Should Israel get oil out of Vinegar, for an energy revolution?
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AnalysisRosh Hashana 5774: An energy crossroads

Should Israel get oil out of Vinegar, for an energy revolution?

The Holy Land sits on the world's second-largest deposits of oil shale. Advocates say its extraction will be safe and could transform the economy. Opponents say the environmental fallout could be disastrous

David Horovitz

David Horovitz is the founding editor of The Times of Israel. He is the author of "Still Life with Bombers" (2004) and "A Little Too Close to God" (2000), and co-author of "Shalom Friend: The Life and Legacy of Yitzhak Rabin" (1996). He previously edited The Jerusalem Post (2004-2011) and The Jerusalem Report (1998-2004).

Harold Vinegar and a vial of oil extracted from Israeli shale (photo: Courtesy Harold Vinegar, IEI)
Harold Vinegar and a vial of oil extracted from Israeli shale (photo: Courtesy Harold Vinegar, IEI)

Far below the surface of the promised land, a hidden treasure lies. If it can be carefully liberated from the geological layer in which it is caught, it promises nothing less than to transform Israel’s economy. It is called oil shale. And, along with Jordan, Israel just so happens to sit upon the world’s second largest deposits of the stuff, after the United States.

Oil shale deposits are overwhelmingly located outside conventional oil-rich areas such as the Middle East and North Africa. So if safe, economic processes for extracting this alternative oil resource can be put into effect, dependence on the energy-exporting Middle East could gradually decline, in a dramatic transformation of the global economy, with Israel as a prime beneficiary.

If.

Advocates say oil shale is an Israeli resource whose time has come, and are adamant that it can be realized without negative environmental consequences. But critics cite fears of underground fires, contaminants seeping into air and water, even seismic rifts.

With a few exceptions, the battle over oil shale is being fought away from the headlines. It will come to a head in the Jerusalem Regional Planning Authority, a body headed by an Interior Ministry bureaucrat, which in the next few months will decide whether to authorize a pilot project to extract shale oil in the Elah Valley, south of Beit Shemesh.

The stakes in the standoff — between those who believe that oil shale is a remarkable asset that has become technologically, commercially and environmentally viable, and those who argue that seeking to extract it could be catastrophic — are enormous. Tens of billions of dollars are involved. And at the heart of the struggle, with investors facing off against environmentalists, and government ministries facing off against each other, stands an alternative oil man with an unforgettable name: Harold Vinegar.

***

Until five years ago, Harold Vinegar was living a thoroughly good life in Houston, Texas, as a chief scientist at Shell Oil. The Brooklyn-born physicist with the Harvard PhD had followed his uncle into the oil industry, and become an expert in developing the world’s unconventional oil resources — oil that won’t flow when you first drill for it, but has to be extracted, one way or another, by heating the rock in which it is trapped. He enjoyed his work. He was convinced that the human race would increasingly need the resources he was skilled at obtaining. He was professionally fulfilled and well paid.

Harold Vinegar (photo: Courtesy Harold Vinegar, IEI)
Harold Vinegar (photo: Courtesy Harold Vinegar, IEI)

And then, one fateful evening, he invited a senior official from Israel’s Petroleum Authority to dinner.

This official had come to Houston to try to persuade Shell to set up operations in Israel — to explore the possibility of extracting shale oil from the rocky depths of the hitherto unpromising Promised Land.

The official’s mission was, of course, a lost cause. Not because the oil isn’t there. It is. In frankly sensational quantities. But because Shell was not going to come near it.

Shell is not an anti-Semitic company. It was started in London, as a transport firm, by Marcus Samuel and his brother Samuel (that’s right: Samuel Samuel), merging in 1907 with the Royal Dutch Petroleum Company to become Royal Dutch Shell. Its US operation was established by their nephew. In 1976, when Vinegar came to the lab in Houston where Shell made many of its major oil innovations and inventions — not to mention the high-octane aviation fuel that helped the US fly rings around the Japanese in World War II — he found a large number of Jewish scientists and engineers there.

But three-quarters of the world’s known conventional oil reserves are located in the Middle East and North Africa. Concluding oil shale exploration deals with the world’s only Jewish state, it could be reliably assumed, would not be helpful to the rest of Shell’s business.

He was on a mission impossible, but the Petroleum Authority official was not easily deterred. Again and again over dinner with Vinegar and wife Robin, the Israeli visitor pressed: “Are you sure you can’t get Shell to come to Israel?'” Again and again, Vinegar gave his reluctant but insistent, “I’m sure this won’t happen.”

