imported oil and gas, has had astonishing success in developing its human resources—so much so that it has flourished economically even in the current global recession. Would it have done even better with adequate sources of domestic energy? Or worse? A formerly theoretical dilemma is poised to become a pressingly practical one.

Trillions of cubic feet of natural gas have been discovered in several titanic fields off Israel's coastline. They promise both an abundance of domestic energy, as much as 200 years' worth by some estimates, and the possibility of the country's becoming a major energy exporter. The total value of the gas is currently worth close to a half-trillion dollars. On the macro level, and from the point of view of ensuring the country's national security, the prospective boon is almost unimaginably beneficial. The question, as always, is what is entailed in realizing it, and how to mitigate any attendant social and political costs.

Begin with the issue of where to locate a gas terminal. Israel's coastline is 170 miles long, the site of several cities and numerous competing uses, including ports, water-desalinization and sewage-treatment plants, military operations, and recreation. Thanks in part to ecological changes in the Nile delta (themselves the long-term effects of the Aswan high dam built in the early 1960s), the coastline is also being eroded and becoming more vulnerable to storm damage. Millions of Israelis, Jews and Arabs, vie for access to the few parks and undeveloped beaches on the seafront.
One pressing issue is strategic. Gas-receiving terminals include the infrastructure to process raw natural gas and remove contaminants, as well as storage tanks and links to distribution systems. They may also include facilities to create liquefied gas for transportation and storage by radically reducing its volume. Such facilities have the explosive potential of small nuclear weapons. In Israel's case, any such facility will also automatically become a major target for adversaries ranging from Hamas to Iran. Already the single pipeline carrying natural gas from Egypt to Israel and Jordan has been repeatedly attacked since the fall of the Mubarak regime, and the electrical-power stations at the two coastal towns of Hadera and Ashkelon have been targeted by, respectively, Hizballah and Hamas rockets.
If the strategic implications of locating a gas terminal are significant, the domestic aspects are almost equally problematic. One plan would have placed the terminal at Dor, just south of the Hadera power station, effectively cutting through a beachfront kibbutz, nature reserve, and major archaeological site. Another proposal would expand the existing gas terminal at Ashdod, which serves a smaller offshore field. In both cases, those affected would be among the less powerful sectors of Israeli society, kibbutzniks and residents of outlying cities. (For both strategic and domestic reasons, there is no chance the terminal will be located anywhere near north Tel Aviv or its affluent suburbs.) And in both cases the sites have already been targeted by rockets.

More recently a proposal has emerged to locate a floating liquefied natural-gas terminal a few miles off the shore of Hadera, in what would amount to a giant ship that could temporarily move out of range of missile and other security threats. Australia is building a similar facility 120 miles off its western coastline, at a cost of $10 billion. In Israel, the state will of course remain responsible for its citizens' security, but the size of the price tag inevitably raises the vexing question of who will pay for the infrastructure, and who will enjoy the proceeds.
The Israeli and American companies that have invested hundreds of millions for exploration stand to reap a windfall of billions. In January, the Israeli cabinet overwhelmingly approved taxing oil and gas profits at between 50 and 62 percent, effectively doubling the tax rate under which exploration had been launched. The new rates are in line with those in most Western countries, but the change prompted a complaint from the U.S. State Department about the deleterious retroactive effect on American investors. For their part, some Knesset members have been railing angrily about "greedy tycoons." Prime Minister Benjamin Netanyahu has promised that the state's share will be allocated toward education and security, but these debates can only become more heated, and more polarized, as time goes on.
No less fraught are the regional and international implications. Israel's gas discoveries have prompted negotiations with Cyprus regarding the delineation of the two countries' maritime borders and exclusion zones. Some entrepreneurs are talking about an undersea pipeline heading toward Europe. And, as has been well reported, there have been threats from Lebanon, which has already accused Israel of stealing "its" offshore natural gas.
Just south of the national park at the imposing ruins of Roman and Byzantine Caesarea, including the remains of the ancient aqueducts that supplied much-needed fresh water, and of the modern town of Caesarea that is home to some of Israel's elite citizens, lies the Hadera power station. Its smokestacks dominate the horizon; a jetty protrudes offshore to carry coal from cargo ships.
The view from Caesarea beach thus already offers a juxtaposition of old—very old—with new infrastructure, as well as of the conflicts and divides that characterize Israeli society internally and its relations with its neighbors without. One can only hope that, with agility and political wisdom, the Jewish state will successfully navigate its course between the blessing and the curse of immense amounts of fuel, and the forms of power that come with it.
Alex Joffe is a research scholar with the Institute for Jewish and Community Research.

The Natural Gas Solution  Shlomo Maital,  Jerusalem Post.  What are the options for processing and utilizing Israel's bonanza?  SAVE

Protecting the Pipeline  Amiram Barkat,  Globes.  Terrorist attacks concentrate on production facilities and, still more, on transportation and distribution networks—a reason to locate as much infrastructure as possible offshore.  SAVE

Shale oil project raises environmental hackles in Israel

Shale oil project raises environmental hackles in Israel December 18, 2011 11:59 AM By Daniella Cheslow 
 
A worker performs a routine check on the valves at a natural gas appraisal well of Sinopec in Langzhong county, Sichuan province in this March 1, 2011 file photo. Reuters


BEIT GUVRIN, Israel: Among the serene vineyards and pine trees of Israel's wine-growing heartland, a towering drill is boring 600 meters underground, dredging up black rocks that smell like petrol.
This is oil shale, rocks saturated with kerogen, a material that turns into oil and gas under intense heat.
Huge deposits of this kerogen-rich rock lie deep underground in southern and central Israel in quantities which Israel Energy Initiatives (IEI) says could make the country an oil superpower and break its dependence on imports.
Shale oil production is often attacked for its high carbon footprint and for being prohibitively expensive, but the entrepreneurs at IEI insist they have found a cleaner, greener and cheaper method of extraction.
And they plan to prove it in the Ela Valley, a Biblical site in the Judaean hills some 30 kilometres southwest of Jerusalem where David is said to have battled Goliath.
But two years into a first round of experimental drilling, IEI faces a firestorm of criticism from environmentalists who say the project is a dangerous experiment in an ecological corridor that lies over the main source of Israel's limited national water supply.
Oil shale exists in deposits around the world, including major sites in the United States, China, Estonia, Australia and Jordan. IEI believes Israel may be sitting on vast reserves of shale oil, second only to those in the United States.
If their estimates are right, shale oil could have a revolutionary impact on the Jewish state's energy portfolio.
Israel currently consumes around 100 million barrels of oil a year, most of it imported from Russia and former Soviet states. It also relies on natural gas, around 60 percent of which comes from domestic sources while the rest is supplied by Egypt.
And while two major offshore gas finds have raised hopes that Israel could supply its own needs, the shale oil deposits could potentially dwarf these discoveries and provide for Israel's energy needs many times over.
Scott Nguyen is vice-president of technology at IEI, a subsidiary of American telecoms giant IDT. A veteran of Dutch Shell Oil, he wears the tan leather boots and giant belt buckle of his native eastern Texas.
"Even in the early 1900s, people said oil shale will be the heir apparent to oil," Nguyen said. "The difficulty is implementing the technology to make it economic to do it."
The key to oil shale is kerogen, an organic material locked into rocks that, given a few aeons, would develop into petroleum. Production is expensive because it speeds up millions of years of geological processes.
While shale oil has been a known fuel source for centuries, it has always been more expensive and less convenient to produce than crude oil.
In Estonia, which produces 90 percent of its power from oil shale, production has declined as a result of cheaper alternatives and more stringent EU environmental penalties.
Extraction involves mining the rocks and heating them with large amounts of energy to convert the kerogen into oil and gas in a process which spews out pollution, litters the land with spent shale, consumes torrents of water and rips gaping scars in the landscape.
And burning it is four times as polluting as natural gas.
But Harold Vinegar, Nguyen's boss and former chief scientist at Shell, has developed a new form of "in-situ" conversion, which converts the kerogen into shale oil underground, thereby cutting out the mining process.
His method involves drilling 200 metres into the deposit, inserting heating elements, then ratcheting up the temperature to 300 degrees Celsius (572 degrees F) for at least three years. At that heat, the rocks release the kerogen and it can be pumped up in liquid form.
But first, the extraction process, which has been under development since the 1980s, must be shown to work.
To date, IEI has carried out only small-scale field studies of the conversion technology, and should it get the necessary licence to run a full pilot in Israel, it will be the first proper commercial-scale trial of the process.
"If we are successful in implementing our in-situ conversion technology in Israel, it will make it easy to do it around the world," Nguyen said.
For years, the main way of extracting shale oil was through open-pit mining, a dirty process which which is very expensive, with production costs of around $70-$100 per barrel.
But using its technology, Nguyen says the barrel production cost would be $30-40.
And he says the amount of carbon dioxide emitted by extraction would "be lower than the emissions from the mix of comparable oil supplies once we reach the commercial phase."
The firm sees the process of sequestering part of the carbon dioxide emissions as "economical and technically favourable," he says.
No one knows how much oil is trapped in the rocks in Israel.
Vinegar believes there could be up to 250 billion barrels of oil, a figure far higher than that published by the London-based World Energy Council which in November 2010 put the figure at closer to four billion barrels.
Whatever the size of the resource, it is substantial. To date, IEI has invested about $20 million in the appraisal phase, and plans to invest up to $30 million more to design the pilot, which in its next stage involves oil shale exploration.
Nguyen says IEI has carried out some field experiments in Canada, but Israel is the first commercial site.
"There is no prior experience in the world (for in-situ conversion), and therefore this is exactly the time to do it," said Moshe Shirav, a researcher at the Israeli Geological Survey.
Shirav says IEI will keep a close eye on the environmental impact of the process through monitoring wells dug alongside the oil shale drill shafts.
But Akiva Flexer, a geology expert at Tel Aviv University, is concerned about the possible impact on the Mountain Aquifer, Israel's main source of drinking water which lies just 200 metres below the shale oil deposits.
"It's Israel's most important aquifer," Flexer said. "If you have some dry crack, and there's a certain leak it is enough that one drop of oil gets in and you can't drink the water."
But Nguyen says a leak would be out of the question because an impermeable layer of clay separates the shale from the aquifer.
"In the pilot, we will have ground water monitoring wells where water can flow above and below the pilot areas," he said.
"If there is contamination in the water, we will stop heating and treat the contamination by removing and diluting it."
IEI, he says, will fully restore the land where they extract and produce shale oil, and the company is working with environmentalists to ensure their concerns are addressed.
But they have not managed to convince a local activist group called "Save Adullam" which fears the project may do irreversible damage to the aquifer which supplies both Israel and the Palestinians.
"I don't want to risk the safety of the Israeli and Palestinian water supply on the 'hope' that everything will be OK," said spokeswoman Rachel Jacobson.
According to Israel's infrastructure ministry, IEI was granted a licence to appraise the area for oil production from shale with the aim of "testing the method and its impacts from every angle, including, of course, the environmental impact."
So far, however, no environmental impact statement has been prepared, prompting Save Adullam and the Israeli Union for Environmental Defence (IUED) to petition the high court last year for a stop-work injunction.
But the court rejected their argument, saying the exploration fell under Israel's 1952 Petroleum Act which grants energy explorers a free hand to search for oil and gas with minimal government interference.
For now, IEI has drilled into five sites, searching for the best place to start a full-scale pilot, with oil production set to begin as early as 2013.
By 2020, IEI expects to be extracting some 50,000 barrels per day (bpd), representing about a sixth of Israel's daily oil imports, which in 2009 stood at 282,200 bpd, Nguyen says.
Mikhal Harm, secretary general of the Estonian branch of the World Energy Council, said that even Estonia, a leading producer of shale oil, had yet to solve the problem of carbon dioxide emissions.
He also said that in-situ conversion has not yet been proven commercially feasible anywhere in the world.
But he believes the shale oil deposits will end up benefiting Israel.
"The fact is that people need energy, and in the near future oil shale will be a big part of the energy portfolio," he told AFP.
"I don't think people should be afraid of oil shale in Israel. They should welcome it, but with strict enough rules."

