Tapping the Promised Land: Can Israel Be an Energy Giant?

In 2009 an Israeli geologist discovered oil embedded in rock in the ground southwest of Jerusalem. There's lots of it — and it could change the Middle East forever

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Nir Elias / REUTERS

A worker walks near an oil rig belonging to Zion Oil and Gas in Karkur, in northern Israel, on Oct. 17, 2010.

One day in August 2009, a geologist named Yuval Bartov sank a drill into the ground southwest of Jerusalem, pulled up a cylinder of rock and, in the same motion, turned the world upside down. The rock contained oil, something that Israel has never had. The oil did not happen to be in liquid form, but the geologist knew someone with a plan to change that.

Bartov works with Harold Vinegar, an oil-industry legend who during a career as chief scientist for Shell helped pioneer methods to basically melt oil out of rock while it is still underground, then pump the liquid to the surface for collecting. Now, working for a company called Israel Energy Initiatives (IEI), both men are preparing to test the method in hopes of exploiting Israeli oil reserves that, in the form of rock, appear to be as large as the oil that sits below the surface of the Saudi Arabian desert in liquid form.

“We think that within a decade we can get 50,000 to 100,000 barrels a day,” says Relik Shafir, IEI chief executive officer.

The product is called oil shale, and unhelpfully so, because that’s far too easily confused with shale oil, which is something else altogether (shale oil exists in liquid form, but in tiny amounts that must be loosened before being harvested; it’s also known as tight oil). The better term for the form Israel’s oil takes may be kerogen, the name for the organic matter embedded in rock — any rock, not necessarily shale — that, were it buried a few hundred meters deeper in the earth, would have melted into petroleum. What IEI proposes to do is to warm it up right where it is, by drilling hundreds of holes into it, then slowly heating them up, through stainless steel cables unspooled to a depth of 300 m (990 ft.), where the oil-bearing rock stands. After about three years, the oil will be seeping out and can be pulled to the surface.

“Very light. Superhigh quality,” says Vinegar, holding a test tube of a sample produced by heating a slab of kerogen in a lab. “Surprisingly easy to refine, it turns out. Which makes it even more valuable.”

If this seems too good to be true, managers at IEI say Israeli officials are among those pinching themselves, even as they facilitate preparations for a test well. Not having oil has always been part of the Israeli identity. Between 1948 and ’86, when Israel’s state petroleum effort was finally abandoned, 440 wells were sunk in the Jewish state, every one a dry hole. Israelis joke that Moses led the Israelites into the only place in the Middle East with no petrochemical potential. Lack of oil was one more thing that separated Israel from its Arab enemies, who had lots of it. The apparent absence of oil below ground helped impel Israelis to develop alternatives — from miraculous desert agriculture to the armaments industry that spawned the “start-up nation,” including an electric-car enterprise, Better Place, marketed in part as a comeuppance to Arab oil.

All that began to change when natural gas was discovered 80 km (50 miles) off Haifa in 2009. The Tamar gas field came online in March, to great satisfaction across Israel. The gas will raise Israel’s GDP a full percentage point, the Bank of Israel says, and along with a second gas find another 50 km (30 miles) out, called Leviathan, could turn Israel into an energy exporter — without stealing any thunder from the kerogen find. Vinegar says the gas would provide the power to heat the subterranean kerogen fields, at least until gas released as a by-product of the kerogen harvest is repurposed for the job.

“From our viewpoint, it couldn’t be better to have discovered all this natural gas,” he says, noting a pipeline would run only 55 km (35 miles) from the coast to the work site.

Environmental concerns loom large. Israeli groups challenged IEI in court, but the high court was comforted by geological evidence that the Mountain Aquifer — which lies under the kerogen, and supplies most of Israel’s drinking water — is protected by some 200 m (660 ft.) or more of impermeable rock. A similar layer lies above the kerogen, ostensibly protecting the surface from noxious emissions, another concern.

