Israel to produce synthetic oil from low quality shale at $17 a barrel. HAIFA, Israel, Nov. 7 The Israeli process for producing energy from oil shale will cut its oil imports by one-third, and will serve as a guide for other countries with oil shale deposits, according to one company. A.F.S.K. Hom Tov presented its oil shale processing method on Tuesday, outside Haifa and just down the street from one of the country's two oil refinery facilities. "Because the patents for this process belong to (the company), Israel is the most advanced in the world in the effort to create energy from oil shale," Moshe Shahal, a Hom Tov legal representative and a former Israeli energy minister, told United Press International. Shahal estimated that the company's Negev Desert facility would begin full-scale production in three to four years, while other countries with oil shale deposits will need five to six years to reach production. Oil shale is limestone rock that contains hydrocarbons, or fossil fuels -- about 20 percent of the amount of energy found in coal. Using the rock as a raw material and coating it with bitumen, a residue of the crude oil refining process, the company can produce natural gas, fuel, electricity, or a combination of the three. Older technologies squeezed the hydrocarbon material out of the rock, with extremely high pressure and at high temperatures. According to Professor Ze'ev Aizenshtat, an oil shale expert, the Hom Tov process is more environmentally friendly than other /methods of converting oil shale into energy. It also allows for more flexibility in the kind of fuel produced, produces less waste and operates at lower temperatures than other methods. Though the production process may be more environmentally friendly, the end product is still a fossil fuel, similar in quality to a high-grade diesel when in liquid form. Israel's shale is low-quality, however -- its "caloric value" is only about 15 percent, while shale in other countries yields 20 percent, according to a report in BusinessWeek earlier this year. As a result, more Israeli shale is needed to produce the same amount of fuel. Hom Tov isn't worried, however. "This is a much lighter (substance) than what gradually comes out of an oil field," Aizenshtat told UPI, as Hom Tov company owners Israel Feldman and Shimon Kazansky posed for photographs with their fingers dipped in a plastic pitcher of the stuff. Because fewer refining processes are necessary with oil shale than with crude oil, the final product is a higher quality fuel at a lower price, Aizenshtat said. The company estimates it will consume 6 million tons of oil shale and 2 million tons of refinery waste each year, for an annual production of 3 million tons of product. It would cost about $17 to produce a barrel of synthetic oil at the Hom Tov facility, meaning giant profit margins in a world of $45 to $60 per barrel crude. Yearly earnings are forecasted to be between $159 million and $350 million, Shahal said. Israel has 15 billion tons of oil shale reserves. Jordan, on the other hand, has about 25 billion tons, and the oil shale in Jordan is of higher quality. Shahal met with Jordanian Energy Minister Azmi Khreisat earlier this year, to discuss setting up a plant there. The United States also has a giant reserve, mostly in Colorado, and Hom Tov sees potential for its patented process there. The process, which Feldman and Kazansky developed in the mid-1990s, has lately attracted some high-powered investors, including Ofer Glazer -- the third husband of Israel's richest resident, billionaire Carnival Cruise heiress Shari Arison. "It's a kind of dream" to invest in Hom Tov, Glazer told UPI. "It's the type of investment where Israel needs the product, and it creates jobs." Glazer added that it will be good for Israel not to be dependent on "external sources" for its energy needs, saying that "those countries aren't exactly friendly (to Israel.)" As for his stake in the project, Glazer said he preferred "not to get into numbers." ------------------------------- Israel Presses for Oil From Shale. HAIFA, Israel, Jul. 7 With the help of homegrown technology, an Israeli company's proposed energy plant could help the country vastly reduce oil imports With oil prices hovering around $70 a barrel, Israel is looking for ways to reduce its near total dependence on energy imports. It's pondering the use of the nation's huge reserves of oil shale a dark, crumbly rock loaded with hydrocarbons located in the central and southern parts of the country. Thanks to a technical breakthrough, it should be possible to extract fuel oil from the shale for less than $20 a barrel. That could allow Israel eventually to cut its crude imports by up to one third. Shale is already used as a fuel for power plants in Israel and Estonia, where the rock is burned like coal to drive steam turbines. Israel's small shale fired power plant was built nearly 20 years ago. But past attempts to extract liquid oil from shale weren't economically feasible: The process cost upwards of $50 per barrel at a time when oil was selling for less than half that. Now, the tables have turned. A Russian born Israeli immigrant named Moshe Gvirtz developed a technique in the 1990s to squeeze oil from shale by mixing the rock with a residue from conventional oil refining and putting it through a catalytic process. The dramatically