Israel to Produce Oil at 25 Dollars a Barrel

I still remember my dad going out to get gas for his truck. He took a book and a snack even thought the Gas Station was only around the block right next to the Seven Eleven.At any time of the day you could look out my window and see a long line of multi colored cars that seemed more like statues than moving vehicles . You see was 1973 and there was an oil shortage in the United States, getting gas was an adventure.

Since the US has promised to come up with alternate sources of fuel, we haven't moved very far down that road. But Israel Has. As described by Israel 21C a company based in Haifa has figured out how tor turn shale and asphalt into Oil. Eventually this technology should be able to produce up to 30% of Israel's Oil needs.

Turning shale and asphalt into oil
By Stuart Winer January 14, 2007

An Israeli company intends to revolutionize oil production by recycling oil shale rock into high quality fuel.

Haifa-based A.F.S.K Hom Tov recently demonstrated its patented method of extracting high quality oil and natural gas from a mixture of bitumen and oil shale rock. Bitumen - or asphalt - is the residue obtained by distillation of crude oil.

Experts predict the process will return oil at just $25 dollars a barrel and the additional natural gas produced would further boost the financial feasibility. With crude oil prices currently floating over the $50 a barrel mark, this proposed method is generating interest around the world.

"The world is looking for a replacement for oil supplies," says attorney Moshe Shahal, a former Israeli energy minister and today the legal representative for Hom Tov.

The Hom-Tov process uses oil shale as a catalyst to extract combustible organic material from the residual bitumen byproduct of crude oil refineries. The end product from the process can easily be refined into high-grade petroleum and other fuels.

At present, oil refineries produce countless tons of bitumen residue every year that have little practical use or economic benefit and are an environmental hazard.

As a further bonus, the process converts the oil shale rock into a dry fuel in which the inorganic rock structure traps dangerous gases, such as sulfurous materials, preventing pollutant emissions to the atmosphere. The dry fuel byproduct could be burnt to power the Hom-Tov process itself as well provide additional electricity for the national grid.

"The Hom-Tov process is energy self-sustained," says Professor Zeev Aizenshtat, an energy resource expert and professor of chemistry and applied chemistry at the Hebrew University of Jerusalem. Aizenshtat has followed the development of the Hom-Tov process for more than a decade and now acts as an expert consultant for the company.

Oil refineries separate crude oil into different grades of fuels and oils. Petroleum and diesel are a higher grade than heavy fuels used in power plants, and those are higher than oils used for plastics and lubricants. At the very bottom is the bitumen residue which is difficult to rectify further into a useful fuel.

The volume of bitumen residue left over from each barrel of crude oil depends on the quality of the crude, but ranges from 10 percent and upwards. Although combustible, the trapping devices required to prevent sulfurous emissions from burning bitumen have made it uneconomical as a fuel. Once used as a heating fuel in steam-powered ships and power stations, stricter emission laws have relegated bitumen to be used for roads surfaces or waterproofing materials.

According to Aizenshtat, reprocessing bitumen to extract oil residues requires very high temperatures that burn off valuable lighter oils leaving mostly gases that are hard to store or transport to clients.

In the US, the Department of Energy is pushing for refineries to produce liquid fuels instead of gases to facilitate handling and transport.

The Hom-Tov process enables refineries to reprocess the bitumen and extract a variety of liquid and gaseous fuels at much lower temperatures. The process itself can be tweaked to produce different grades of oil as required.

Hom-Tov first suggested using the shale process in 1992 and in 1994, Shahal, then Israel's energy minister, ordered an investigation of the process to check its financial viability. Although the results proved that oil could be made at just $16 a barrel, at a time when oil was selling at $20 a barrel made the profit margin too low to justify setting up a plant. A decade later, as oil prices reach record highs, Hom Tov relaunched its method for producing cheap oil.

AFSK Industries was established 30 years ago and in 1994 established AFSK Hom-Tov to promote the unique extraction process. Yisrael Feldman, A.F.S.K. Hom Tov CEO, and creator of the revolutionary technique, estimates it will cost $700 million to set up a production plant in Israel's Negev region that could produce 2.3 million tons of oil and natural gas from 6 million tons of shale and 2 million tons of bitumen.