But can it be done? And at a profit? “The challenge is, Is it technically recoverable?” says Simon Henderson, energy specialist at the Washington Institute for Near East Policy. IEI is now awaiting a license from Israel’s Interior Ministry for a pilot project, which will occupy a few square meters, all the scientists say they need for a single well. That will take three years, and will be informed by Vinegar’s three decades of experience with Shell, which developed test sites on more complicated terrain in the American West, where a vast kerogen field lay in western Colorado’s Piceance Basin.

The economics are likewise provisional. IEI estimates melting the oil in Israel’s Shelfa Basin will cost about $40 a barrel — too much when oil was selling for about that, but attractive since the price has nested north of $100. Analysts expect it to stay in that vicinity. But as liquid oil grows harder to find and more expensive to extract, alternate approaches like tar sands (which contain extremely viscous oil that must be released at considerable expense) and tight oil (reached through horizontal drilling and hydraulic fracturing) have become cost effective. Advances in technology may make them even more so, according to Fadel Gheit, senior oil-and-gas analyst at Oppenheimer & Co.

“The people who were talking about peak oil 20 years ago are eating their words,” Gheit tells TIME, referring to dire predictions of decline as civilization passed the halfway point of earth’s total supply of liquid oil. Gheit notes that the percentage of liquid oil recovered per deposit went from the low 20s to the mid-70s in the past half century, and “unconventional” oil is delivering profits while recovering much lower levels per deposit. “So imagine the upside potential in recovery — and it’s not going to take 50 years,” Gheit goes on. “There are thousands of engineers and scientists working on this 24/7. One of them is going to reach the Promised Land sooner or later.”

Perhaps literally. IEI is mostly owned by Genie Energy, but investors include Jacob Rothschild, whose family built much of Israel, and the hedge-fund legend Michael Steinhardt, who chairs the IEI board. Vinegar, who is also Jewish, went to Israel after a career in an industry that, aligned as it was with the Arab world, was only too happy for an excuse to avoid working in the Jewish state. But the kerogen find in what the Bible calls Elah Valley — where David slew Goliath — not only allowed him to put his life’s work into practice, it also dovetailed with a political dream.

The kerogen formation that geologist Bartov first confirmed in 2009 extends beyond Israel. It runs across the few kilometers east to the Palestinian West Bank — Vinegar flourished a sample from there, darker than the chalky Israeli sample — and into Jordan, where the known kerogen formation is as large as all of Israel itself. Shell is working with King Abdullah II to develop it, in a country that has almost no mineral resources. Egypt has potential as well.

“The truth is, Israel is sitting on the best,” says Vinegar. Its oil could well lock in the energy independence that’s promised by natural gas — an independence that’s first of all economic: every dollar’s worth of oil or gas Israel produces is a dollar of hard currency available for other uses. But in Israel’s case, energy independence also involves military security. When the country fights wars, as it has every few years, insurance companies bar oil tankers from venturing into its ports. As a practical matter, that limits a war to the length of time it takes Israel to burn through petroleum it has stored.

But Vinegar sees a potential beyond hard currency, or even the brand of security provided by military assets. He envisions Israel, with its existing complex refineries, excellent infrastructure and seaports as a natural nexus for “an integrated energy zone” that spans borders and unites countries no longer quite at war, but not terribly close, either.

“Longer term, security will also come from Israel helping the countries around it,” Vinegar says. “That’s a world state I would love to see.”

20 comments
MarkusKemp
MarkusKemp

And 100,000 barrels a day would make Israel an energy GIANT exactly HOW? The world burns through something like 85 million barrels each day. In the grand scheme of things, this isn't even a blip on the RADAR.