Clean Energy's Outlook - 08.07.2011

Clean Energy's Outlook - 08.07.2011

Created 08.06.11

Air Date 08.06.11

Video Transcript (opens in a new window)

[SUITERS] Finding the future of energy in an ancient land.
[DAVID ROSENBLATT] Israel has the best sun, has people living where that is, has transmission lines, and has available land.
[SUITERS] You make it sound like a simple equation.
[ROSENBLATT] Yeah. What could be hard?
[SUITERS] Israel strives for energy independence using cutting-edge solar technology, which is finding a home in the United States.
[RUSSELL HANCOCK] This is going to be a place where America's energy future is invented.
[SUITERS] And Silicon Valley, America's high-tech capital, takes on a new challenge.
[SULLIVAN] So you're one of the high-tech refugees that have switched over to clean energy. There's a lot of you guys here, isn't there?
[BOB LOFTIS] Yeah, there are quite a few. I'm meeting more every day.
[SUITERS] Meet the tech-savvy workers and entrepreneurs who may bring us the next big thing in clean energy.
Plus, the debt limit showdown is over -- for now. Trillions in budget cuts lie ahead. But what will the impact be on energy spending? We'll mix it up with two former longtime senators about the energy implications of the looming budget battle. This is "energyNOW!"
Hello, I'm Tyler Suiters. Welcome to "energyNOW!", a weekly look at America's energy challenges and what we're doing about them. Thalia Assuras is on assignment. This week, a look at the oldest energy source around -- the Sun -- and how companies are harnessing its power, providing clean, renewable electricity and creating jobs. Before we explain what's happening here at home, let's look at a country facing very similar energy challenges to the U.S. -- Israel. It is completely dependent on foreign oil, and its biggest supplier of natural gas, Egypt, is hardly reliable right now, after recent attacks on the Egyptian stretch of gas pipeline that feeds Israel. And Israel is eager to draw more heavily on renewable energy, so the country is turning to a natural resource it has in abundance -- sunshine.
This is a NASA map from space, tracking the sunniest spots on the Earth. The darker the red, the better for collecting and using solar energy. The United States has a deep red band across the southwest. And the whole of Israel is on the northern tier of the Earth's sunniest stretch. As the CEO of an Israeli solar company said, "The Sun cannot be sabotaged." And while Israel still needs help from the rest of the world to claim its energy independence, solar technology that's developing right now could soon be generating power here in the U.S. More now in our continuing look at the Israel Connection.
Israel's Negev Desert, once home to Abraham, the Ottomans, and a stretch of the Spice Road. Arid, unforgiving, and brutally bright. But that's not to say there's nothing new under the Sun. Alongside a highway in the southern Negev sits the Arava Institute. Housed on a working kibbutz, it's a hothouse for solar energy innovation -- innovation that could make its way to the United States. Among the technologies in the testing phase here, a solar panel field that sits on the water, designed to power coastal areas that don't have a lot of empty land. And this, a small solar array, designed to better collect the Sun's energy.
[EYAL RICHTER] Each row of flat mirrors concentrates a primary concentration on one of those up there.
[SUITERS] Eyal Richter is the brains behind Verilite, a solar energy system that he says is especially efficient. One of Richter's brighter ideas was coming to the Arava Institute to put his product through its paces.
Why test this on a kibbutz? Why here?
[RICHTER] Well, here, they have a very comfortable setting for new technologies. This is a validation center, run by Capital Nature.
[SUITERS] It's a bit of a lab, high-tech lab.
[RICHTER] Yeah, right, it's a high-tech lab for new renewable technology.
[SUITERS] A lab that focuses on the most ancient form of energy, the Sun, a natural resource Israel has in abundance.
[RICHTER] Everybody has been using the energy of the Sun since Neanderthals. So I think it's a very natural connection. There are palm trees. They need the Sun to grow. We grow energy.
[DAVID ROSENBLATT, CO-FOUNDER, ARAVA POWER COMPANY] It's funny, when you're in Israel and you start talking about solar energy, it's amazing how many people can quote the Bible and give you references to the ability of the Sun and the respect of any people -- the Moslems, the Jews, the Christians, about the Sun and the power of the Sun.
[SUITERS] American David Rosenblatt is helping Israel realize its clean energy potential. His company, Arava Power, built a solar panel field in the Negev.
[ROSENBLATT] Israel has the best sun, has people living where that is, has transmission lines, and has available land.
[SUITERS] You make it sound like a simple equation.
[ROSENBLATT] Yeah. What could be hard?
[SUITERS LAUGHS]
[SUITERS] Israel does have a long history of solar power. Almost 90% of its homes have rooftop solar water heaters. But solar energy generates only about 1% of Israel's electricity, so it has to rely on imported fossil fuels for power.
[ROSENBLATT] If you look at the Arab states, they actually have a grid that they share among each other. So, if a country doesn't produce enough power, they can get power from another country.
[SUITERS] Israel has no backup.
[ROSENBLATT] Right, so, like the United States, if New Jersey doesn't create enough power, then it goes with some of its neighbors, and more power is provided to New Jersey, so it doesn't have to produce all of its power. In Israel, if it doesn't produce power, it goes black.
[SUITERS] With that in mind, Israel's government just approved a plan to get 10% of the country's electricity from renewable sources by 2020. That's about the same total the U.S. gets today from renewables like solar and wind and hydropower and biomass.
But in some ways, the U.S. is following Israel's lead in solar energy. A trip to the northern reaches of the Negev is a little like looking in the mirror, a preview of what's to come in the U.S. But the view is much better way up there, almost 200 feet off the ground.
The desert has a certain beauty to it, but I bet you've never seen anything quite like this. A little surprise for you -- an entire field of concentrated solar panels, all pointing pretty much right at us.
This solar thermal demonstration facility and all the 1,600 mirrors you see laid out before us, they belong to BrightSource Energy, an American company with deep ties to Israel, a company now building a much bigger version of this power plant in California's Mojave Desert, the biggest solar project under construction in the entire world, with the financial backing of Google, among others. Arnold Goldman is the founder of BrightSource.
[GOLDMAN] We can only effectively work with good direct sunlight, excellent, I'd say, direct sunlight. So we have limited areas, but we work very, very effectively from those areas.
[SUITERS] The Mojave isn't as sun-drenched as the Negev, but California does have more of another critical resource -- land. Israel is only a little bit bigger than the state of New Jersey. And that lack of space could mean a conflict between energy security and national security. Yossi Inbar led Israel's Environmental Ministry for two years.
[INBAR] And some of this land, unfortunately, because we are in a war zone, I would say, we need to keep it for practicing. The Air Force needs to practice. And that's -- solar panels and bombs don't come together.
[SUITERS] But solar panels could be valuable weapons in a different battle -- the fight against climate change.
Do you think of climate change as a security threat?
[INBAR] The climate change is a security threat if -- for example, the delta of the Nile is now bigger in culture and feeding ground for the Egyptians, to give an example. And if sea water will rise and there will be no -- no, no land, no agriculture, no food, stuff will be our problem at the end of the day.
[SUITERS] A geopolitical problem that David Rosenblatt says could mean an opportunity for clean energy cooperation.
[ROSENBLATT] So if you look over there at those trees --
[SUITERS] All the date trees off in the distance, yeah.
[ROSENBLATT] So right beyond that, and I'm talking, we could walk for five minutes and be there, is Jordan.
[TEXT ON SCREEN] To see more of the interviews in this story go to energynow.com.
[ROSENBLATT] We could literally hop across the border if we were allowed -- that's Jordan. Why not -- why couldn't you just put panels there and run a wire?
[SUITERS] And share the electricity.
[ROSENBLATT] Share the electricity.
[SUITERS] And share an ancient reverence for the power of the Sun.
Arava Power's solar project in the Negev Desert is scheduled to go online later this month, and when it does, the Ketura power plant will become the first ever large-scale solar field to generate power and deliver that power to Israel's electric grid.
And "energyNOW!" will have more stories from Israel in the coming weeks, including a discovery that is dramatically changing its energy picture, and a look at some of Israel's off-the-wall energy innovations that could find their way to the United States.
Here at home, the U.S. government and clean energy companies are searching for new innovations to make solar power more affordable. Take a look at this "energyNOW!" reality meter. The cost of electricity from new photovoltaic solar cells is about 21 cents a kilowatt hour. That according to the Energy Information Administration. And that is more than double the national average electricity price of about 10 cents a kilowatt hour. Most of that electricity comes from fossil fuels.
[TEXT ON SCREEN]
SOLAR VS. GRID
New Photovoltaic Solar
21.1 cents per kWh
U.S. Retail Electricity (April 2011)
9.7 cents per kWh
[SUITERS] But the Department of Energy is trying to close the gap and achieve what's known as grid parity by 2015. That means pushing down the price of solar power to match electricity from conventional sources. And the DoE has a more ambitious goal for 2020, cutting the cost of solar power to 6 cents a kilowatt hour, so solar can compete against fossil fuels without the help of government subsidies.
