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An Alternative to Oil
Israel is tapping oil shale reserves as a potential source of alternative energy – at what cost to the environment?
T IS EARLY EVENING, AND Joshua Fox, back home from his job as a project leader at IBM, is spending time with his children in front of his house in Aderet, a rural community in the Elah Valley bordering the lush Adullam National Park, which in recent years has become home to dozens of English-speaking professionals drawn by its quiet, relaxed quality of life. Or rather, as Fox notes, it used to be quiet. “Can you hear that?” he asks, referring to the constant rat-ta-tat emanating from a 15-meterhigh drill operating near the perimeter of Aderet, biting into the ground in search of oil shale samples. “Can you smell the fumes?” The residents of Aderet say they awoke one day in late December to discover that they were living next to what may potentially be a major oil extraction site, in the heart of the country, some 25 kilometers (15 miles) southwest of Jerusalem. At a time of increasing global awareness that traditional oil reserves will not be around forever, and an intense search for alternative energy sources, it turns out that Israel is one of a relatively small number of countries with significant reserves of oil shale – a potential source of liquid fuel. “This has major significance,” says Dr Yuval Bartov, CEO of Israel Energy Initiatives (IEI), which is conducting exploratory drilling near Aderet. “Israel could attain energy independence, with all that implies. This is not speculation – the reserves exist.” But while there is no controversy over the existence of oil shale reserves, the methods used to extract oil from oil shale – using immense heating devices to raise the temperature of the oil shale, hundreds of meters (yards) underground, to as high as 650°F for years – can be a cause of concern. What will
something like that do, ask local residents, to our environment?
HE RESIDENTS OF ADERET have banded together in an attempt to prevent the oil shale extraction from proceeding in and around Adullam park, pooling together skills and expertise they have as middle-class professionals. Demonstrations have been held. Fox has created a “Save Adullam” website. Lawyers are preparing legal challenges. Ecologists, biologists and other experts in the sciences have pitched in. “We are looking into all the legal aspects involved,” says Naftali Smulowitz, a Torontoborn lawyer who has lived in Aderet for the past 12 years. “We are now trying to alert as
many statutory bodies as we can to the potential damage this can cause, and may challenge the law under which the drilling license was issued.” But the overall mood of the Save Adullam group, as of now, is palpable concern that they are up against much larger forces than they can muster. They have read up on the effects of extracting oil from shale on the environment in other places around the world, such as Colorado and Scandinavia – and that has only intensified their concerns. At the same time, although their website depicts them as David up against Goliath, they are also at times frustrated that they cannot present a clear, Hollywood-style narrative of citizen-activists fighting a big, bad company,
THE JERUSALEM REPORT MARCH 1, 2010
COURTESY JOSHUA FOX
immense amounts of water and tremendous heat essentially to ‘fry’ the oil out. That can cause gases to drip into the surrounding soil and aquifer. We are told that whatever damage may be caused will be cleaned up. But who can really give us a guarantee of that?”
ENVIRONMENTAL ACTIVIST: Joshua Fox and his children with, in the background, the 15-meter-high shale drill near their home in Aderet
eager to rip out the trees and tear up the earth. Energy companies have long learnt to adopt and even embrace the mottoes of environmental protection, and IEI is no exception. “Environmental responsibility is one of the founding principles of our company,” says Bartov. “We have a commitment to minimal disturbance of the environment when conducting our work, and to restoring the sites to the exact condition they were in before we started, when we are done. We understand this is a small country. If what we do is not sustainable environmentally, it will not be sustainable at all.” “We know they are not evil people,” says Fox, referring to IEI. “They are doing their jobs. But extracting oil from shale involves
N INTENSIVE SEARCH FOR OIL shale, and for new methods of extracting oil from it, is being conducted on a global scale nowadays. The background to it is a growing sense that the era of easy, “cheap” oil – meaning oil that can be easily pumped out of near-surface, high-pressured oil wells – may be drawing to a close. Known, large near-surface fields have been pumped regularly for decades, and are aging. Drawing oil from depleting wells requires advanced methods that are typically expensive to implement. Most new oil discoveries in recent years have been in hard to get places, often miles under water, or deep in the arctic regions, again implying large extraction costs. At the Davos World Economic Summit in late January, Thierry Desmarest, chairman of French oil giant Total, predicted that it would be very difficult to raise crude oil production worldwide above 95 million barrels a day, which is 10 percent more than today’s level. Desmarest told AFP that the problem is not one of insufficient reserves, but that “a lot of it is difficult to produce,” and foresaw a possible world oil production peak in about 10 years. These sorts of predictions, coupled with the extreme volatility in oil prices over the past couple of years, have spurred many to seek alternatives to the crude petroleum that has powered industrial civilization for more than a century. Some of the efforts are focused on renewable “green” alternatives, such as wind and solar energy. But those technologies are still years away from being ready to scale to meet global needs. That has meant that other hydrocarbon-based alternatives to petroleum, such as natural gas and oil shale, have caught the attention of energy industry leaders. If and when a shift away from petroleum occurs, the implications, in economic and geo-political terms, will be profound, and along the way there will be fortunes to be won or lost. These developments are being monitored in Israel, which has for decades disappointed those who hoped there may be petroleum oil fields in the Holy Land, to counterbalance the immense oil wealth amassed by Arab countries. No major oil has yet been struck in Israel, but large natural gas reserves were discovered 80 kms (50 miles) off the coast of Haifa last