HAL_of_infinity
HAL_of_infinity

Big deal, most certainly. Could shift the entire region. Think I find hilarious is all these Zionists, which is a separate supremacists and isolationist ideology.  Go on about Arabs, when reality is . The reason why nothing has ever happened with Palestine. No great war of freedom for them, that has really had serious support. Is because they clearly are fine with Israel and Israel is clearly fine with them- when they are run by dictators supported by America and dont talk about democracy.
If this new oil reserve is spreading out and touches into Egypt. Its interesting that the new Leader of Egypt is Sisi whom is Israeli friendly and shut Palestine border, then how the issue of petrol money can have an effect on the extracting - which Iran can cause to go up. Same with Gulf, but they allies of the west and Israel. So if you remove Iran whom are not . They wont have to worry anymore about the costs going up, which would benefit Israel a lot.

talkbackzionism
talkbackzionism

This is a positive article for Karl Vick, but there is still some none-too-subtle whispering going on here that is intended to show Israel in a negative light.  For example:  1) The kerogen field goes a couple of kilometers (!) into the West Bank.  (We all know what that means... Israel will no doubt be unable to resist the urge to "steal" it - especially, as he feels the need to point out, it is of better quality.) 2) He says that, "every dollar’s worth of oil or gas Israel produces is a dollar of hard currency available for other uses."  What, pray tell could those other uses be? Could it be education, infrastructure, the arts? No. In Vick's world it is making war, of course.  This find will not only allow Israel to buy more weapons but it will now be able to carry out longer wars (since we all know that this is the only thing Israelis want).  3)  Lastly, Vick uses Vinegar to put forth his own worldview while giving Israel a dig.  He says that "Longer term, security will also come from Israel helping the countries around it." As if Israel doesn't try to help its neighbors.  Gazans, Jordanians and even Iraqis regularly travel to Israel for medical treatment.  Whenever there is an earthquake, Israel offers assistance (even to Iran, which always refuses), and there are several existing transboundary watershed projects with the Palestinians and Jordanians.  The dig here is that Vick, like so many other leftist propagandists, positions himself as the one who knows what Israel's "real" best interests are - i.e. doing anything and everything to be "loved" by its Arab neighbors.

newyorkcityexec
newyorkcityexec

Wow!  I kept reading to see where the hatchet would fall.  This is, after all, Karl Vick -- the man who thinks Israel's claims of Palestinian anti-Israel, anti-Jewish incitement are merely a strategic distraction for Israel to conduct more nefarious deeds; the man who knows for a fact that Israel doesn't care about peace; the man who heaped condemnation on Israel for simply wanting to create some accountability for NGO funding; the man who thinks Gaza is currently occupied (somehow misremembering the Israeli disengagement from Gaza along with the fact that Egypt shares a border with the terror-tory).

So, nothing negative in this article.  I commend him.   Small miracle.  I won't plan on getting used to it, though.

Jossef
Jossef

Karl Vick, let us hope that this is not a prelude to another one of your Time Magazine hatchet jobs that tell the world that Israelis are so busy making money that they no longer care about peace.

TizzAlNabi
TizzAlNabi

The Arabs are apparently too thick to realize that their best bet is to cooperate with Israel instead of trying to wipe it out

crystalclear
crystalclear

Indeed a wonderful article Karl nothing the bible hasn't predicted for Israel already and the aspirations  in your article I agree depict a great future for Israel as we know from the Lords words, but what I also fear and know from his word, that this wonderful newly discovered energy resource for the nation will be the hook in the mouth for the nations of gog & magog as they now most certainly will have some stiff competition from Israel to face for their market in Europe and elsewhere. The information in your article also tells me how Jordan will be wiped out by fire when the Messiah comes and the earth starts to erupt everywhere because of it.. As you say nearly all of Jordan is has this fuel for a firey explosion under it. .

ckg
ckg

Longer term, Israeli security will not come from helping the countries around it, as Vinegar imagines, but giving equal political rights to the Palestinians whom it occupies and oppresses.  Eventually, one person one vote is inevitable.