Still ahead on "energyNOW!", a switch in Silicon Valley.
[MAN] Green energy and solar seems to be at the stage where we were, you know, 20, 25 years ago in the semiconductor business.
[SUITERS] America's dot-com corridor famous for high tech is moving into clean tech. A look at the race to find the next big thing in clean energy.
[TEXT ON SCREEN]
In 2010, the U.S. solar industry employed 93,000 workers.
Source: Solar Energy Industries Association.
[BREAK]
[Baby coughing] [Wheezing] [Coughing and wheezing continue]
[ANNOUNCER] Congress can't ignore the facts. More air pollution means more childhood asthma attacks.
[Baby coughing and wheezing]
[ANNOUNCER] Log on to LungUSA.org and tell Washington, "Don't weaken the Clean Air Act."
[END BREAK]
[SUITERS] California's Silicon Valley has long been known as the home to Internet and technology companies like Google and Apple, and as a magnet for venture capital, the money that investors give to start-up companies, hoping they will become the next Google or Apple. But information technology firms are increasingly sharing Silicon Valley with energy companies. Last year, the region took in about $9 billion in venture capital, and almost 20% of that went to clean technology companies, a far cry from 10 years ago, when clean energy firms lured less than 1% of Silicon Valley's start-up funds.
[TEXT ON SCREEN]
Silicon Valley Venture Capital
2010 total $9.1 billion
Clean technology 19.6%
2001 clean technology 0.9%
Source: National Venture Capital Association.
[SUITERS] That tremendous growth in clean energy investment has helped Silicon Valley make it through some tough economic times. And, as "energyNOW!"'s Lee Patrick Sullivan reports, that area is now helping America take charge of its energy future.
[RUSSELL HANCOCK] They said, this is going to be a place where America's energy future is invented.
[SULLIVAN] Russell Hancock's nonprofit organization helps Silicon Valley's business leaders create the next big thing. And Hancock says, in the last decade, he's seen a steady stream of both money and people switch from high tech to renewable energy. People like software programmer Laks Sampath.
[LAKS SAMPATH, TRINA SOLAR] So, my software background came in very handy. I was able to build critical modeling tools. I built one of the first monitoring systems that the industry ever had.
[SULLIVAN] And that monitoring system runs this 468-kilowatt solar array at a Silicon Valley water treatment plant and could save this plant more than $2 million in energy costs over the next decade.
[SAMPATH] Here, actually, it is something that is tangible. It is green. You're putting together something that actually is worth your while. That's what I love about the industry.
[SULLIVAN] For Silicon Valley, clean energy companies came along just at the right time. When the tech bubble of the 1990s finally burst in 2000, it left a lot of highly educated and skilled workers looking for new jobs. And the region's economy took another hit during the recent recession. But between those two body blows, California's state government decided it was going to set limits on greenhouse gas emissions and mandate greater use of solar panels, wind turbines, and other forms of renewable energy. The state's clean energy push helped spur a local market for new energy technologies, just as some I.T. and Internet companies were downsizing.
So you're one of the high-tech refugees that have switched over to clean energy. There's a lot of you guys here, isn't there?
[BOB LOFTIS] Yeah, there are quite a few.
[SULLIVAN] Bob Loftis was at Apple, Compaq, and Hewlett-Packard before coming to Solyndra, a solar energy manufacturer outside San Jose.
[LOFTIS] A lot of the people working on the factory floor are using automation tools that they're pretty familiar with from previous jobs.
[SULLIVAN] The high-tech background of the workers and designers at Solyndra has led to innovative ways to harness the power of the Sun. Instead of flat panels, these are lightweight round tubes, able to get reflective sunlight from rooftops without having to be motorized to follow the Sun.
[Applause]
[SULLIVAN] Innovation like that led the Obama administration to award the facility a half a billion dollars in loan guarantees. Now, while the area was struggling during the recent recession, jobs in clean energy grew in the region by 109% in the last decade. Driving that growth, an array of solar companies setting up shop; electric vehicle manufacturers; and new innovations like the Bloom Box, a fuel cell that runs on a host of fuels, including natural gas, methane, and propane.
Even companies from the last big thing in Silicon Valley are jumping on board. eBay has installed five of those Bloom Boxes on its campus. And Google has pledged $780 million for clean energy.
Still, for all the overlap between these dot-com companies and clean energy firms, there are some important differences. Take the folks at eBay, for example. Last year, they helped facilitate the sale of billions of dollars' worth of products. But they have no warehouse, because they have no items. Like most dot-coms, their start-up cost is this. With clean energy, you need factories, warehouses... and energy projects just tend to be big.
[HANCOCK] The projects are done on huge scales. I mean, they're done on a regional scale, on a utility scale, on a statewide scale.
[SULLIVAN] It's also good to have government support. But for all the help clean tech companies are getting in California, they haven't been so lucky in the nation's capital, where renewable energy and global warming legislation has stalled. And when the Department of Energy was handing out stimulus money for clean energy projects, politicians from the Midwest made their voices heard in Washington.
[SEN. DEBBIE STABENOW (D) MICHIGAN] And when we talk about innovation and making things, that's Michigan.
[SULLIVAN] And Silicon Valley watched as Michigan and Indiana got the bulk of the funding.
[HANCOCK] That's not what Silicon Valley does well. Silicon Valley is a really maverick kind of place. Lots of libertarian thinkers here, cowboy entrepreneurs. You know, we don't have our act together, politically. We're not used to going to Washington. That part is going to be hard for us.
[SULLIVAN] And even the federal help they do receive is getting scrutinized. The Republican-controlled House is looking into Solyndra's loan guarantee, demanding the White House hand over all documents related to the decision.
So, back in Silicon Valley, programs like Boots on the Roof are looking to train the wave of blue-collar workers needed to install the solar panels, geothermal systems, and wind turbines.
Now, the whole idea behind this is that, although it's, you know, it's green technology, but it's still electricians and plumbers that need to do this.
[CHUCK RAMES, DIRECTOR, BOOTS ON THE ROOF] Very much so, yeah. This is how renewable energy is going to happen. Working men and women are going to need to install these things on, eventually, millions of homes in America.
[SULLIVAN] And if former high-tech refugees like Laks Sampath have their way, those systems will be designed and improved in Silicon Valley.
[TEXT ON SCREEN] To learn how solar energy works, watch Solar Power 101 at energynow.com.
[SULLIVAN] Do you think there will come a day where you and I will have to explain to our grandkids that Silicon Valley refers to the semiconductor and not the solar panel?
[LAKS SAMPATH] I hope it comes to that. That will be a good one. [Laughs]
[SULLIVAN] In San Jose, California, Lee Patrick Sullivan, "energyNOW!"
[SUITERS] And Laks Sampath is working especially hard to make that happen. Since we visited with him, he has left Trina Solar and opened up his own solar company. A man with a vision and apparently an endless supply of his own energy.
The idea of converting sunlight into electricity isn't anything new. That concept has been around for decades now. And although the size of solar panels, and much of the technology, have changed, the cost of solar has always been a challenge. Check out this energyTHEN from 1958.
[Film projector running]
[NARRATOR] The big, window-like roof of this house is meant not for looking out, but to let in sunlight to fuel the heating system. This solar house, the first designed for a northern climate, is the result of 20 years' research at Massachusetts Institute of Technology. Some 80% of the heating all year round is supplied by water warmed by sunshine. A housewife sets the temperature by thermostat. In the summer, a refrigeration unit provides air cooling. This solar heat system is prohibitively expensive. With expected improvements in mass production, tomorrow's homeowner may have small concern with fuel bills.
[SUITERS] Solar IV, as the house was known, was completed in 1959 after the Department of Agriculture held a contest on solar house design. After collecting data for three heating seasons, MIT then ended up selling the house to a private owner.
Still ahead, the debt deal is done. The budget cuts are coming. And that means some energy funding could be slashed.
Which energy resources could be the big winners and losers in the race to fuel the future? Two former longtime senators share their insights and experience about the effects of the budget battle on America's energy.
[ANNOUNCER] Clean energy is a top priority with consumers and politicians across this country and throughout Maryland. And now there's an easy way to learn how clean energy can be a part of your life -- in your home, at work, as a career. The Maryland Clean Energy Summit is your chance to get all the information you want -- from solar and wind to thermostats and energy suppliers. The state's foremost clean energy leaders will be presenting at this hallmark conference, so don't miss it.

[TEXT ON SCREEN]
Can I recycle a beer bottle with a lime wedge suck inside?
Natch. But limes make good compost. Just sayin'. http://www.grist.org/
Laugh now or the planet gets it.

