Shale oil project raises hackles in Israel
IEI believes Israel may be sitting on vast reserves of shale oil, second only to those in the United States.
By Daniella Cheslow (AFP) – December 18, 2011
BEIT GUVRIN, Israel — Among the serene vineyards and pine trees of Israel’s wine-growing heartland, a towering drill is boring 600 metres (2,000 feet) 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 (18 miles) 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."
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