year, of sufficient quantity to prompt the Israel Electric Corporation to consider converting its power-generating stations from running on imported coal to locally produced natural gas. While explorations continue for more natural gas fields, and the hope of an Israeli company striking oil never fails to intrigue investors in the Tel Aviv Stock Exchange, it has become increasingly clear in recent years that Israel is one of the relatively few countries in the world – there are estimated to be about 30 such – sitting on significant reserves of oil shale. Oil shale is sedimentary rock that contains kerogen, a compound that can be processed to yield hydrocarbon in liquid form, which can then be used similarly to petroleum oil. The potential for extracting useful oil from oil shale has been known for a long time, and there are estimates that the total amount of oil shale resources in the world may exceed proven crude oil reserves. The problem is that the cost of extracting oil from oil shale is sufficiently high to have made it uneconomical compared to pumping oil wells. With the costs of conventional oil extraction expected to rise, however, efforts to find economical methods of using oil shale have intensified. Virtually every process for converting kerogen into oil involves heating oil shale to very high temperatures, in order to decompose it chemically, in a method called retorting. This is accomplished either by shipping shale to processing sites, after conducting full-scale mining, or by on-site processing, involving heating the oil shale while it is still underground to yield a vapor, which can potentially access material at greater depths than standard mining.
ARTOV KEEPS A HANDFUL OF oil shale samples in his Jerusalem office to show visitors what they look like. “Here, smell this,” he says encouragingly, as the unmistakeable whiff of oil rises from a sample in a jar. “The presence of fuel is not as evident in every sample, but the extraction potential is there.” Resembling a professorial Bill Gates, Bartov gives more of an impression of an earnest and concerned scientist than a highpowered chief executive. He earned his doctorate in geology in Israel, and then moved to Colorado, where he worked in shale oil extraction, and joined the faculty of the Colorado School of Mining as a professor. He returned to Israel when he was recruited to head IEI, given his extensive experience in Colorado. IEI is a subsidiary of IDT Corporation, a multinational holding company specializing in
THE JERUSALEM REPORT MARCH 1, 2010
the telecommunications and energy industries. It has long had a presence in Israel as a telecommunications company, but in the last couple of years decided to expand its energy arm in the country in order to explore shale oil possibilities. Its overall energy company is called Genie, comprised of IDT Energy, American Shale Oil, and IEI. IDT Energy reported $227.7 million in revenues during the first three quarters of 2009. American Shale Oil is a joint venture with Total, whose main aim is researching and developing on-site extraction technologies. Genie owns approximately 89 percent of IEI. One of the more prominent private investors in IEI is Harold Vinegar, formerly a senior scientist at oil giant Shell. IEI was issued a license by the Infrastructure Ministry in July 2008, under the 1952 Petroleum Law, granting it the right to search for oil shale reservoirs within an area comprising 238 square kilometres (some 59,000 acres). “That is a large area,” says Bartov, “but it is an exploration licence alone – all it means is that if we have a successful pilot locating a promising reservoir, we will then receive a commercial licence to work on about a square kilometre only, at that site.” IEI’s current activities are limited to removing samples from underground, which are collected for laboratory analysis. It can operate only two sampling sites at a time, for stretches of about two to three months; the currently active sites are in Beit Guvrin, and the Adullam site that has sparked the Aderet protests. Bartov asserts that every site will be reclaimed and restored to what it looked like before work started there. “You won’t even know we had a site there,” he says. This is a requirement of the Infrastructure Ministry – if we do not do it, our licence will be revoked.” The multi-year plan formulated by IEI calls for six exploratory drillings to be conducted in 2010. A commercial pilot that may produce 500 barrels of oil is scheduled for 2011 and 2012. If all goes well, the company will ramp up to production levels between 2012 and 2015, extracting up to 2,000 barrels a day, with full-scale production beginning in 2015. The only extraction procedure the company will use is on site, using thermal conduction, since its license does not permit mining activities. Bartov clearly believes in the potential of the on-site heating method, evincing a geologist’s excitement when speaking about the way in which heat brings about the “maturation” of kerogen. “It yields jet fuel, naphtha, diesel, natural gas and hydrogen,” he notes. “That’s impressive.” my work there,” says Bartov, in defense of the company’s decision. “In Colorado, the aquifer flows through the same layer as the oil shale, while in Israel, it flows far below. That means that the water is completely separate from the oil shale. There is no need for a freeze wall here. The water authorities here are actually very cautious, and we are fully cooperating with them to ensure that no water could possibly be contaminated by our work. In Colorado, for every barrel of oil extracted, three barrels of water are needed. That is not the case in Israel – our water needs will cost about 500 shekels a month, about the water usage of one or two large households.”