[END BREAK]
[BARACK OBAMA, AUGUST 2, 2011] This compromise guarantees more than $2 trillion in deficit reduction. It's an important first step to ensuring that, as a nation, we live within our means.
[SUITERS] That was President Obama after he signed the compromise bill to raise the country's debt ceiling. It came after a very heated battle, and now Democrats and Republicans will try to determine where those spending cuts will come from. And what will it all mean for energy spending here in the U.S.? Joining us for this week's MIX, former Democratic Senator Byron Dorgan of North Dakota. He was part of the Senate leadership for 16 years. He also chaired the Senate Subcommittee on Energy Spending. And former Republican Senator and Majority Leader Trent Lott of Mississippi. He served in the Senate for 19 years. Both former senators are cochairmen of the Bipartisan Policy Center's Energy Project. They are also senior advisers to law firms that represent energy companies, and, gentlemen, thank you both for taking time with us today.
[LOTT] Glad to be with you.
[SUITERS] The bill to raise the debt ceiling calls for $2.4 trillion in spending cuts over 10 years. How much of that will fall on the Department of Energy?
[DORGAN] My hope is that, with respect to energy, there's going to be an understanding there's a difference between spending and investing. Most of what we want to do to move this country towards greater independence, or less dependence on foreign oil, and move towards electric vehicles and move to explore other forms of energy, most of that is very important investment for the future of the country. I don't think there's a way of knowing what's at risk, but I think anybody that cares about almost anything ought to understand, everything's vulnerable, as this supercommittee begins to get moving.
[SUITERS] Senator Lott, before we get to the supercommittee itself, the debt deal includes $917 billion in cuts just to begin with. Then, beyond that, the special committee in Congress will try to come up with $1.5 trillion in cuts. What are the odds that that committee votes to raise revenue by repealing tax breaks for the oil and natural gas sector? This has been a hot-button issue, especially for Democrats.
[LOTT] With regard to, you know, what this supercommittee will do, the possibility that they will look at oil and gas issues, whether you refer to them as subsidies or tax breaks, would be on the table. And they need to be careful how they do that.
[SUITERS] Electric vehicles and wind energy -- both require subsidies to be viable in the current economy. How vulnerable are those, if this committee, and indeed, all of Washington, is focusing on debt reduction, cutting spending?
[DORGAN] Well, I'm concerned about that. I think both are very important. We have people say, "Well, you shouldn't pick and choose with respect to these subsidies." Look, we've been picking and choosing for 100 years. We said to the American people, "If you go out and look for oil and gas, God bless you, and we'll give you tax breaks for doing it." We've been doing that, and I'm not complaining about it. I would say, on the last question you asked Trent, you know, most of the oil and gas is out there, being discovered by independent producers, and particularly with respect to the majors, if they're using their money to buy back stock and drill for oil on Wall Street through mergers, they don't need incentives at that point.
[SUITERS] Back in April, you wrote together that -- I want to paraphrase here -- the U.S. needs to boost its production of conventional sources, like oil, while aggressively working on alternatives. How much will that cause be hurt if the federal government has less money for energy research and development, or for tax incentives?
[LOTT] Well, it could be hurt, but, you know, we need a national energy policy, I believe. I want more production of everything. I want more oil and gas, hydro, nuclear, I want to make greater use of natural gas, let's try the electric vehicles, but what I've not always wanted to do is to put more money into conservation and into alternative fuels. I think we need to do the whole package. Republicans are going to have to say, Look, we're going to have to deal with conservation. We're going to have to look at alternative fuels. We're going to need that. We have to be prepared to do that, to get more production, the conventional sources, until we can get more going in these other areas. That's the package that we need to find a way to bring Republicans and Democrats together to produce a product.
[DORGAN] I agree with that, and that's why I think both of us have come to the Bipartisan Policy Center. Instead of getting the worst of each party, let's get the best of both parties, and come together in an energy policy that moves our country forward. At the moment, we're just gridlocked.
[LOTT] If we would do more on energy, it would bring revenue into the federal government, it would create thousands of jobs quickly that are not there now.
[SUITERS] Don't we have to spend, to do more in energy?
[LOTT] Well, if we would just open up -- go back to where we were in the Gulf before the spill -- it would create hundreds of thousands of jobs and bring in tons of revenue.
[SUITERS] Do you think the debate over spending and taxes puts the 18 cents a gallon federal gasoline tax at risk? This is a law that's set to expire at the end of September.
[LOTT] There are people that would be happy to see that tax go away in the price of a gallon of gasoline. Actually, I think that number should be more. Now, a lot of Republicans would have an attack to hear me say that, but --
[SUITERS] Does that mean you're calling for a higher tax on gasoline, Senator?
[LOTT] I believe what we need is a highway and an infrastructure program in America, for lanes, planes, trains, ports, and harbors infrastructure, water and sewer. How do you get that? You have to pay for that. And I bought the argument from President Reagan -- that is a user fee, that's not a tax.
[SUITERS] But is this gasoline tax at risk right now, Senator Dorgan, simply because of the timing?
[DORGAN] Oh, I hope not. I mean, you can't put anything past the current political system, but everybody understands -- I mean, we don't want Third World roads and bridges. I mean, we want to invest in this country's infrastructure. I agree with Trent, not only should we extend the current gasoline tax, it ought to have some marginal increases, because we need to invest -- the other side of that, that investment creates a lot of jobs instantly -- building roads and bridges, you put people to work immediately.
[SUITERS] Well, before we send all these recommendations straight to the Congressional supercommittee, let's wrap it right here. Former Democratic Senator Byron Dorgan of North Dakota, former Republican Senator Trent Lott of Mississippi, now both with the Bipartisan Policy Center, gentlemen, thanks again for joining us today.
Car companies are now implementing a bright idea for their electric vehicles -- powering them with sunlight. And that's what's in this week's "energyNOW!" hotZONE. General Motors is investing more than $7 million in solar energy system provider Sunlogics. Some of the money will be used to install solar panels at Chevrolet dealerships across the country. The 20-kilowatt solar charging stations will provide enough electricity to power 4,500 Chevy Volt electric cars each year. GM will also install solar arrays at its auto-making facilities.
And Mitsubishi has a similar plan. The Japanese auto maker wants to roll out its own solar charging stations here in the U.S. for the company's electric "i" car. That model is due out later this year.
Our show a few weeks ago on the promise and problems of getting natural gas from shale rock garnered some responses on our Web site and Facebook. We thought we'd share a couple of them with you. Frank Joseph of Atlantic City, New Jersey, says, "Compressed shale gas should be used in buses in urban areas and tractor trailers should be fueled by compressed natural gas. Once a refueling infrastructure is established for trucks and buses, CNG could be introduced into the automobile market. This would be a low-cost alternative to the already established gasoline refueling infrastructure and could be added t these stations at at an acceptable cost. Natural gas will provide us with a price-stable fuel for the next two generations while other alternatives are developed."
And Chris Sehhat of Fair Oaks, California, says, "Everything seems to come at a cost. The health effects seem pretty damaging. Drinking water that can be lit on fire is pretty bad... America is at a crossroad because we can't rely on foreign oil anymore. Solutions should have been made years ago."
That's it for this week's "energyNOW!" We want to hear from you, so reach out to us with your comments and questions on YouTube, Facebook, or Twitter. Just search for us at energyNOWnews. Plus, you can weigh in on energy issues, read our blogs, and watch extras on our Web site, all at energyNOW.com. I'm Tyler Suiters. We'll see you next week.
[END SHOW]

Clean energy technology protects our environment, bolsters our energy security, and creates green jobs - but will this emerging industry keep growing? This week, energyNOW! explores the future of clean energy in the United States and abroad.
The Israel Connection: Solar Power and Energy Independence
Energy independence and climate change are two of the biggest challenges facing the U.S. But perhaps no other nation understands the link between clean energy and security more than Israel. It relies on imported fossil fuel from hostile neighbors to power its economy, despite having a vast and mostly untapped clean energy source – the sun.
As part of energyNOW!’s “The Israel Connection” series, chief correspondent Tyler Suiters discovers how emerging solar technology in this sun-drenched land could lead to greater energy security and a cleaner environment. Suiters also explores the link between Israel’s innovative solar technology and the future of clean energy in the U.S.
Taking Charge: Clean Tech’s New Capital
California’s Silicon Valley is mostly known for launching the Internet revolution, but the region has also become the epicenter of the U.S. clean energy industry. In fact, billions of dollars in venture capital funding to clean-energy companies has helped the region through some tough economic times.
Correspondent Lee Patrick Sullivan looks at Silicon Valley’s shift toward clean energy, and meets the tech-savvy workers and entrepreneurs who are now helping America take charge of its energy future.
The Mix: The Debt Deal’s Energy Impact
President Obama and Congress have struck a deal to raise the nation’s debt ceiling, while cutting more than $2 trillion in spending. Will those cuts hurt key government programs for clean energy?
Chief Correspondent Tyler Suiters talks with former U.S. Senators Trent Lott (R-MS) and Byron Dorgan (D-ND) of the Bipartisan Policy Center about the debt deal’s fallout for U.S. energy policy, and their own plan for moving the nation toward cleaner and more secure sources of energy.


