On Tuesday, June 14, Zion Oil & Gas, Inc. announced it had requested a petroleum exploration permit to develop large shale oil deposits in the Shfela Basin, 30 miles west of Jerusalem. Zion Oil & Gas is one of many companies beginning to develop Israel’s large shale oil deposits. Though the reserves were discovered years ago, only recently have advances in energy technology rendered the reserves accessible and extraction affordable. In fact, more than simply affordable — these deposits comprise the third largest shale oil reserve in the world and are expected to yield 250 to 500 billion barrels of oil. If these projections prove correct, this development could well be one of the most geo-politically consequential discoveries of the twenty-first century.
China and the United States currently have the largest deposits of shale oil but, as the largest consumers of energy, these countries consume most of their deposits. Therefore, Israel could potentially become the world’s leading exporter of shale oil.
Developments in extraction technology have significantly lowered the price per barrel of shale oil to $35 or $40. This poses a serious threat to Saudi Arabia, the world’s leading exporter of oil. The recent Wikileaks suggest that Saudi Arabia has been overstating its oil reserves by as much as 300 billion and is estimated to actually have only 260 billion barrels of oil. With deposits rivaling those of Saudi Arabia, Israel may well join the ranks of the world’s top oil exporters.
Israeli energy initiatives have already attracted international attention and celebrity investors including Dick Cheney, Rupert Murdoch, Jacob Rothschild, and Harold Vinegar, the world’s leading shale oil extraction expert. According to Vinegar, “These Israeli deposits have been known about, but have never been listed before. It was previously assumed there was not the technology to deal with it.”
With newfound resources and new age technology come endless possibility. To many, this news is a blessing, for some a burden, and for still others a mixed bag. Here are a few examples of how the development of the region is being received:
For Israelis:
Currently, Israel must import all its oil and 70 percent of its gas. Given the recent suspension of natural gas from Egypt, the development of its oil reserves is a boon to Israeli energy security. Israel has pledged to move away from dirtier forms of energy and has worked to develop advances in shale oil extraction technology.
For religious Zionists:
Zion Oil & Gas Inc. was founded in 1983 by John Brown, a devout Christian, after reading in Deuteronomy 33:18-19 that Israel shall “suck the abundance of the seas and treasures hid in the sand.” Since the discovery, many Jews and Christians cited the book of Ezekiel as well, prophesizing a “spoil” to be found in Jerusalem.
For environmentalists:
International environmental lobbies in the past have criticized shale oil extraction as a water intensive and air polluting process. Yet Israel’s Energy Initiative refutes the claim that the process requires excess use of water and assures that a nearby aquifer will not be contaminated by the work. According to Lawrence Solomon, the executive director of the environmental research team, Energy Probe, Israeli oil has, “an exceedingly low environmental footprint.”
For academics:
Joining the ranks of countries like Switzerland and Singapore, Israel has had to develop its human capital in the absence of abundant natural resources. Some attribute Israel’s success to this counterintuitive finding and cite case studies of countries with great nonrenewable natural resources having a “resource curse,” a condition of dependence, volatility, and lopsided economic growth. Therefore, some have received Israel’s energy development with cautious indecision.
For Palestinians:
Palestinians have objected to Israel’s development as many believe Israel’s land is rightfully theirs. One Fatah member has already been quoted as calling it an “act of aggression.” However, in all likelihood, Palestinians will benefit from the trade and economic activity spurred by Israel’s newfound resource. As one study points out, “The magnitude of Israeli exports is directly and strongly linked to the level of Palestinian economic activity at large.”
For OPEC:
OPEC had long retained a monopoly on petroleum. After the attempted oil embargo in the 1970s, the power of the OPEC cartel has faded but its political influence endures by putting political contingencies on the transaction of oil. Israeli oil reserves may challenge the cartel and, by introducing more competition into the market, considerably reduce OPEC’s political clout.
For the United States:
The United States may enjoy a modest decrease in the price of oil but the geopolitical benefits far exceed the economic gains. For example, if freed from the diplomatic constraints of a dependency on Arab oil, American presidents may no longer have to kowtow to the King of Saudi Arabia, who denies women the right to vote and allows stoning as a punishment for adultery. Israeli oil could bring about a global shift in the petroleum paradigm.
Photo Credit: http://geology.com/usgs/oil-shale/images/israel-jordan-oil-shale-map.gif