By Daniel Fink, Israel-based energy and commodities analyst.
While Israel enjoys its recent finds of offshore natural gas, we keep hearing rumors of vast reserves of oil waiting to be tapped. Is that just wishful thinking? Or might the Land of Milk and Honey become the world’s next oil power?
Despite all appearances, the annual OPEC meeting that took place this past May in Vienna was more tense than any of the participants were willing to admit. The headlines coming out of the meeting emphasized consensus and stability, with the cartel agreeing to leave global oil production unchanged. With oil at around $100 per barrel, no one wants to rock the boat. But, as one attendee put it, the facade of calm obscured a matter of “grave concern” for OPEC.
The real story of the OPEC meeting was a tectonic shift taking place in the global energy market. Such shifts have been predicted before, supposedly driven by electric cars, an emerging renaissance of nuclear energy, or one of the alternative fuels du jour. But in the post-Fukushima world, the global appetite for nuclear energy is on the decline; and the demand curve for electric vehicles hasn’t risen as expected.
Now, more traditional alternatives have governments in Riyadh, Caracas, and Abuja worried. They are referred to as “unconventionals”: Fuels derived from sources that would once have been technologically impossible to reach or exploit in a cost-effective manner.
The future of energy will be unconventional oil: Not from the Arabian desert but the heartland of the Dakotas, the tar sands of Alberta, and maybe the rocks under the Shfela plain in Israel.
They should be worried, because it increasingly looks like the future of energy will be unconventional. It’s a future in which oil will not come from the Arabian desert but the heartland of the Dakotas, the tar sands of Alberta, or 7,000 meters under the waters off the coast of Brazil. It’s a future in which technology and capital are just as important as having huge oil fields. It’s also a future in which once energy-poor countries are poised to challenge those that have traditionally dominated the market. And Israel may hold the keys to one crucial part of it.
This is not because Israel has suddenly discovered vast, easily exploited reserves of oil. It’s 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.
South of Jerusalem, deep under the Valley of Elah where, according to the Bible, David slew Goliath, are some of those billions of barrels. Unlike the shale oil extracted by the process famously known as “fracking,” which exists in liquid form trapped inside of rock; the oil beneath the surface of Israel is the rock itself, which must be converted into liquid before being pumped out. This form of hydrocarbons—known in the industry, inconveniently, as oil shale—has not been extracted on a commercial basis anywhere in the …read more