Clean Energy's Outlook - 08.07.2011
Length 28:29
Created 08.06.11
Air Date 08.06.11
Video Transcript (opens in a new window)
[SUITERS] Finding the future of energy in an ancient land.
[DAVID ROSENBLATT] Israel has the best sun, has people living where that is, has transmission lines, and has available land.
[SUITERS] You make it sound like a simple equation.
[ROSENBLATT] Yeah. What could be hard?
[SUITERS] Israel strives for energy independence using cutting-edge solar technology, which is finding a home in the United States.
[RUSSELL HANCOCK] This is going to be a place where America's energy future is invented.
[SUITERS] And Silicon Valley, America's high-tech capital, takes on a new challenge.
[SULLIVAN] So you're one of the high-tech refugees that have switched over to clean energy. There's a lot of you guys here, isn't there?
[BOB LOFTIS] Yeah, there are quite a few. I'm meeting more every day.
[SUITERS] Meet the tech-savvy workers and entrepreneurs who may bring us the next big thing in clean energy.
Plus, the debt limit showdown is over -- for now. Trillions in budget cuts lie ahead. But what will the impact be on energy spending? We'll mix it up with two former longtime senators about the energy implications of the looming budget battle. This is "energyNOW!"
Hello, I'm Tyler Suiters. Welcome to "energyNOW!", a weekly look at America's energy challenges and what we're doing about them. Thalia Assuras is on assignment. This week, a look at the oldest energy source around -- the Sun -- and how companies are harnessing its power, providing clean, renewable electricity and creating jobs. Before we explain what's happening here at home, let's look at a country facing very similar energy challenges to the U.S. -- Israel. It is completely dependent on foreign oil, and its biggest supplier of natural gas, Egypt, is hardly reliable right now, after recent attacks on the Egyptian stretch of gas pipeline that feeds Israel. And Israel is eager to draw more heavily on renewable energy, so the country is turning to a natural resource it has in abundance -- sunshine.
This is a NASA map from space, tracking the sunniest spots on the Earth. The darker the red, the better for collecting and using solar energy. The United States has a deep red band across the southwest. And the whole of Israel is on the northern tier of the Earth's sunniest stretch. As the CEO of an Israeli solar company said, "The Sun cannot be sabotaged." And while Israel still needs help from the rest of the world to claim its energy independence, solar technology that's developing right now could soon be generating power here in the U.S. More now in our continuing look at the Israel Connection.
Israel's Negev Desert, once home to Abraham, the Ottomans, and a stretch of the Spice Road. Arid, unforgiving, and brutally bright. But that's not to say there's nothing new under the Sun. Alongside a highway in the southern Negev sits the Arava Institute. Housed on a working kibbutz, it's a hothouse for solar energy innovation -- innovation that could make its way to the United States. Among the technologies in the testing phase here, a solar panel field that sits on the water, designed to power coastal areas that don't have a lot of empty land. And this, a small solar array, designed to better collect the Sun's energy.
[EYAL RICHTER] Each row of flat mirrors concentrates a primary concentration on one of those up there.
[SUITERS] Eyal Richter is the brains behind Verilite, a solar energy system that he says is especially efficient. One of Richter's brighter ideas was coming to the Arava Institute to put his product through its paces.
Why test this on a kibbutz? Why here?
[RICHTER] Well, here, they have a very comfortable setting for new technologies. This is a validation center, run by Capital Nature.
[SUITERS] It's a bit of a lab, high-tech lab.
[RICHTER] Yeah, right, it's a high-tech lab for new renewable technology.
[SUITERS] A lab that focuses on the most ancient form of energy, the Sun, a natural resource Israel has in abundance.
[RICHTER] Everybody has been using the energy of the Sun since Neanderthals. So I think it's a very natural connection. There are palm trees. They need the Sun to grow. We grow energy.
[DAVID ROSENBLATT, CO-FOUNDER, ARAVA POWER COMPANY] It's funny, when you're in Israel and you start talking about solar energy, it's amazing how many people can quote the Bible and give you references to the ability of the Sun and the respect of any people -- the Moslems, the Jews, the Christians, about the Sun and the power of the Sun.
[SUITERS] American David Rosenblatt is helping Israel realize its clean energy potential. His company, Arava Power, built a solar panel field in the Negev.
[ROSENBLATT] Israel has the best sun, has people living where that is, has transmission lines, and has available land.
[SUITERS] You make it sound like a simple equation.
[ROSENBLATT] Yeah. What could be hard?
[SUITERS LAUGHS]
[SUITERS] Israel does have a long history of solar power. Almost 90% of its homes have rooftop solar water heaters. But solar energy generates only about 1% of Israel's electricity, so it has to rely on imported fossil fuels for power.
[ROSENBLATT] If you look at the Arab states, they actually have a grid that they share among each other. So, if a country doesn't produce enough power, they can get power from another country.
[SUITERS] Israel has no backup.
[ROSENBLATT] Right, so, like the United States, if New Jersey doesn't create enough power, then it goes with some of its neighbors, and more power is provided to New Jersey, so it doesn't have to produce all of its power. In Israel, if it doesn't produce power, it goes black.
[SUITERS] With that in mind, Israel's government just approved a plan to get 10% of the country's electricity from renewable sources by 2020. That's about the same total the U.S. gets today from renewables like solar and wind and hydropower and biomass.
But in some ways, the U.S. is following Israel's lead in solar energy. A trip to the northern reaches of the Negev is a little like looking in the mirror, a preview of what's to come in the U.S. But the view is much better way up there, almost 200 feet off the ground.
The desert has a certain beauty to it, but I bet you've never seen anything quite like this. A little surprise for you -- an entire field of concentrated solar panels, all pointing pretty much right at us.
This solar thermal demonstration facility and all the 1,600 mirrors you see laid out before us, they belong to BrightSource Energy, an American company with deep ties to Israel, a company now building a much bigger version of this power plant in California's Mojave Desert, the biggest solar project under construction in the entire world, with the financial backing of Google, among others. Arnold Goldman is the founder of BrightSource.
[GOLDMAN] We can only effectively work with good direct sunlight, excellent, I'd say, direct sunlight. So we have limited areas, but we work very, very effectively from those areas.
[SUITERS] The Mojave isn't as sun-drenched as the Negev, but California does have more of another critical resource -- land. Israel is only a little bit bigger than the state of New Jersey. And that lack of space could mean a conflict between energy security and national security. Yossi Inbar led Israel's Environmental Ministry for two years.
[INBAR] And some of this land, unfortunately, because we are in a war zone, I would say, we need to keep it for practicing. The Air Force needs to practice. And that's -- solar panels and bombs don't come together.
[SUITERS] But solar panels could be valuable weapons in a different battle -- the fight against climate change.
Do you think of climate change as a security threat?
[INBAR] The climate change is a security threat if -- for example, the delta of the Nile is now bigger in culture and feeding ground for the Egyptians, to give an example. And if sea water will rise and there will be no -- no, no land, no agriculture, no food, stuff will be our problem at the end of the day.
[SUITERS] A geopolitical problem that David Rosenblatt says could mean an opportunity for clean energy cooperation.
[ROSENBLATT] So if you look over there at those trees --
[SUITERS] All the date trees off in the distance, yeah.
[ROSENBLATT] So right beyond that, and I'm talking, we could walk for five minutes and be there, is Jordan.
[TEXT ON SCREEN] To see more of the interviews in this story go to energynow.com.
[ROSENBLATT] We could literally hop across the border if we were allowed -- that's Jordan. Why not -- why couldn't you just put panels there and run a wire?
[SUITERS] And share the electricity.
[ROSENBLATT] Share the electricity.
[SUITERS] And share an ancient reverence for the power of the Sun.
Arava Power's solar project in the Negev Desert is scheduled to go online later this month, and when it does, the Ketura power plant will become the first ever large-scale solar field to generate power and deliver that power to Israel's electric grid.
And "energyNOW!" will have more stories from Israel in the coming weeks, including a discovery that is dramatically changing its energy picture, and a look at some of Israel's off-the-wall energy innovations that could find their way to the United States.
Here at home, the U.S. government and clean energy companies are searching for new innovations to make solar power more affordable. Take a look at this "energyNOW!" reality meter. The cost of electricity from new photovoltaic solar cells is about 21 cents a kilowatt hour. That according to the Energy Information Administration. And that is more than double the national average electricity price of about 10 cents a kilowatt hour. Most of that electricity comes from fossil fuels.
[TEXT ON SCREEN]
SOLAR VS. GRID
New Photovoltaic Solar
21.1 cents per kWh
U.S. Retail Electricity (April 2011)
9.7 cents per kWh
[SUITERS] But the Department of Energy is trying to close the gap and achieve what's known as grid parity by 2015. That means pushing down the price of solar power to match electricity from conventional sources. And the DoE has a more ambitious goal for 2020, cutting the cost of solar power to 6 cents a kilowatt hour, so solar can compete against fossil fuels without the help of government subsidies.
Still ahead on "energyNOW!", a switch in Silicon Valley.
[MAN] Green energy and solar seems to be at the stage where we were, you know, 20, 25 years ago in the semiconductor business.
[SUITERS] America's dot-com corridor famous for high tech is moving into clean tech. A look at the race to find the next big thing in clean energy.
[TEXT ON SCREEN]
In 2010, the U.S. solar industry employed 93,000 workers.
Source: Solar Energy Industries Association.
[BREAK]
[Baby coughing] [Wheezing] [Coughing and wheezing continue]
[ANNOUNCER] Congress can't ignore the facts. More air pollution means more childhood asthma attacks.
[Baby coughing and wheezing]
[ANNOUNCER] Log on to LungUSA.org and tell Washington, "Don't weaken the Clean Air Act."
[END BREAK]
[SUITERS] California's Silicon Valley has long been known as the home to Internet and technology companies like Google and Apple, and as a magnet for venture capital, the money that investors give to start-up companies, hoping they will become the next Google or Apple. But information technology firms are increasingly sharing Silicon Valley with energy companies. Last year, the region took in about $9 billion in venture capital, and almost 20% of that went to clean technology companies, a far cry from 10 years ago, when clean energy firms lured less than 1% of Silicon Valley's start-up funds.
[TEXT ON SCREEN]
Silicon Valley Venture Capital
2010 total $9.1 billion
Clean technology 19.6%
2001 clean technology 0.9%
Source: National Venture Capital Association.
[SUITERS] That tremendous growth in clean energy investment has helped Silicon Valley make it through some tough economic times. And, as "energyNOW!"'s Lee Patrick Sullivan reports, that area is now helping America take charge of its energy future.
[RUSSELL HANCOCK] They said, this is going to be a place where America's energy future is invented.
[SULLIVAN] Russell Hancock's nonprofit organization helps Silicon Valley's business leaders create the next big thing. And Hancock says, in the last decade, he's seen a steady stream of both money and people switch from high tech to renewable energy. People like software programmer Laks Sampath.
[LAKS SAMPATH, TRINA SOLAR] So, my software background came in very handy. I was able to build critical modeling tools. I built one of the first monitoring systems that the industry ever had.
[SULLIVAN] And that monitoring system runs this 468-kilowatt solar array at a Silicon Valley water treatment plant and could save this plant more than $2 million in energy costs over the next decade.
[SAMPATH] Here, actually, it is something that is tangible. It is green. You're putting together something that actually is worth your while. That's what I love about the industry.
[SULLIVAN] For Silicon Valley, clean energy companies came along just at the right time. When the tech bubble of the 1990s finally burst in 2000, it left a lot of highly educated and skilled workers looking for new jobs. And the region's economy took another hit during the recent recession. But between those two body blows, California's state government decided it was going to set limits on greenhouse gas emissions and mandate greater use of solar panels, wind turbines, and other forms of renewable energy. The state's clean energy push helped spur a local market for new energy technologies, just as some I.T. and Internet companies were downsizing.
So you're one of the high-tech refugees that have switched over to clean energy. There's a lot of you guys here, isn't there?
[BOB LOFTIS] Yeah, there are quite a few.
[SULLIVAN] Bob Loftis was at Apple, Compaq, and Hewlett-Packard before coming to Solyndra, a solar energy manufacturer outside San Jose.
[LOFTIS] A lot of the people working on the factory floor are using automation tools that they're pretty familiar with from previous jobs.
[SULLIVAN] The high-tech background of the workers and designers at Solyndra has led to innovative ways to harness the power of the Sun. Instead of flat panels, these are lightweight round tubes, able to get reflective sunlight from rooftops without having to be motorized to follow the Sun.
[Applause]
[SULLIVAN] Innovation like that led the Obama administration to award the facility a half a billion dollars in loan guarantees. Now, while the area was struggling during the recent recession, jobs in clean energy grew in the region by 109% in the last decade. Driving that growth, an array of solar companies setting up shop; electric vehicle manufacturers; and new innovations like the Bloom Box, a fuel cell that runs on a host of fuels, including natural gas, methane, and propane.
Even companies from the last big thing in Silicon Valley are jumping on board. eBay has installed five of those Bloom Boxes on its campus. And Google has pledged $780 million for clean energy.
Still, for all the overlap between these dot-com companies and clean energy firms, there are some important differences. Take the folks at eBay, for example. Last year, they helped facilitate the sale of billions of dollars' worth of products. But they have no warehouse, because they have no items. Like most dot-coms, their start-up cost is this. With clean energy, you need factories, warehouses... and energy projects just tend to be big.
[HANCOCK] The projects are done on huge scales. I mean, they're done on a regional scale, on a utility scale, on a statewide scale.