With those costs, a barrel of oil would be just $25.

"We won't see that price for [crude] oil again," Feldman asserts.

Last year, energy consultants Eco-Energy reviewed the Hom-Tov process and concluded that the proposed plant would return profits of over $200m, given current oil prices. Shahal estimates it would take just three years to build the proposed full-size production plant and Hom-Tov is now applying for construction and mining permits.

The project has already attracted serious interest from foreign investors. Ofer Glazer Holdings recently bought a 70% controlling share of the company for an undisclosed amount and Shahal says both US and European oil companies are ready to back the proposed Israeli plant along with similar extraction sites in Jordan and Morocco.

For Israel and other countries that have negligible domestic oil resources the process will relieve dependence on imported oil. Israel's Ministry for National Infrastructure is keen to follow developments as initial estimates show that Israel has enough shale to provide a third of its own energy demands.

"It gives Israel the opportunity to produce up to 30% of its fuel needs," Shahal told ISRAEL21c. "It all depends on the size of the plant. Israel is rich in shale deposits and there is enough to keep production going for another 70 years."

Oil shale is in plentiful supply in the Negev desert and is already being mined by phosphate factories that must dig past the shale to get to the lower mineral reserves.

Oil shale is a naturally occurring rock containing about 20 percent organic material. Geological pressures form the shale over time from organic matter deposited in lakes, lagoons and estuaries, and it is found in abundant supplies in many countries around the world. Oil shale can also be burnt directly as fuel and has been used as such in power stations for over a hundred years notably in Estonia, Russia, China and Brazil.

Distilling oil shale yields petroleum oils and the United States Energy Information Administration estimates the recoverable oil from oil shale rock in the US alone at over a trillion barrels. However, the petroleum extraction process requires very high temperatures and pressures and in the past oil shale petroleum was never able to compete with the much more easily mined crude oil.

With global energy concerns rising together with oil prices, oil shale is drawing renewed interest and several US and European oil companies are researching new in-situ mining methods to extract oil directly from the subterranean shale. The most promising method now under consideration requires heating the underground shale over a period of several years to extract the oil content. Due to the enormous energy required in the extraction process, researchers are looking at nuclear power to provide the heat.

According to Ainzenshtat the in-situ mining research will require another $2 billion to complete and even then the final product will only be ready by 2011. Questions still remain as to what residue will be left behind after the oil is extracted.

"If you want to wait till 2011 to find out what has happened that is up to you," he says.

By contrast, the Hom-Tov process with its side product of dry fuel is far more energy efficient than any other shale oil process under research. After combustion the burnt dry-fuel can be returned to the ground a scenario that Aizenshtat says falls in line with demands by the US Environment Protection Agency (EPA) that power plants be ecologically balanced.

"One of the major constraints is those of the EPA that you have to have a total balance of that what you put into your reactor must be put back into the ground, "he explains.

The Hom-Tov process has a long-term viability as well. Although the world is now looking for energy resources to replace crude oil, the by-product of which supplies the Hom-Tov process, Aizenshtat predicts that there will be plenty of raw material to keep it viable for the foreseeable future. Aside from fuel demands, the petrochemical industry is indispensable for other sectors, such as pharmaceuticals.

"Oil is more than just burning as fuel," he says.Yet because the process is so adaptable Aizenshtat hopes it will one day be used to process a wide range of refuse from different industries.

The oil shale extraction method is suitable for organic matter from different sources including anything from recycled tires and plastics to hazardous waste from the pesticide and fertilizer industries. Although the price of the final oil product may change depending on the basic materials used, the ecological value would make up for it.

"As an ecological system the price is different," Aizenshtat concedes. "But then you take into consideration that you are getting rid of refuse as well. It is not just the matter of making gasoline but getting rid of mountains of refuse. If you have a process that can convert all the chemical refuse into something useful then you are in business."