So the Israeli emissary changed tack. “You come!” he urged Vinegar. “Start a company. Put in an application for oil shale exploration rights.'”

Vinegar had been to Israel… once. Briefly. In 1972. He had no family here. Life was good in Texas. He sat on prestigious bodies like the US National Research Council’s Committee on Earth Resources. He was a member of the National Academy of Engineering, and a fellow of the American Physical Society.

But this Israeli visitor just wouldn’t take no for an answer. “He stayed late into the night,” Vinegar recalls. “Talks about a pipeline here, infrastructure there, this is how long it will take. I tell him I’ve never formed a company before. He says, ‘You just come. The money will find you.’ And so, I promised that I’d see.

“Finally he leaves,” Vinegar continues, “and I say to my wife Robin, ‘Have you ever heard anything so crazy?’

“She says, ‘I can be packed by tomorrow morning.'”

And so it was that on October 31, 2008, after 32 happy years, Harold Vinegar retired from his job as chief scientist at Shell Oil. And barely five weeks later, on December 7, 2008, along with wife Robin and his son, a cartographer in the same business, he made aliya.

Why? “Because I thought we could do something very good for Israel.”

****

A world authority on extracting shale oil, Vinegar has been active in the field since 1980, improving the technology, pioneering conversion and extraction processes for shale.

And this tiny country, dwarfed physically in the region, and dwarfed economically down the decades by Arab oil, is a potential oil shale superpower.

Vinegar is a friendly, garrulous 64-year-old with graying hair, a very loud, pealing laugh, and an impressive capacity to explain his specialized work to the layman. He elaborates that 23 countries worldwide have oil shale. The US is at the head of the list, boasting considerable resources in Colorado. And then come Israel and Jordan.

Oil shale, he explains, is “a source rock containing solid organic matter trapped in the rock. If it was buried deep enough, then over geological time the organic matter would generate oil and gas. This is what happened to make conventional oil. But oil shale is too young, buried too shallow, so it hasn’t generated oil yet.” The in situ thermal process for its extraction, Vinegar says, “accelerates the maturation of the oil shale, so that it occurs in a period of a few years instead of millions of years.”

“For most of my career, a barrel of oil cost about $20 in inflation-adjusted terms,” notes Vinegar, speaking to The Times of Israel at the Jerusalem offices of his firm, Israel Energy Initiatives, “but today demand is soaring from China and the developing countries, and the price of oil is over $100 a barrel. There are 7 billion people on Earth today, and by 2050, there are projected to be 9 billion. Those extra two billion people will be mainly in the developing countries — where energy use per capita is very low today, but is sure to increase many times. So I believe the price of oil is going to stay high.”

Current estimates of conventional world oil reserves are about 1 trillion barrels. At the present rate of use, unless major new discoveries are found, the importance of unconventional oil seems likely to rise, with immense economic and geopolitical consequences.

Shell may not have been prepared to get involved in Israel, but it is emphatically involved across the border in Jordan. Unencumbered by the constraints of democracy, King Abdullah in 2009 granted Royal Dutch Shell exploration rights over a staggering 22,500 sq. km. of Jordanian territory — “that’s a quarter of the country,” Vinegar notes, “larger than Israel” — under the Yarmouk in the north, and running down the center of the country. Shell-registered JOSCO, the Jordan Oil Shale Co. with headquarters in Amman, has drilled hundreds of exploration wells, and is preparing a Jordanian pilot. Vinegar says that the Jordanian and Israeli oil shales are “sister deposits, very similar high quality oil shale.”

Vinegar has been here for four and a half years now. He has heavyweight backing: Investors in IEI parent Genie Energy, which is chaired by Howard Jonas, reportedly include former US vice president Dick Cheney, Michael Steinhardt, Jacob Rothschild, and Rupert Murdoch.

So how are things going in Israel? How much progress has he made? “Well,” he offers after a pregnant pause, “I’m disappointed it hasn’t gone faster.”

Potentially, he says, using a small tract of land (1,000 dunams), Israel could be producing 50,000 barrels of oil a day for more than 25 years — that’s $5.5 million-worth per day at today’s imported prices – from its shale deposits. And it could step up the pace from there.

Potentially.

***

Israel’s oil shale deposits lie on the coastal plain. They were formed as a result of shifting geological plates along the lines of the Dead Sea Fault 70 million years ago. The best oil shale deposits are usually on the coast, and the Shfela lowlands are no exception — rich in oil shale, concentrated in a layer 300-500 meters down.