[SULLIVAN] It's also good to have government support. But for all the help clean tech companies are getting in California, they haven't been so lucky in the nation's capital, where renewable energy and global warming legislation has stalled. And when the Department of Energy was handing out stimulus money for clean energy projects, politicians from the Midwest made their voices heard in Washington.
[SEN. DEBBIE STABENOW (D) MICHIGAN] And when we talk about innovation and making things, that's Michigan.
[SULLIVAN] And Silicon Valley watched as Michigan and Indiana got the bulk of the funding.
[HANCOCK] That's not what Silicon Valley does well. Silicon Valley is a really maverick kind of place. Lots of libertarian thinkers here, cowboy entrepreneurs. You know, we don't have our act together, politically. We're not used to going to Washington. That part is going to be hard for us.
[SULLIVAN] And even the federal help they do receive is getting scrutinized. The Republican-controlled House is looking into Solyndra's loan guarantee, demanding the White House hand over all documents related to the decision.
So, back in Silicon Valley, programs like Boots on the Roof are looking to train the wave of blue-collar workers needed to install the solar panels, geothermal systems, and wind turbines.
Now, the whole idea behind this is that, although it's, you know, it's green technology, but it's still electricians and plumbers that need to do this.
[CHUCK RAMES, DIRECTOR, BOOTS ON THE ROOF] Very much so, yeah. This is how renewable energy is going to happen. Working men and women are going to need to install these things on, eventually, millions of homes in America.
[SULLIVAN] And if former high-tech refugees like Laks Sampath have their way, those systems will be designed and improved in Silicon Valley.
[TEXT ON SCREEN] To learn how solar energy works, watch Solar Power 101 at energynow.com.
[SULLIVAN] Do you think there will come a day where you and I will have to explain to our grandkids that Silicon Valley refers to the semiconductor and not the solar panel?
[LAKS SAMPATH] I hope it comes to that. That will be a good one. [Laughs]
[SULLIVAN] In San Jose, California, Lee Patrick Sullivan, "energyNOW!"
[SUITERS] And Laks Sampath is working especially hard to make that happen. Since we visited with him, he has left Trina Solar and opened up his own solar company. A man with a vision and apparently an endless supply of his own energy.
The idea of converting sunlight into electricity isn't anything new. That concept has been around for decades now. And although the size of solar panels, and much of the technology, have changed, the cost of solar has always been a challenge. Check out this energyTHEN from 1958.
[Film projector running]
[NARRATOR] The big, window-like roof of this house is meant not for looking out, but to let in sunlight to fuel the heating system. This solar house, the first designed for a northern climate, is the result of 20 years' research at Massachusetts Institute of Technology. Some 80% of the heating all year round is supplied by water warmed by sunshine. A housewife sets the temperature by thermostat. In the summer, a refrigeration unit provides air cooling. This solar heat system is prohibitively expensive. With expected improvements in mass production, tomorrow's homeowner may have small concern with fuel bills.
[SUITERS] Solar IV, as the house was known, was completed in 1959 after the Department of Agriculture held a contest on solar house design. After collecting data for three heating seasons, MIT then ended up selling the house to a private owner.
Still ahead, the debt deal is done. The budget cuts are coming. And that means some energy funding could be slashed.
Which energy resources could be the big winners and losers in the race to fuel the future? Two former longtime senators share their insights and experience about the effects of the budget battle on America's energy.
[ANNOUNCER] Clean energy is a top priority with consumers and politicians across this country and throughout Maryland. And now there's an easy way to learn how clean energy can be a part of your life -- in your home, at work, as a career. The Maryland Clean Energy Summit is your chance to get all the information you want -- from solar and wind to thermostats and energy suppliers. The state's foremost clean energy leaders will be presenting at this hallmark conference, so don't miss it.
[TEXT ON SCREEN]
Can I recycle a beer bottle with a lime wedge suck inside?
Natch. But limes make good compost. Just sayin'. http://www.grist.org/
Laugh now or the planet gets it.
[END BREAK]
[BARACK OBAMA, AUGUST 2, 2011] This compromise guarantees more than $2 trillion in deficit reduction. It's an important first step to ensuring that, as a nation, we live within our means.
[SUITERS] That was President Obama after he signed the compromise bill to raise the country's debt ceiling. It came after a very heated battle, and now Democrats and Republicans will try to determine where those spending cuts will come from. And what will it all mean for energy spending here in the U.S.? Joining us for this week's MIX, former Democratic Senator Byron Dorgan of North Dakota. He was part of the Senate leadership for 16 years. He also chaired the Senate Subcommittee on Energy Spending. And former Republican Senator and Majority Leader Trent Lott of Mississippi. He served in the Senate for 19 years. Both former senators are cochairmen of the Bipartisan Policy Center's Energy Project. They are also senior advisers to law firms that represent energy companies, and, gentlemen, thank you both for taking time with us today.
[LOTT] Glad to be with you.
[SUITERS] The bill to raise the debt ceiling calls for $2.4 trillion in spending cuts over 10 years. How much of that will fall on the Department of Energy?
[DORGAN] My hope is that, with respect to energy, there's going to be an understanding there's a difference between spending and investing. Most of what we want to do to move this country towards greater independence, or less dependence on foreign oil, and move towards electric vehicles and move to explore other forms of energy, most of that is very important investment for the future of the country. I don't think there's a way of knowing what's at risk, but I think anybody that cares about almost anything ought to understand, everything's vulnerable, as this supercommittee begins to get moving.
[SUITERS] Senator Lott, before we get to the supercommittee itself, the debt deal includes $917 billion in cuts just to begin with. Then, beyond that, the special committee in Congress will try to come up with $1.5 trillion in cuts. What are the odds that that committee votes to raise revenue by repealing tax breaks for the oil and natural gas sector? This has been a hot-button issue, especially for Democrats.
[LOTT] With regard to, you know, what this supercommittee will do, the possibility that they will look at oil and gas issues, whether you refer to them as subsidies or tax breaks, would be on the table. And they need to be careful how they do that.
[SUITERS] Electric vehicles and wind energy -- both require subsidies to be viable in the current economy. How vulnerable are those, if this committee, and indeed, all of Washington, is focusing on debt reduction, cutting spending?
[DORGAN] Well, I'm concerned about that. I think both are very important. We have people say, "Well, you shouldn't pick and choose with respect to these subsidies." Look, we've been picking and choosing for 100 years. We said to the American people, "If you go out and look for oil and gas, God bless you, and we'll give you tax breaks for doing it." We've been doing that, and I'm not complaining about it. I would say, on the last question you asked Trent, you know, most of the oil and gas is out there, being discovered by independent producers, and particularly with respect to the majors, if they're using their money to buy back stock and drill for oil on Wall Street through mergers, they don't need incentives at that point.
[SUITERS] Back in April, you wrote together that -- I want to paraphrase here -- the U.S. needs to boost its production of conventional sources, like oil, while aggressively working on alternatives. How much will that cause be hurt if the federal government has less money for energy research and development, or for tax incentives?
[LOTT] Well, it could be hurt, but, you know, we need a national energy policy, I believe. I want more production of everything. I want more oil and gas, hydro, nuclear, I want to make greater use of natural gas, let's try the electric vehicles, but what I've not always wanted to do is to put more money into conservation and into alternative fuels. I think we need to do the whole package. Republicans are going to have to say, Look, we're going to have to deal with conservation. We're going to have to look at alternative fuels. We're going to need that. We have to be prepared to do that, to get more production, the conventional sources, until we can get more going in these other areas. That's the package that we need to find a way to bring Republicans and Democrats together to produce a product.
[DORGAN] I agree with that, and that's why I think both of us have come to the Bipartisan Policy Center. Instead of getting the worst of each party, let's get the best of both parties, and come together in an energy policy that moves our country forward. At the moment, we're just gridlocked.
[LOTT] If we would do more on energy, it would bring revenue into the federal government, it would create thousands of jobs quickly that are not there now.
[SUITERS] Don't we have to spend, to do more in energy?
[LOTT] Well, if we would just open up -- go back to where we were in the Gulf before the spill -- it would create hundreds of thousands of jobs and bring in tons of revenue.
[SUITERS] Do you think the debate over spending and taxes puts the 18 cents a gallon federal gasoline tax at risk? This is a law that's set to expire at the end of September.
[LOTT] There are people that would be happy to see that tax go away in the price of a gallon of gasoline. Actually, I think that number should be more. Now, a lot of Republicans would have an attack to hear me say that, but --
[SUITERS] Does that mean you're calling for a higher tax on gasoline, Senator?
[LOTT] I believe what we need is a highway and an infrastructure program in America, for lanes, planes, trains, ports, and harbors infrastructure, water and sewer. How do you get that? You have to pay for that. And I bought the argument from President Reagan -- that is a user fee, that's not a tax.
[SUITERS] But is this gasoline tax at risk right now, Senator Dorgan, simply because of the timing?
[DORGAN] Oh, I hope not. I mean, you can't put anything past the current political system, but everybody understands -- I mean, we don't want Third World roads and bridges. I mean, we want to invest in this country's infrastructure. I agree with Trent, not only should we extend the current gasoline tax, it ought to have some marginal increases, because we need to invest -- the other side of that, that investment creates a lot of jobs instantly -- building roads and bridges, you put people to work immediately.
[SUITERS] Well, before we send all these recommendations straight to the Congressional supercommittee, let's wrap it right here. Former Democratic Senator Byron Dorgan of North Dakota, former Republican Senator Trent Lott of Mississippi, now both with the Bipartisan Policy Center, gentlemen, thanks again for joining us today.
Car companies are now implementing a bright idea for their electric vehicles -- powering them with sunlight. And that's what's in this week's "energyNOW!" hotZONE. General Motors is investing more than $7 million in solar energy system provider Sunlogics. Some of the money will be used to install solar panels at Chevrolet dealerships across the country. The 20-kilowatt solar charging stations will provide enough electricity to power 4,500 Chevy Volt electric cars each year. GM will also install solar arrays at its auto-making facilities.
And Mitsubishi has a similar plan. The Japanese auto maker wants to roll out its own solar charging stations here in the U.S. for the company's electric "i" car. That model is due out later this year.
Our show a few weeks ago on the promise and problems of getting natural gas from shale rock garnered some responses on our Web site and Facebook. We thought we'd share a couple of them with you. Frank Joseph of Atlantic City, New Jersey, says, "Compressed shale gas should be used in buses in urban areas and tractor trailers should be fueled by compressed natural gas. Once a refueling infrastructure is established for trucks and buses, CNG could be introduced into the automobile market. This would be a low-cost alternative to the already established gasoline refueling infrastructure and could be added t these stations at at an acceptable cost. Natural gas will provide us with a price-stable fuel for the next two generations while other alternatives are developed."
And Chris Sehhat of Fair Oaks, California, says, "Everything seems to come at a cost. The health effects seem pretty damaging. Drinking water that can be lit on fire is pretty bad... America is at a crossroad because we can't rely on foreign oil anymore. Solutions should have been made years ago."
That's it for this week's "energyNOW!" We want to hear from you, so reach out to us with your comments and questions on YouTube, Facebook, or Twitter. Just search for us at energyNOWnews. Plus, you can weigh in on energy issues, read our blogs, and watch extras on our Web site, all at energyNOW.com. I'm Tyler Suiters. We'll see you next week.
[END SHOW]
Clean energy technology protects our environment, bolsters our energy security, and creates green jobs - but will this emerging industry keep growing? This week, energyNOW! explores the future of clean energy in the United States and abroad.
The Israel Connection: Solar Power and Energy Independence
Energy independence and climate change are two of the biggest challenges facing the U.S. But perhaps no other nation understands the link between clean energy and security more than Israel. It relies on imported fossil fuel from hostile neighbors to power its economy, despite having a vast and mostly untapped clean energy source – the sun.
As part of energyNOW!’s “The Israel Connection” series, chief correspondent Tyler Suiters discovers how emerging solar technology in this sun-drenched land could lead to greater energy security and a cleaner environment. Suiters also explores the link between Israel’s innovative solar technology and the future of clean energy in the U.S.
Taking Charge: Clean Tech’s New Capital
California’s Silicon Valley is mostly known for launching the Internet revolution, but the region has also become the epicenter of the U.S. clean energy industry. In fact, billions of dollars in venture capital funding to clean-energy companies has helped the region through some tough economic times.
Correspondent Lee Patrick Sullivan looks at Silicon Valley’s shift toward clean energy, and meets the tech-savvy workers and entrepreneurs who are now helping America take charge of its energy future.
The Mix: The Debt Deal’s Energy Impact
President Obama and Congress have struck a deal to raise the nation’s debt ceiling, while cutting more than $2 trillion in spending. Will those cuts hurt key government programs for clean energy?
Chief Correspondent Tyler Suiters talks with former U.S. Senators Trent Lott (R-MS) and Byron Dorgan (D-ND) of the Bipartisan Policy Center about the debt deal’s fallout for U.S. energy policy, and their own plan for moving the nation toward cleaner and more secure sources of energy.