OSHUA FOX, WHOSE CHILDHOOD was divided between Jerusalem and Madison, Wisconsin, holds a PhD from Harvard University in Semitic Philology, which he studied before switching to software engineering as a career. He moved to Aderet with his wife Louise, originally from Sunderland, U.K., over 12 years ago. The couple sought a quiet place outside the city in which to raise a family, and their timing was just right: Aderet, which had for many years been a struggling agricultural community, obtained rezoning rights to construct residential housing, intended to attract young urban professionals, on formerly agricultural land. The Fox family happily traded their cramped Jerusalem apartment for a house in the country. They now find the prospect of oil extraction being conducted near their home disturbing, to say the least, and are also perturbed that no attempt was made to explain to or involve the residents in what so clearly affects their quality of life. “A month prior to the appearance of the drill, we saw a wheat field paved over for what looked like a parking area,” says Fox. “But no one explained why.” “The local council obviously knew, because it had signed agreements with IEI,” adds Smulowitz, “but they did not tell us.” On the Save Adullam website, Fox has written that “the extraction technique will involve giant on-site production facilities heating a thousand-foot-thick section of underground shale to 650°F. Heating elements will snake underground to bake the ground for four years. Hundreds of wells will be needed to channel the oil leaking through the shale into the production facility. The extraction will consume huge amounts of scarce water. This will cause destruction of the landscape, the antiquities, the wildlife, the air and the groundwater.” Anxiety about possible water contamination is prominent in the concerns raised by Aderet residents. This was heightened by reports they read about major efforts undertaken in Colorado to avoid water contamination during on-site shale oil extraction, which included creating an underground barrier called a “freeze wall” around the perimeter of the extraction zone, using refrigerated fluid to prevent groundwater from mixing with the extraction zone. IEI, however, has no plans to implement a similar technology. “The geology in Israel is very different from that in Colorado, with which I am familiar from
OX ALSO NOTES THAT NO ONE knows what the great heat of on-site extraction will do to what is underground, which in this case includes archaeological artifacts that have never been dug up – this area was at the heart of Judea in the Hasmonean, Roman and Byzantine periods. Adullam is mentioned several times in the Bible, most prominently as the location of the Cave of Adullam, where David, having been expelled from the court of King Saul, found refuge and gathered “everyone that was in distress, and every one that was in debt, and every one that was discontented.” The Elah Valley is where David fought Goliath. In reply, Bartov points out that IEI’s on-site process will take place 300 meters below ground – which means that it won’t be felt above ground, or near the surface. “Archaeological artifacts are not located below 10 to 20 meters underground,” he says. “We will be heating the earth 300 meters below. It would take a million years for the heat down there to affect anything close to the surface, including archaeological objects. They will be perfectly safe. In fact, consider the freeze walls used in Colorado. They are located very close to where the main heating is taking place – which shows you how insulated the heat is when on-site extraction is implemented.” Adullam Park is nowadays a magnet for tourists, both local and foreign, who flock to one of the main large, green, open areas left in central Israel for hiking, cycling and wildlife spotting, and it is likely that extensive oil extraction may severely curtail these activities. “A scenic park near the middle of a crowded country is an insane place to dig for oil,” continues Fox, writing on the Save Adullam site. “The American parent corporation is testing this as-yet-untried extraction technique on ‘for-
THE JERUSALEM REPORT MARCH 1, 2010