The IEI exploration area
The IEI exploration area

How rich? IEI was granted an exploration license for 238 square kilometers in the Shfela, which IEI chief geologist Yuval Bartov estimates hold 40–60 billion barrels. “His estimate is that Israel as a whole has at least 250 billion barrels of high quality shale oil,” says Vinegar. (IEI’s exploration area extends 
northward
 to 
the 
Elah
 River,
 down 
to 
the 
Adurayim River 
in 
the 
south, 
in the area of Route 
6 
in the west,
 and out 
to the 
Aderet 
settlement 
in 
the east, according to a Keren Kayemet LeYisrael-Jewish National Fund report.)

The best area to have a scientific controlled pilot is in the Elah valley, south of Beit Shemesh, IEI says, but it says the commercial project will be located further south, near Tarqumiyah.

To help with the visualization, Vinegar says that each ton of rock — about a cubic meter — yields about 30 gallons of shale oil.

So how do you get them out?

Vinegar talks through the process he has been central to improving, “In Situ Thermal Recovery.” This involves drilling heater wells down to the oil shale layer, turning the wells horizontal and extending far into the rock, inserting heaters into the wells, and gradually heating up the rock. It’s a process that over a few years duplicates the natural maturation of the oil shale over geological time, he says.

As the temperature rises in the oil shale, the solid organic matter converts into oil and gas, but at the temperatures and low pressures in the subsurface, it moves predominantly as a gas. “The gas flows to the production wells, and when it is produced to the surface, you condense it. You end up with about two-thirds oil and one-third natural gas. The in situ process leaves the coke behind, as it distills only light products from the oil shale.”

This is not “the black stuff that one historically thought of as oil from shale,” he says. Vinegar hands over a vial of clear, light-golden oil — product of Israel.

Vinegar says the process is energy-efficient: Although heat is supplied to the rock in order to mature the oil shale, the energy contained in the produced oil and gas is many times the input thermal energy.

Israel is usually handicapped by its tiny size, but in this endeavor, he says, small is beautiful. IEI’s license area is just 30 kilometers from where Israel’s current energy windfall, natural gas from the Tamar field, is coming ashore. Vinegar envisages using the Tamar gas to start the heating process, “but pretty soon you’ll be producing your own gas. It’s self-sustaining.”

Once the shale oil is produced, the refineries at Ashdod and Haifa come into play. Israel has pipeline infrastructure, two excellent refineries, and abundant natural gas, he notes.

“We’ve completed the exploration phase,” he says. “We drilled six appraisal wells and we’ve taken 1,500 meters of continuous core. It’s very homogeneous rock.” He passes over a foot-long tube of unremarkable-looking material. “The richness of the resource and the quality of the oil produced from it in the laboratory has exceeded our expectations.”

***

Vinegar is adamant that he and his colleagues can extract Israel’s oil shale without harming the environment. The in situ thermal process, he insists, is “environmentally sound.”

The oil shale is confined by very thick (approximately 200 meters) impermeable layers both above and below, Vinegar says. Also, since the process is operated at pressures below hydrostatic pressure, any flow will be inwards into the heated zone, not outwards.

Meanwhile, on the surface, there is only a small footprint from the well heads. “We would use less than a square kilometer over 30 years of production. Using horizontal wells results in a very small surface footprint.”

Overall, says Vinegar, “I’m sure we’ll have a very small impact on air and no effect on water. But,” he stresses, “the pilot has to show it.”

A long Haaretz article in April painted a very different picture. It alleged that key Israeli government officials were being pressured to approve the project and that dissenters were being silenced and marginalized. “If the authorities don’t pull themselves together, and if the public doesn’t wake up and take action,” the article warned, “the Elah Valley will be turned into a great big oil shale production site… Its vistas will likely be ruined, its soil and groundwater polluted by heavy metals, and its clean air will become a distant memory. Its 7,000 residents will lose their slice of heaven on earth. And a few tycoons in Israel and the United States will get even richer.”

Orr Karassin may not speak in quite those apocalyptic tones, but she is extremely concerned that Vinegar’s assurances may be mistaken, and is intent on ensuring that Vinegar and IEI do not win the Jerusalem Regional Planning Authority’s approval for their proposed pilot.