Israel Technologies Redraw the World’s Energy

October 25, 2011

New Technologies Redraw the World’s Energy Picture

By CLIFFORD KRAUSS

GOLDA MEIR, the former prime minister of Israel, used to tell a joke about how Moses must have made a wrong turn in the desert: “He dragged us 40 years through the desert to bring us to the one place in the Middle East where there was no oil.’ ”
As it turns out, Moses may have had it right all along. In the last couple of years, vast amounts of natural gas have been found deep under Israel’s Mediterranean waters, and studies have begun to test the feasibility of extracting synthetic oil from a large kerogen-rich rock field southwest of Jerusalem.
Israel’s swing of fate is just one of many big energy surprises developing as a new generation of unconventional fossil fuels take hold. From the high Arctic waters north of Norway to a shale field in Argentine Patagonia, from the oil sands of western Canada to deepwater oil prospects off the shores of Angola, giant new oil and gas fields are being mined, steamed and drilled with new technologies. Some of the reserves have been known to exist for decades but were inaccessible either economically or technologically.
Put together, these fuels should bring hundreds of billions of barrels of recoverable reserves to market in coming decades and shift geopolitical and economic calculations around the world. The new drilling boom is expected to diversify global sources away from the Middle East, just as the growth in consumption of fuels shifts from the United States and Europe to China, India and the rest of the developing world.
“Use whatever hackneyed phrase you want, like tectonic shift or game-changer,” said Edward L. Morse, global head of commodity research at Citigroup. “These sources will dramatically change the energy supply outlook, and there is little debate about that.”
This striking shift in energy started in the 1990s with the first deepwater wells in the Gulf of Mexico and Brazil, but it has taken off in the last decade as a result of declining conventional fields, climbing energy prices and swift technological change.
The United States may now have the means to reduce its half century of dependence on the Middle East. China and India may have the means to fuel the development of their growing middle classes. Japan and much of Europe may have the chance to reduce dependence on nuclear power. And, at least theoretically, poor African countries might be able to lift themselves out of poverty.
For consumers around the world, the new fuels should moderate future price increases.
But giving new life to fossil fuels is a devil’s bargain, probably making solutions to climate change, and the development of renewable energy, even more difficult. “Not only are you extending the fossil fuels era,” said Daniel Lashof, director of the climate program at the Natural Resources Defense Council, “but you are moving into fossil fuels that are dirtier and release more carbon pollution in the process of extracting and using them.”
James Burkhard, a managing director of the energy consulting firm IHS Cera, said that competition between fossil fuels and renewable energy development was driven by the price of oil and gas as well as by government policy.
“The unconventional boom will guarantee that the competition is strong for years to come,” Mr. Burkhard said. “If oil costs $200 a barrel, that would provide more headroom for electric vehicles. But if oil is at $90, alternative, renewable energy will need to compete better on an economic basis.”
The Deepwater Reserves
The future is now when it comes to deepwater offshore drilling, which has already measurably increased oil and gas supplies around the world.
In 2000, fewer than 20 vessels in the world could drill deepwater wells. Now there are nearly 200, and more almost every month. Global deepwater oil production leapt to roughly seven million barrels a day in the last 11 years, up from 1.5 million barrels, and now provides about 8 percent of the world’s oil supply. That production could double by 2020, according to experts.
Most of the drilling is in the Gulf of Mexico, off Brazil, Australia and India, and along the west coast of Africa. But only about 10 percent of the world’s deepwater oil and gas fields have been extensively explored and drilled.
In recent years, advances in computer processing power have allowed geologists to make sense of seismic data 15,000 feet or more below the ocean floor. Three-dimensional imaging and seismic mapping are now possible even below thick layers of salt, which used to blur views of untapped reservoirs. Superstrong alloys allow drill bits to go into hot, high-pressure fields.
Even with the advances, risks remain, as the BP Deepwater Horizon disaster last year demonstrated. Regulations became somewhat tougher worldwide, yet they caused little more than a pause in drilling. Even in the United States, drilling was almost back to pre-Horizon levels a year after the accident.
Cuba is planning to start drilling exploratory wells offshore at the end of the year, and Mexico is slowly moving toward deepwater drilling to revive its flagging oil industry. Drilling has begun in the deep waters off Ghana, and experts say they believe fertile fields exist all the way down the west coast of Africa to Namibia. The potential for new wealth could give Africa a better chance for development, although the history of Nigerian oil development is a cautionary tale of corruption, environmental degradation and strife.
Geologists say they believe the fields of West Africa fit like jigsaw puzzle pieces with prospective fields in South America, because the two continents were connected hundreds of millions of years ago. Total and Royal Dutch Shell recently made a major discovery along the coast of French Guiana, and neighboring Suriname is likely to become an important producer, too. Some analysts say they think more offshore fields may be discovered along the Brazilian coast and south to Argentina.
The coasts of East Africa are rich in gas, and China, Indonesia, Malaysia, Australia and the Philippines also have significant deepwater potential. And India’s deepwater prospects could provide much of its gas needs as its economy grows.
“We are just at the beginning of this story,” said William Colton, Exxon Mobil’s vice president for strategic planning. “It’s only likely we will find more deepwater resources.”
Oil Sands
Oil sands have already transformed Canada into an energy superpower, and they have shifted American dependency from the nations of the Organization of the Petroleum Exporting Countries to a friendlier and more stable source. Oil sands have been around for decades, but they were too expensive to produce at large scale. Then rising oil prices altered the economics in their favor — attracting multibillion-dollar investments from international oil companies, including those in China.
Since 2000, production has expanded to more than 1.5 million barrels a day of synthetic oil from 600,000, making Canada’s oil sands the most important source of oil imported to the United States. (Canada also exports considerable conventional oil to the United States.)
“It’s one thing to find oil, and another thing to find oil in a very safe, secure place like Canada,” said Mr. Colton of Exxon Mobil. “From a U.S. energy security standpoint, it’s a very attractive proposition to U.S. consumers that we have this friend next door who has all these oil resources.”
Canadian oil sands production is expected to increase by as much as 200,000 barrels a day every year for the next two decades. Current estimates of how much is there already top Iraq’s total reserves, guaranteeing Canada’s place as a premier oil producer for many decades. IHS Cera projects $100 billion in investments in the oil sands over the next decade.
The only thing holding back production of Canada’s oil sands are environmental concerns. Much of the oil sands come from carving mining sites out of large sections of the boreal forest, an important depository for containing carbon and a breeding ground for many bird species. Refining of the oil sands, which requires the burning of natural gas, is more carbon-intensive than refining of most other crude oils, despite a 40 percent reduction since 1990 in carbon emissions for each barrel produced.
Technological improvements in recent years have streamlined the burdensome refining process for bitumen, the feedstock in synthetic oil production. Recovering reserves from deeper underground using steam injection, rather than mining, has reduced the footprint of operations and some environmental damage to the forests.
But opposition remains strong among American and Canadian environmentalists, who are fighting to stop pipelines to the United States and western Canadian ports. Without those pipelines, oil sands production capacity would most likely struggle to grow. That resistance has forced the oil companies to invest heavily in research to reduce the footprint of extraction and carbon emissions.
The Obama administration has been considering a proposed 1,711-mile, $7 billion pipeline to connect Canada’s oil sands production to terminals in Oklahoma and refineries on the Gulf Coast. The State Department recently gave the project a passing grade in an environmental impact statement, increasing the likelihood of approval. With the pipeline, Canada would move an additional 700,000 barrels a day.
The synthetic fuels now go almost entirely to the American and Canadian markets, but China and other Asian countries are increasingly interested in the oil sands. Chinese companies have invested more than $15 billion in Canadian oil sands projects over the last two years, even though there is not yet a way to get the fuel to China.
The Canadian company Enbridge is proposing a pipeline from Alberta to Kitimat, British Columbia, near the coast, where tankers could load for trips to Asia. Sinopec of China is helping to finance the $5.5 billion project. The pipeline could be completed by 2017 but faces various regulatory hurdles and opposition from Native Canadian groups.
China wants to obtain 15 billion to 20 billion additional barrels of foreign oil reserves over the next few years, so it also has its eyes on an enormous heavy oil field in the Orinoco Belt, in the northeast part of Venezuela. Production started in recent years, and several projects that have been announced could produce up to two million barrels a day by 2020.
Shale
