Will Israel Become an Oil Giant?

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Will Israel Become an Oil Giant?
Posted: 07/23/2013
Huff Post

A tectonic shift is taking place in the global energy market: The rise of alternative sources of petroleum known as "unconventionals." These hydrocarbons are derived from sources that would once have been technologically impossible to reach or exploit in a cost-effective manner. But technology is starting to overcome these difficulties, and it increasingly looks like the future of energy will be unconventional. And Israel may hold the key to one crucial part of it.

This is because one visionary Israeli company, Israel Energy Initiatives (IEI), is developing a unique technology that could unlock hundreds of billions of barrels of unconventional oil around the world.

Called "oil shale," these hydrocarbons exists in rock form and must be converted to liquid before being pumped out. This method, known as "in-situ" retorting has not been implemented on a commercial basis anywhere in the world, though these reserves exist in great abundance. The World Energy Council estimates that global reserves constitute around 4.8 trillion barrels. That is nearly three and a half times larger than conventional oil reserves. Developing a technology that makes the process economically feasible would be a major game-changer for the entire industry.

IEI is trying to seize the opportunity presented by oil shale. And it has one of the most capable figures in the global energy industry to lead the charge: IEI's chief scientist, Harold Vinegar.

Vinegar is a giant in the world of energy extraction and production. For 32 years, he worked for Royal Dutch Shell, and is the world's leading expert on oil shale. In 2008, he retired from Shell and moved to Israel with his wife and son. "My goal was to teach at Ben Gurion University," he says, "to train a new generation of Israeli petroleum engineers and also explore for oil and gas and oil shale in Israel." Then he teamed up with Yuval Bartov, IEI's chief geologist, whom he met years before when they worked together in Colorado, where some of the world's largest deposits of oil shale are located.

"Israel has some of the best source rock in the world," Vinegar says. He is referring to rock that lies some 300 meters beneath the Shfela region, just south of Route 35 in the northern Negev desert. In 2008, IEI was granted a research, development, and demonstration license to perform survey drilling in the 90 square-mile area known as the Shfela Basin. Five years later, IEI believes that the Shfela has resources equal to 100 billion barrels of oil, of which the area covered by their license contains 40 billion barrels. This is enough to supply Israel's energy needs for over three centuries.

The challenge, however, lies in the fact that oil shale isn't actually oil yet. It's rock that has to be turned into oil before it can be extracted. Put simply, this process requires extremely high temperatures.

Oil is formed by the very slow effect of pressure and heat on organic remains. Seventy million years ago, the Shfela basin was covered by the Tethys Ocean. The skeletal remains of small sea creatures that sank into the seabed were eventually covered by sedimentary rock and, over millions of years, turned into solid organic matter called kerogen. Had this rock been buried thousands of feet deeper, where temperatures are much higher (between 158 and 338 degrees Fahrenheit), it would ultimately have turned into liquid crude. In order to turn solid kerogen into liquid, IEI has to artificially accomplish what the earth did not have time to do: Melt the kerogen through a process known as retorting.

Vinegar has developed a process that requires heating the kerogen to temperatures of around 300 degrees Celsius by drilling heating wells into the oil shale. A smaller number of production wells are also strategically placed in the heating pattern. Because liquid is lighter than rock, the high temperatures bring the lighter liquid to the surface while the heavier rock remains below. Using this process, IEI hopes that, by 2024, Israel will be able to produce 50,000 barrels a day for 25 years.

IEI's plan is a national security advisor's fantasy. It could provide Israel with a domestic source of high quality crude oil; erode the influence of OPEC, which is made up almost exclusively of countries that are vociferously anti-Israel; improve Israel's trade balance; and develop a technology that can be used by countries with large oil shale reserves around the world.

Is Israel poised to become the next energy superpower, a Saudi Arabia of the Levant? The short answer is no, and followers of this story must calibrate their expectations with reality. The process of developing oil shale as a viable alternative to conventional oil is still in its infancy and faces a variety of economic, technological and environmental uncertainties. But it is important to remember that Israel is a country that has survived by making the nearly impossible possible. Should it succeed again in doing so with oil shale technology, it could lead to enormous changes not only for Israel but the entire world.