BUSINESS

An Alternative to Oil
Israel is tapping oil shale
reserves as a potential
source of alternative
energy – at what cost to
the environment?

Ziv Hellman

I
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 qual-
ity 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-meter-
high 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) south-
west 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 something like that do, ask local residents, to many statutory bodies as we can to the poten-
out that Israel is one of a relatively small num- our environment? tial damage this can cause, and may challenge
ber of countries with significant reserves of oil the law under which the drilling license was

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 tempera-
ture 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
T
HE RESIDENTS OF ADERET
have banded together in an attempt to
prevent the oil shale extraction from
proceeding in and around Adullam park, pool-
ing 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 Toronto-
born lawyer who has lived in Aderet for the
past 12 years. “We are now trying to alert as
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,

30 THE JERUSALEM REPORT MARCH 1, 2010

 COURTESY JOSHUA FOX
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 environmen-
tal 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 conduct-
ing 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
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?”
A
N INTENSIVE SEARCH FOR OIL
shale, and for new methods of extract-
ing 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 typi-
cally 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 extrac-
tion 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 coun-
tries. 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
THE JERUSALEM REPORT MARCH 1, 2010
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 natur-
al gas fields, and the hope of an Israeli compa-
ny 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 – sit-
ting 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 con-
ventional oil extraction expected to rise, how-
ever, efforts to find economical methods of
using oil shale have intensified.
Virtually every process for converting kero-
gen 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 pro-
cessing sites, after conducting full-scale min-
ing, 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.
B
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 high-
powered chief executive. He earned his doc-
torate in geology in Israel, and then moved to
Colorado, where he worked in shale oil extrac-
tion, 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
31
BUSINESS
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 approxi-
mately 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 cur-
rently 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 hydro-
32
gen,” he notes. “That’s impressive.”
J
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 cou-
ple 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 pro-
fessionals, 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 writ-
ten 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 pro-
duction 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 contamina-
tion is prominent in the concerns raised by
Aderet residents. This was heightened by
reports they read about major efforts undertak-
en 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 pre-
vent groundwater from mixing with the extrac-
tion zone. IEI, however, has no plans to imple-
ment a similar technology.
“The geology in Israel is very different from
that in Colorado, with which I am familiar from
THE JERUSALEM REPORT MARCH 1, 2010
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 possi-
bly 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.”
F
OX ALSO NOTES THAT NO ONE
knows what the great heat of on-site
extraction will do to what is under-
ground, which in this case includes archaeo-
logical 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 dis-
tress, 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 sur-
face, including archaeological objects. They
will be perfectly safe. In fact, consider the
freeze walls used in Colorado. They are locat-
ed very close to where the main heating is tak-
ing 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,” con-
tinues Fox, writing on the Save Adullam site.
“The American parent corporation is testing
this as-yet-untried extraction technique on ‘for-
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 easi-
ly 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 produc-
tion the company plans to transport oil to refin-
ing 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.”
S
HMUEL BENTOV, A BIOLOGIST
and resident of Aderet, regards many
of these answers as unsatisfactory.
“Restoring land back to its original condi-
tion [after shale extraction] is not simple,”
he says. “In Sweden, unacceptably high lev-
els of cadmium were found in the ground 20
years after extraction ended. Restoring nat-
ural woodland, after trees have been
removed, is impossible; the best they can do
is plant new trees. There is also much evi-
dence, 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 resi-
dential areas, and power stations for running
‘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
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 under-
standing that all petroleum resources belong to
the state. Any attempt to extract petroleum
requires state licensing. The licenses cover pre-
liminary 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.
B
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-
THE JERUSALEM REPORT MARCH 1, 2010
SHIMI NACHTAILER
ters, and the direction of Israel’s energy poli-
cies.
“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 foot-
print 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 under-
ground.
“I never thought I would be an environ-
mental 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.”
•
33