How seriously should we take the Golan oil find?

Golan Heights

Afek Oil and Gas's projected oil production covers at most 2% of Israel's consumption argues Daniel Reem.

Afek Oil and Gas, headed by former Minister of National Infrastructure and former Minister of Construction and Housing Brigadier General (res.) Effi Eitam, this year began drilling in the Golan Heights in order to find oil. Due to the opposition to its drilling, the company is trying to persuade the public and decision makers that the venture is sound, among other things by invoking patriotism and talk of energy independence, a huge treasure, Israel becoming an oil power, etc. Are these slogans based on real data?

Israel consumed 9.4 million tons of fuel in 2014, or an average of 190,000 barrels of oil a day. The small print published by Afek shows that the company was talking about production of 2,000-10,000 barrels of oil a day - 1-5.3% of consumption in 2014. Taking into account the two main other components in Israel's energy basket (natural gas and coal), oil from the Golan will cover only 0.4-2% of consumption.

Although it can be argued that as long as the quantity of oil is unknown, production cannot be estimated, this argument is incorrect for several reasons. First of all, two drillings have already been completed (the first in May), but suspiciously, and in contrast to the company's declarations of transparency, no real information was disclosed, other than "signs of oil," no production tests were conducted, and the reports to the New York Stock Exchange by Genie Energy, Afek's parent company, said that the quality of the findings was unclear. It can be assumed that any real oil findings would have been reported with great fanfare.

Secondly, even if the quantity of oil in the ground is enormous (a doubtful premise), fiscal, economic, environmental, and social constraints can still be expected to limit the extent of production. For example, expensive field infrastructure and transport is needed. Furthermore, it is likely that the oil is trapped in rock. This will probably require stimulation (and perhaps also fracking), plus a large number of low-production and short-lived drillings. Thirdly, company geologist Dr. Yuval Bartov has previously admitted that producing 10-20% of any amount found is ideal, and on the same occasion mentioned production of 20-100 million barrels, in other words, only 40-200 days of consumption in 2014 figures (oil, gas, and coal).

In other words, there are indeed signs of oil on the Golan Heights, but on the other hand, there are several concrete question and exclamation marks about the project indicating an element of illusion in the statements about "energy independence." The shale oil project in the Adulam area, led by Israel Energy Initiatives (IEI), Afek's fellow subsidiary, marketed an illusion. A potential of tens (or even hundreds) of billions of barrels of oil and energy independence was mentioned, while production of 50,000 barrels daily at best was planned, before deducting the great amount of energy lost as a result of the production method.

On the Golan Heights, a prolonged illusion is feared, because production of 20-100 million barrels of oil at the rate of 10,000 barrels a day will continue for 5.5-27.5 years. Experience accumulated around the world shows that prolonged oil production significantly increases the risk of severe pollution events, leaking of hazardous materials, accidents, sabotage, earthquakes, and air pollution. It is frightening to think of such disasters and others like them (such as the oil disaster in the Arava in December 2014) happening in a sensitive region like the Golan Heights, destroying the nature reserves in the area; polluting Lake Kinneret (the Sea of Galilee), the groundwater, and the rivers; and damaging health, agriculture, and tourism.

In contrast to the past, oil has now become less important, because there are substitutes for it. One of these is natural gas, which is gradually replacing oil products and coal. Gas, however, is a non-renewable resource, some of which is designated for export, not domestic use. More promising substitutes are renewable and environmentally friendly energy resources, such as solar and wind energy, which within a few years are expected to provide all the electricity consumed in the Golan Heights and the Galilee. Renewable energy has been picking up speed throughout the world in recent years, bringing with it many developments, job possibilities, exports, better health, and a drastic fall in energy prices, including in Israel, which is expected to continue in the future.

Theoretically, renewable energy, combined with storage facilities, can supply all of Israel's energy needs for generations. It will contribute to energy stability, because solar panels installed on the roofs of private houses, public buildings, cowsheds, etc. are not vulnerable like power stations, are not exposed to market volatility, and last for decades with minimal maintenance.

To summarize, the oil venture in the Golan Heights appears extremely dubious. Instead of getting involved in it, sun-rich (and wind-rich in the Golan Heights) Israel can decide to be a light unto the Gentiles in the field of clean and renewable energy, and later enjoy true energy independence.

The author holds a PhD in mathematics, and is doing a post-doctorate at the Institute of Mathematics and Computer Science, University of Sao Paulo, Brazil.

Published by Globes [online], Israel business news - - on October 7, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Golan Heights
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