The biggest wild card for the future of oil and gas may be shale and other tight rocks. Finding and producing hydrocarbons from these rocks has taken off in the United States with such velocity that it has already significantly altered government and corporate energy expectations. At the beginning of the last decade, the United States was believed to be burning quickly through its gas resources, and a flurry of construction began to build liquefied natural gas import terminals.
But a surge in production in shale fields across Pennsylvania, Texas, Louisiana and several other states over the last five years has produced such a glut that the price of natural gas has plummeted, and energy companies are proposing to convert their empty import terminals into export facilities.
The new drilling was made possible by a mixture of new and old technologies. Hydraulic fracturing, or fracking — the shooting of water, sand and chemicals at high pressures to fracture hard rock — has been done for decades. Now, combining that practice with horizontal drilling — directionally guiding a drill bit through a shale reservoir, as opposed to conventional vertical drilling — has taken advantage of fields that were practically useless in the past.
Shale gas production in the United States is more than five times as great now as in 2006, and the country surpassed Russia as the world’s leading gas producer in 2009.
A variety of environmental groups oppose the surge, saying the chemicals in fracking fluids can pollute water supplies. Temporary or permanent fracking bans have been put in place in New York, New Jersey and Maryland. Other states are toughening drilling regulations, and the industry is responding with tighter wastewater management, while the Environmental Protection Agency is expected to complete a study on fracking next year. Nevertheless, gas shale drilling appears likely to continue at a fast pace in the most important gas-producing states.
The rest of the world is watching. Moratoriums have been put in place in parts of France, Germany, South Africa and the Canadian province of Quebec; Britain, Ukraine and other countries are moving cautiously forward. Still, the Energy Department projects that gas from shale could account for 14 percent of global supplies by 2030, with as many as 32 countries having production potential.
Poland is likely to be the next big shale player, with the government eager to lessen its gas dependence on Russia, which provides half of Poland’s energy. Already more than eight million acres have been leased by Chevron, Exxon Mobil, ConocoPhillips and other large international companies. Drilling success in Poland could lead to more drilling in shale fields in Germany, Norway, Sweden, France and Ukraine.
Europe imports about 60 percent of its gas, roughly half of that from Russia. With many Europeans wanting to reduce their energy dependence on coal-fired generation and nuclear power, there should be a strong impetus to increase domestic production, at least in some countries.
China is also moving fast. With a goal of satisfying 10 percent of its gas demand from shale by 2020, it held its first shale gas auction in June. China has a big incentive to develop shale gas, because it is poised to become the world’s largest importer of natural gas and it wants to reduce its dependence on coal to clean up the air of its cities.
In the last five years, as engineers advanced their techniques, shales have begun to produce oil as well. The Bakken field in North Dakota and Montana now produces 400,000 barrels a day, up from a trickle in 2007, and oil executives predict production could soar to a million barrels a day by 2015. The first well was drilled in the Eagle Ford shale field in south Texas three years ago; the field now produces more than 100,000 barrels a day, with 420,000 expected by 2015.
There are 20 other shale and similar tight rock fields across the United States that could make states like Ohio and Michigan major producers.
Exploration of such fields outside the United States and Canada is barely in its infancy, although there are major shale fields across Europe, China, Australia, Africa and South America. “It could change production forecasts around the world,” said Bobby Ryan, Chevron’s vice president for global exploration. “But we are still at the point of the spear. We have to shoot the seismic first to find out.”
Chinese, Norwegian and other foreign companies have already entered into joint ventures in shale oil and gas exploration in the United States to learn fracking techniques. China is moving fast to study its shales, although so far there seems to be more gas than oil. Argentina also looks promising for oil and gas, with American companies including Apache, Exxon Mobil and EOG Resources making large investments in shale in the Argentine province of Neuquen.
But there are constraints, including political opposition. Geological analysis of shales globally has barely started, and there are limits to the equipment and skilled manpower available for drilling. This has delayed fracturing jobs and raised costs in developed fields. Africa and the Middle East appear to have promising reserves, and Saudi Arabia has begun studying its shale fields, but the water requirements for fracking will be a high hurdle absent a technological breakthrough.
High Arctic
The last frontier, at least for the foreseeable future, is the high Arctic, most of which is still unexplored by oil companies. High winds, months of darkness and icebergs have long stymied dreams of finding vast quantities of oil and gas in the northern reaches of the globe.
A 2008 assessment by the United States Geological Survey estimated that a quarter of the world’s remaining undiscovered conventional oil and gas is in the Arctic, more than 80 percent of it in forbidding offshore areas. Again the United States is the big potential winner, with an estimated one-third of the total undiscovered oil, according to the survey.
Large oil and gas discoveries began in Russia and Alaska in the 1960s, and more than 40 fields are now in production across Alaska, Russia, Norway and Canada. Shell has been trying for five years to drill in Alaska’s Chukchi and Beaufort Seas and has invested about $4 billion on 10-year leases. But regulatory agencies or courts have delayed its efforts, because of concerns that Arctic waters are vital breeding grounds for many aquatic species that are endangered or at risk and that a well blowout could cause a huge leak that would be difficult or impossible to fix.
A paper released by the national commission on the BP Deepwater Horizon spill warned that a serious leak in the high Arctic would be extremely difficult to clean up. That is partly because skimmers can become clogged in ice and spilled oil is unlikely to degrade in frigid temperatures.
But in August, Shell received conditional approval from the Interior Department to begin drilling exploratory wells next summer. The company estimates that 25 billion barrels of oil are in the Alaskan Arctic, mostly in the Chukchi Sea.
“We’re hopeful,” said Pete Slaiby, Shell’s vice president for Alaska, although the company still faces several regulatory hurdles and perhaps some legal ones, too. As for the rest of the Arctic, Mr. Slaiby acknowledged that drilling would require strong regulatory regimes and large companies with the experience and resources to drill in the most challenging environments.
“I’m confident, but it will require high bars, financial acumen and operational acumen,” he said. “You want companies that have financial resources and operational skills to develop the Arctic responsibly. It will be expensive.”
Other companies are moving forward in other Arctic countries.
Chevron is doing seismic work in Canada’s Arctic waters. Cairn Energy, a British company, has drilled several exploratory wells off Greenland in recent months, so far with little success. Exxon Mobil and Rosneft, a company controlled by the Russian government, have agreed to invest $3.2 billion in exploration in the ice-clogged Kara Sea.
Statoil of Norway and ENI of Italy are furthest along in the far northern waters of Norway, which has the advantage of being ice-free because of warm Gulf Stream waters. Statoil already operates a gas field, called Snow White, 340 miles north of the Arctic Circle in the Barents Sea, and several companies are drilling oil wells in the sea now. The operations accelerated after the discovery of an estimated 250 million barrels of retrievable reserves of high-quality sweet crude oil in the Skrugard field in April, the seventh-largest oil or gas find in the world this year.
“This is the premier next frontier,” said Tim Dodson, Statoil’s executive vice president for exploration.
Power Balances
While many countries stand to benefit from the new energy resources, the United States may have the most to gain.
Before the 1960s, American companies dominated Persian Gulf and North Africa oil resources and made lasting alliances with autocratic governments. By the 1970s, as the United States’ oil production peaked and OPEC and national oil companies took command of the world’s oil, the United States had to accept almost hostage status. Now the tables are turning.
“There is the potential to really rebalance strategic power in the world,” said David L. Goldwyn, former State Department coordinator for international energy affairs. “If we are able to manage significant incremental supply from Canada, from onshore U.S., from Brazil and friendly countries in West Africa, then we can significantly ameliorate the risk of a supply disruption in the Middle East or from other countries that might use oil as a weapon.”
While more energy sources could be a stabilizing factor, competition over the new fields could produce tensions. Already, in the South China Sea, China has warned India’s state oil company not to drill in waters it claims. Turkey recently warned Cyprus against drilling for natural gas without reaching an agreement with Turkish Cypriots over royalties. The political twists and turns are bound to be many. The devil’s bargain looks like a necessity for the United States, China and many other countries, as the continued extraction and use of fossil fuels will come with some environmental degradation. According to the most recent estimates of the Energy Department, world energy demand is going to increase by 50 percent by 2035, largely because of increased consumption in China, India and the rest of the developing world.
Renewable energy will rise as a percentage of energy used, to 15 percent from 10 percent, but that will not provide for the growing demand.
“The fossil fuel age will be extended for decades,” said Ivan Sandrea, president of the Energy Intelligence Group, a research publisher. “Unconventional oil and gas are at the beginning of a technological cycle that can last 60 years. They are really in their infancy.”