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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Israeli Company Promotes Shale Oil and Natural Gas Production, Protests Ensue

Israeli Company Promotes Shale Oil and Natural Gas Production, Protests Ensue

Israel imports all its oil and coal and 70 percent of its natural gas needs, leaving the government deeply interested in developing indigenous alternatives.

Highlighting the vulnerability of its imports, on 5 February there was an explosion on Egypt's $500 million East Mediterranean Gas Company Ltd. (EMG) pipeline, that transits Egyptian natural gas to Israel and Jordan in northern Sinai in the Massaeed area, west of al Arish.

The attack on the EMG pipeline is the 12th since February 2011, when a popular uprising deposed Egyptian President Hosni Mubarak.

Egypt currently supplies Israel with more than 40 percent of its natural gas used to generate electricity and as a consequence of the assaults electricity prices have risen by more than 10 percent in Israel in the past year.

But Israel has other natural gas options, even if they are politically sensitive. On 5 February Israel's Delek Group, Ltd. announced that it has discovered what it estimates to be close to 1.3 trillion cubic feet (tcm) of natural gas in Israeli waters near the Lebanese border. Delek is working in cooperation with the U.S. company Noble Energy. Israel is attempting to press forward to the swift development of its Mediterranean offshore natural gas assets, the Tamar field, discovered in 2009 and Leviathan, discovered the following year. In June 2011 an Israeli company announced the discovery of two new natural gas fields, Sarah and Mira, about 45 miles off the city of Hadera, while Noble Energy announced that drilling in the 125 square-mile Israeli Leviathan-1 offshore Mediterranean natural gas field had “the potential to position Israel as a natural gas exporting nation.” Initial prospecting estimates of the Tamar and Leviathan fields off Haifa, concluded that the two sites between them could hold as much as 688 billion cubic meters (bcm) of recoverable natural gas

Never mind the political hornet’s nest that it has stirred up with Lebanon.

Now, a land-based indigenous potential oil source is stirring up environmental concerns.

According to the Israel Energy Initiatives Ltd (IEI) website, “Israel is blessed with a vast oil shale resource. When this resource is developed, it will bring Israel to energy independence. It is estimated that in the Shfela Basin alone, there are 150 billion barrels of oil, 40 billion barrels are in IEI's licensed area.” Further waving the flag, IEI’s chief scientist Harold Vinegar observed, “Israel has one of the largest deposits of oil shale rock in the world, enough to produce 250 billion barrels… Saudi Arabia has reserves of 260 billion barrels.”

Israel Energy Initiatives Ltd (IEI), founded in 2008, is an Israeli company based in Jerusalem and a subsidiary of Newark, NJ-based Genie Energy Corp., which is a publicly traded company. IEI’s affiliate, AMSO, is engaged in an oil shale project on federal land in Colorado, through a joint venture with French oil giant Total.

In July 2011, the company received a one-year extension of a three-year license to explore the oil shale resources on its 92 square-mile Shfela Basin concession in the Adulam district between Beit Shemesh and Beit Guvrin.

The project has some heavyweights behind it – in November 2010 Lord Jacob Rothschild and Rupert Murdoch bought acquired 11 percent in equal shares of Genie Energy Corp. unit Genie Oil and Gas Inc. for a total of $11 million.

Major Israeli environmental organizations, including the Jewish National Fund, the Society for the Protection of Nature in Israel and the Israel Union for Environmental Defense have united along with Greenpeace in protesting the IEI Shfela license. They have expressed concerns that the IEI drilling down to the oil shale stratum, which begins at a depth of 1,000 feet, could contaminate the Shfela aquifer, situated underneath the Shfela oil shale formation. The Israel Union for Environmental Defense has petitioned the Supreme Court of Israel to review the legality of the IEI Shfela license and the court has scheduled a hearing on the matter for April.

How does IEI propose to tap its Shfela license shale oil and natural gas reserves?

Oil shale production faces unique technological challenges as the kerogen occurs in the shale as a solid and is not free-flowing like crude petroleum. The shale must be heated or “retorted” to extract the petroleum-like distillates.

IEI accordingly proposes to extract the shale oil by sinking heating rods made of molten salt into the shale deposits, where heat from the 600 degree Fahrenheit rods spread gradually through the shale over three to five years, allowing the liberated oil and natural gas to be pumped to the surface. Vinegar states that the technology could produce oil for as low as $35 a barrel.

So, piss off your neighbors, or potentially permanently pollute your non-renewable aquifers? As for water resources, Haaretz newspaper reported last month, “Israel is experiencing its eighth consecutive dry winter, according to statistics for the first part of the rainy season.”

Tough call.

By. John C.K. Daly of Oilprice.com

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Leave a comment
  • Fred Banks on February 08 2012 said:
    Uh-huh. I was once told that if there were large amounts of oil or gas in or near Israel, they would have already found it. I don't know why, but that makes a lot of sense to me.
  • Steve on February 08 2012 said:
    First of all, this year Israel has been blessed with record rainfall. In fact, it looks like January will be the wettest on record for Israel. Secondly, Israel is at the tail-end of converting all of its water resources from aquafiers and the Sea of Galilee, to desalinated water from the Med Sea. In about two years, it is estimated that Israel could be an exporter of water, and 100% of its water-use will be from desalinated water, leaving the natural resources to replinish. These desalination plants require energy, and they will get more of it from the natural gas found offshore. Israel is not going surrender huge natural resources to help pay for it's survival, just because a few enviromentalists have worries.
  • Philip Andrews on February 09 2012 said:
    If anyone wants to read a really good report on Israel water they might go to:

  • Name on April 27 2012 said:
    There is rather large and impermeable layer of rock between the deposit and the aquifer. The heat dissipates quickly, as rock is a poor conductor. Trust me, the company has the natural resources of Israel at heart. Pretty much all of the professional hydrologists and geologists have agreed that the plan is extremely low risk. The aquifer will be safe. The people living in the area just don't want it in their backyard, so they desperately search for people who are willing to make the claim that this would contaminate the source. When they had trouble finding someone to agree with them, they claimed the company "bought them off". Silly. Unfortunately, fear sticks in the public mind.
  • Lordrobot on May 01 2012 said:
    Only an American Jew has the luxury to be a liberal. Israel need energy. There have been numerous studies on fracking and none have shown detriment to the underlying water supplies. New fracking techniques use less water and move laterally.

    But if you don't like this idea then you can always buy your oil and nat gas from Iran, or Syria. With enough energy money and energy you can always build desalinization plants. Greens are the most hysterical people on earth. They constantly over estimate the capacity of man to destroy the earth and the environment. Al Gore screaming into a microphone that we are killing the polar bears are nothing more than mindless rants. Israel needs energy more than it needs the insane rantings of Al Gore and the Greens.

    Israel may have the third largest deposits of shale oil in the world. Its a gift from God, now use it!

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