JeremyBoak
JeremyBoak

For more than 100 years, oil shale has been the technical term for organic-rich, fine-grained sedimentary rock that has not been buried deeply enough to heat it to the point where chemical reactions (not melting) convert it to lighter organic compounds, including hydrocarbons.  For an equal amount of time, the product of artificial heating of the rock has been called shale oil.  The new use of the term shale oil for liquid oil contained in similar fine-grained rocks (which also still contain substantial amounts of kerogen) ignores this technical priority, and simply leads to more confusion. The rocks with oil in them would be better called oil-bearing shale and the product shale-hosted oil, and the difference would be made clearer.  Calling such rock a kerogen formation is a poor alternative label, as most shale contains some kerogen.  Kerogen, by definition, is just the part of the organic matter in a rock that does not dissolve in petroleum solvents.

Jeremy Boak, Director

Center for Oil Shale Technology and Research

Colorado School of Mines

Golden CO, USA

HAL_of_infinity
HAL_of_infinity

@xhidden99 you hate anyone that critical of you, like a spoiled brat of US. So I expect a lot of people will roasting in hell.

HAL_of_infinity
HAL_of_infinity

@talkbackzionism lol clear talk back zionism. You strangle everyone in Gaza then get all butt hurt when they get made at you? So pathetic, half of them are injured because of the strikes you done along with them not being able to get any medical supplies   in the first place. You turn the Palestinians into dependent crack addicts, because you borderline fascists- which is pretty much zionism is. Sure plenty of nice Israelis though.
I notice how this also stretches into Egypt, which recently had a Coup via Sisi, whom straight away sealed of the border that was opened by Moursi. Cant help but see the benefit of that, along with say the removal of Iran and chances of Oil prices going up which is causing problems for extraction. 

HAL_of_infinity
HAL_of_infinity

@newyorkcityexec Well considering Israel have breached dozens upon dozens of international laws, still occupying the Palestinians- you miss how you pretty much strangle them? Oh wait no you dont miss that , because you a supremacists.  You clearly dont care about peace with the settlement building and attacks. You care about control. You dont want peace to be peace, but peace through the might of you and prioritization of you (as in zionism which is all about you are all alone and all that is important) . If you really cared about peace you would stop the settlements. Love you putting the terror-tory. Great generalization of an entire populace, Egypt shut that straight after Sisi did his Coup. Its very beneficial for you no?  Maybe if you werent illegally settling their lands and strangle hold on all the people, turning it into a semi prison. People wouldnt get all pissed at you? But no you wont think that because you - or Zionism only prioritizes yourself.

HAL_of_infinity
HAL_of_infinity

@TizzAlNabi Again generalization, only Iran that whittled on about it- ironically the only one capable of wiping out someone in the region is Israel with your nuclear weapons.  I dont see how thickness has anything to do with it, considering the reservoir has only been found recently. But obviously you use thickness because you hate Arabs.

HAL_of_infinity
HAL_of_infinity

@crystalclear wow, you sound no better than a fanatically muslim, oh that is right you are the same - but you think you better.

YvesG
YvesG

@ckg Frankly, why do you want israelis access to what muslims does not allow to any christian or jew or buddhist in Middle East. Let's start with Saudis and UAE accepting the presence of Judaism and Christianity on their land, as israelis do and we will see then what to do. 

magster102
magster102

@ckg the palestinians will get their own state and then they can show the world how they protect the equal political rights of their people, just like all the arab states the world over.  (laugh)

YvesG
YvesG

@JeremyBoak it nice to hear the pros speaking thanks for your info it helps understanding the issues 

MenahemZen
MenahemZen

@HAL_of_infinity @talkbackzionism 

Zionism is legal and legitimate action for all Jews to come home to their homeland after the Roman Empire expelled them in 70 CE. As for Gaza, the city is ruled by Hamas terrorist, who teach kids to be suicide bomber in the name of islam. What a sick religion!

HAL_of_infinity
HAL_of_infinity

@magster102 @ckg love you entirely missing that the middle east has been run by dictators for the west for decades, any perspective they have is due to that awful setup to protect Israel. You arrogant supremacists