improved results, coupled with soaring crude prices, have inverted the economics of oil shale. That could help not just Israel but dozens of other countries, including the U.S., that are rich in shale reserves. SOME CHALLENGES. A Haifa based engineering firm called A.F.S.K. Hom Tov, which owns the patented process, is now gearing up to exploit the opportunity. "The technology could reduce dependence on imports and substantially reduce Israel's overall energy bill," says Israel Feldman, the company's co-founder and managing director. A.F.S.K. Hom Tov has proposed building a plant that could produce up to 3 million tons of oil annually, or roughly 30% of Israel's current oil imports. How does it work? Older technologies squeezed oil out of shale by putting the crushed rock under enormous pressure at high temperatures. But the process developed by Gvirtz costs far less. The shale is mixed and coated with bitumen, a remnant of normal oil refining, then put through a catalytic converter under relatively low pressure. The output is synthetic oil that can be refined into gasoline and other products. The only problem for Israel is that its shale is relatively low quality, with a "caloric value" of only around 15%, compared with values of 20% or higher in other countries. That means A.F.S.K. Hom Tov has to use more shale for a given output of oil. DREAM REVIVED. But in an interesting wrinkle, the company also has developed a way to burn the leftover shale which still contains residual fuel that could someday be used to drive a 100 megawatt power plant in southern Israel. The dream of exploiting shale's potential is far from new. Ten years ago, a study conducted for the Israeli Energy Ministry by a panel consisting of some of the country's leading technical experts found that a 3 million ton per year shale plant could turn an annual profit of $20 million to $59 million if oil were priced at $18 a barrel. On that basis, the experts strongly backed shale oil technology and recommended the Israeli government finance a pilot plant. But "falling energy prices and Israel's decision to switch to natural gas led the Israeli government to put the homegrown technology on the back burner," says Moshe Shahal, a former energy minister and now a leading Tel Aviv corporate lawyer who represents A.F.S.K Hom Tov (Hebrew for "good heat"). Only when oil prices began skyrocketing again last fall did Shahal and the company resume serious efforts to market the process locally as well as abroad. DESERT PLANT. Not surprisingly, an updated feasibility study by local energy consulting firm Eco-Energy found that the shale plant would be even more profitable today. "The cost of producing a barrel of oil using the process would be around $17 a barrel," estimates Amit Mor, managing director of Eco Energy. At that price, the proposed plant would be a veritable gold mine, with annual profits between $188 million to $317 million. Mor notes that the projections are based on the U.S. Energy Dept.'s forecasts of an average oil price of $45 to $50 a barrel in the coming 25 years. So far, A.F.S.K.'s process has only been tested on a laboratory scale. The company is planning an industrial scale plant to be built at Mishor Rotem in the Negev Desert. "We hope to be in full scale production in 2010 or 2011 at the very latest," says Feldman. That will entail construction of a pipeline from the Ashdod refinery located 80 kilometers (48 miles) to the north that would be used for transferring the necessary bitumen needed for the production process. A parallel pipeline would transport the synthetic oil back to Ashdod for refining. INTERNATIONAL APPEAL. A.F.S.K. has already made a formal request to Israel's National Infrastructure Ministry for mining rights at Mishor Rotem. It has also asked the Industry, Trade, and Labor Ministry for government backing for the ambitious project. "The technology is extremely interesting and, with oil prices at these levels, there is a lot of interest on our part to develop shale," says Yaakov Mimran, Petroleum Commissioner at Israel's National Infrastructure Ministry. The two ministries are expected to give the green light in the next few weeks for a pilot plant to test the process. The company hopes to have the necessary licenses and government financial support in hand by the end of this year. The technology has a huge potential abroad. Some 25 countries, including the U.S. and Jordan, have substantial shale reserves. Israeli energy industry sources involved in the project say that energy giant Royal Dutch Shell has reportedly expressed interest in the technology. Shell is already active in shale in Colorado. In addition, several major investors from Israel and abroad have reportedly expressed interest. FULFILLING THE PROMISE? Shahal has discussed cooperation with neighboring Jordan, which has even larger and higher quality shale reserves than Israel. Earlier this year, he held talks with Jordan's Energy Minister Azmi Khreisat on building a similar size plant in the kingdom. In the past the Israeli government has not taken exploiting the country's oil shale reserves very seriously. But the spike in oil prices has changed all that. If the new technology proves to be as worthwhile as it is cracked up to be, Israel and many other countries could be on the road to greater energy independence within a matter of years.