Karassin is an environmental policy expert who heads the Sustainable Development Committee of the board of directors at Keren Kayemet LeYisrael (Jewish National Fund), and represents the Green Zionist Alliance on the board. Karassin headed a committee that authored a report for KKL two years ago that emphatically opposes movement toward oil shale production unless or until a wide range of concerns are successfully addressed. Three months ago, the board of KKL formally decided to oppose the IEI’s pilot application.

The project was liable to damage the local landscape, KKL chairman Efi Stenzler was quoted as saying, and the board would continue to oppose oil shale extraction until “the uncertainty over the many risks inherent in the venture has been significantly reduced.” KKL will make its representations to the Jerusalem Regional Planning Authority. Says Karassin: “I hope its view will be a factor” in the committee’s decision.

It was noted in some Hebrew media reports that KKL controls some of the terrain in which IEI was granted exploration rights. That constitutes a fairly spectacular understatement. As Karassin’s 2011 report highlights, IEI’s exploration license area “includes
 Britannia 
Park, 
Masua
 forest
 and all
 of 
Adullam
 Park,
 which was 
bestowed upon 
the
 state
 by KKL‐JNF” to mark Israel’s 60th anniversary of independence. “The areas
 of 
forest, 
park 
and nature 
reserves, 
which 
are 
under
 statutory 
protection, 
constitute 
55% 
of 
the 
license
 area.” Moreover, the 
proposed 
site 
for 
the IEI pilot 
is 
located
 at 
the 
foot 
of Tel 
Azekah, 
part 
of 
Britannia Park… 
and 
as 
such 
determined 
to 
be 
an 
integrated 
conservation
 area in 
the 
National
 Outline
 Plan.”

Orr Karassin (photo credit: Courtesy)
Orr Karassin (photo credit: Courtesy)

In a telephone interview, Karassin reiterates that KKL does not support the pilot “because there are too many questions of uncertainty regarding the environmental consequences.”

On a broad level, she says, “Oil shale does not synchronize well with the current Israeli policy on alternatives to oil, and on clean and sustainable energy. If Israel wants to be a leader in clean and sustainable energy, then oil shale is not the way to go.”

Her 2011 report noted, among other objections, that “
investing 
in 
the development
 of
 a
 limited
 resource
 like 
oil 
shale” could lead to a 
decrease in 
”investment 
in 
renewable energy
 sources
 that
 are 
not 
dependent 
on 
limited 
resources.” This, it warned “
will halt 
the progression 
of 
an 
energy
 industry 
independent 
from
 fossil 
fuel
 energy.” The report also cited an expected increase in greenhouse gas emissions.

IEI operations at the Zoharim drilling site in the Shfela, as part of the appraisal process, seen from a viewpoint to the north (photo: Yoray Liberman, IEI)
IEI operations at the Zoharim drilling site in the Shfela, as part of the appraisal process, seen from a viewpoint to the north (photo credit: Yoray Liberman, IEI)

The report highlighted a list of concerns about the particular area earmarked for the project, describing it as “
one 
of 
the 
only 
stretches 
of open 
spaces 
that 
remain 
in
 central
 Israel,” with irrefutable 
ecological 
significance, whose character would “completely change” if the project went ahead at the commercial level.

In the interview, on the specific level, Karassin expresses concern about different contaminants moving from the oil shale to the air or ground water. Her report cited fears that some toxic gases could leak into the air, and that the heating process could render the layers separating the soil from the aquifer permeable, with heavy metals and other pollutants infiltrating the water.

She worries about underground fires, on a far greater and more devastating scale than the one in Mishor Rotem in 2010 caused by open crater mining at a phosphate mine that runs on oil shale. And she refers to the dangers of seismic rifts, citing new research in the US, amid the boom in fracking, that shows “very substantial indications of seismic activity, to the point of earthquakes.”

The proposed technology for the IEI project may not be directly comparable to the techniques used in fracking, but Karassin’s point is that too many aspects of what IEI is planning are insufficiently familiar, and insufficiently tested, and therefore “the precautionary principle has to be influential.” (This approach holds that if an action or policy has a suspected risk of causing extreme and irreparable harm to the public or to the environment, in the absence of scientific consensus that the action or policy is harmful, the burden of proof that it is not harmful falls on those taking an act.)

The bottom line, says Karassin, who was the first executive director of Life and Environment, the umbrella group for Israeli environmental organizations, and was appointed by the Israeli government to serve as a charter member of the National Committee for Environmental Quality, is that “we need a broader discussion of the risks — what we know and what we don’t know about the risks. This is a tiny country. We’re not much larger than New Jersey,” she points out. “If a major region in the country becomes an oil production zone, it becomes a major issue for all of central Israel.”