eigners’ (that’s us Israelis), allowing it to avoid the interference of American environmental regulations while evaluating its economic effectiveness.” Concerned Aderet residents raise several other concerns. They have heard assurances that any damage caused to the park will be cleaned up, and that the park will be restored to its original condition, but they remain sceptical, asking who will stand behind those guarantees if what is intended as a financial investment goes sour and there is no money left to pay for extensive clean-up. Who, they ask, will provide compensation for local bed-and-breakfast inns, and boutique vineyards, whose businesses may be ruined? Will the infrastructural changes and new roads that an oil extraction project will necessitate irrevocably change the character of the area? Will it be inundated with trucks rumbling day and night? Will the immense electricity required for the heating elements mean that large cables will snake through the park? Bartov has a patient reply to each objection. IEI is backed, he points out, by IDT, a major international conglomerate, which should easily be able to pay cleanup costs, even if IEI itself goes out of business. Liquids extracted from on-site retorting still require some amount of refinement, he admits, chiefly for removing sulphurs in the liquid, but at full-scale production the company plans to transport oil to refining facilities via underground pipes, not trucks. Although electricity from the electricity grid may be needed initially for heating – another option is using down-hole gas heaters – “eventually we will switch to underground fluid heat transport, which will mean that we will be self-sustainable for our energy needs – using some of the energy we extract in order to extract more energy.”
‘Israel could attain energy independence, with all that that implies. This is not speculation – the reserves exist.’
– Dr Yuval Bartov CEO of Israel Energy Initiatives
HMUEL BENTOV, A BIOLOGIST and resident of Aderet, regards many of these answers as unsatisfactory. “Restoring land back to its original condition [after shale extraction] is not simple,” he says. “In Sweden, unacceptably high levels of cadmium were found in the ground 20 years after extraction ended. Restoring natural woodland, after trees have been removed, is impossible; the best they can do is plant new trees. There is also much evidence, backed by scientific studies, that water can penetrate from the oil shale to the aquifer. Any refinement conducted on site will involve dangerous chemicals near residential areas, and power stations for running
the heating elements will emit polluted air.” One possible avenue being considered for blocking further shale oil extraction efforts is to challenge the licensing granted to companies such as IEI under the Petroleum Law, which was passed in 1952 and amended in 1965. The law is intended to encourage the exploration and production of petroleum, with the understanding that all petroleum resources belong to the state. Any attempt to extract petroleum requires state licensing. The licenses cover preliminary investigations, the drilling of test wells, and production leases, issued for 30 to 50 years, granting leases exclusive rights in a particular area, and royalties from extracted petroleum. “The law gives companies that have a licence, issued by the Infrastructure Ministry, a wide range of exemptions from regulations,” says Fox. “It essentially gives them rights to any land that is not a private plot.” According to Smulowitz, there are grounds to claim that the Petroleum Law does not apply to on-site oil shale extraction, which was not a technology under consideration over 45 years ago. “We are looking into this very seriously,” he says.
EYOND THE DETAILS, THE debate over the Adullam oil exploration raises broader questions, regarding how much say the residents of rural settlements should have over what happens in the vicinity of their homes outside the settlement perime-
ters, and the direction of Israel’s energy policies. “This should not be just a local issue, for those of us living in this valley,” says Rachel Jacobson, who moved to Israel from California and now lives in Aderet. “This needs to be debated at the national level. Is this what we want, for our green areas to be mined? What about alternative [renewable] sources of energy?” “Shale oil cannot, of course, be categorized as a renewable energy source,” says Bartov. “Clearly, it would be better for the world to move to renewable energy sources. But the question is whether that is practical [in the near term]. Oil extracted from shale has 20 percent lower CO2 emissions than crude oil. That means that if we move to this source of energy, we will immediately lower our carbon footprint by 20 percent.” Fox is convinced that the nation’s focus can and should be turned towards future sources of energy, instead of seeking hydrocarbons underground. “I never thought I would be an environmental activist – but here I am,” he says. “I always thought that the policies advocated by many environmentalists would actually do more harm. But we don’t live in a static world. Things are changing. Israel has built itself not on natural resources, but on brain power. That is where we should be putting our efforts – in designing the future of energy, solar and wind power, not oil.”
THE JERUSALEM REPORT MARCH 1, 2010
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