She says that both the Agriculture Ministry and the Environment Ministry currently favor deferring the pilot, but is fearful that most government ministries — especially the Ministry of Energy and Water — don’t have a clear enough view of broader policy and of whether the risks are worth taking.

***

Vinegar says the pilot is critical for IEI’s engineering design, but also for tangible scientific proof that the process works in Israeli oil shale. Seven pilots have been done successfully in Colorado oil shale, but “we have to prove there won’t be environmental damage here in Israel.”

How will the pilot work? “The Shfela pilot will involve a number of wells heating a 30-meter thick zone for about a year. We’ll produce about 500 barrels of oil, which will be refined to transportation fuels. Together with the ministries, we will carefully monitor the air and the water all around the pilot. We will check for unknown factors. Only if all is clear,” he says, “will we move on to a demonstration phase.”

Vinegar believes it is very clear that a pilot should be done. “We have 250 billion barrels in the ground! Israel has to know if it can be produced in a way that is economically viable and environmentally acceptable. The opposition says ‘No, it will not work.’ OK, let’s see, because if it does work, and I am sure it will, Israel will have a very bright energy future, and then the country can decide, based on facts, what will be the scale of commercial activity.”

But Karassin argues that the battle over the pilot is the key phase of the struggle over the project as a whole, because she says it would be “very difficult if not impossible” under Israeli law to stop “commercial planning and execution” were the pilot stage to be cleared. And yet, she claims, “the pilot submitted and the real project are technologically different. And the monitoring (envisaged in the pilot) will not be a very good indication of the final manufacturing reality.” Put simply: “The pilot is not necessarily sufficiently reliable,” she says.

Elaborating on this claim, Karassin’s 2011 report cited a petition by environmental group Adam Teva V’Din (Israel Union for Environmental Defense), which argued that the pilot would not offer adequate insights because planned commercial production was envisaged in a location 20 kilometers from the pilot area, and because “the 
pilot 
drilling 
method 
will
 be 
vertical 
only, 
and 
not 
vertical 
split 
into 
horizontal,
 as expected 
in 
the 
commercial
 production.” This petition was rejected by the Supreme Court last December.

IEI operations at the Zoharim drilling site in the Shfela, removing shale rock from a depth of 350 meters, as part of the appraisal program (photo:  Yoray Liberman, IEI)
IEI operations at the Zoharim drilling site in the Shfela, removing shale rock from a depth of 350 meters, as part of the appraisal program (photo: Yoray Liberman, IEI)

Asked whether she would always oppose the project, no matter how it might be improved, Karassin divides her answer into two. On the micro-perspective, “there’s a huge question mark.” The pilot “must be defined to the point where the impact of the technology is clear, and the repercussions on both the broader and the micro scale are much better known.” It’s a case of “mind the gap!, be careful,” she says. But from a broad policy perspective, she says, yes, her opposition to extracting Israel’s oil shale is unstinting and unchangeable.

“Yes, this is a mega-gigantic project,” says Karassin, with many times the economic potential of Israel’s offshore natural gas finds. She cites talk of 300 million barrels — although she says that’s a gross figure, before the energy input is subtracted. “Well, at 100 euros a barrel, that’s 3 trillion euros, so there are huge economic interests involved,” she says. And the shareholders are placing “lots of pressure” on the government to give it the go-ahead. Concludes Karassin: “Israel’s wider interests must take precedence. And those require that the oil shale stays where it is.”

Says Vinegar: “I see what this can mean for Israel.” He continues, “It means energy security for Israel, almost forever. It means an enormous continuing source of income. It means so many jobs — in both primary and related industries.”

Vinegar adds, “The natural gas in the Mediterranean will have a very favorable impact on the economy; but this will have a greater effect than that of the natural gas. And remember, gas is ideal for electricity generation, but oil is required for true energy security because it provides the fuel for cars, trucks and jet planes.”

***

It was in the Elah Valley, where IEI wants to carry out its pilot, that the Bible tells us David defeated Goliath.

For IEI’s environmental opponents, the association is highly appropriate; they see theirs as a modern version of that against-the-odds struggle by the little man against the giant.

But for Harold Vinegar and his supporters, too, the David and Goliath story resonates, for theirs, they believe, is a project that will safely strengthen tiny Israel — literally empower it — against its vast array of enemies.

It might take the wisdom of David’s son, Solomon, to determine whose argument should triumph. We have the Jerusalem Regional Planning Authority.

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