http://www.timesofisrael.com/oil-magnate-tovia-luskin-israeli-tech-can-solve-the-worlds-energy-crisis/Oil magnate: Israeli tech can solve the world’s energy crisis, if red tape doesn’t tie it up.
Tovia Luskin says it’s not true the rebbe told him where to drill, but he did use a biblical verse as a guide.
Once, people scoffed at the idea of Israel as a high-tech powerhouse – but today, the likes of Intel and Microsoft scout the Israeli start-up landscape to find the next big thing.
Based on recent developments, that same transformation is taking place in the area of energy — gas and oil. Not too long ago, the idea of an Israel that was not only energy independent, but even an exporter of fuel, was laughable. Even now, the prospect seems somewhat pie-in-the-sky to Israelis who pay for expensive (compared to most Western countries) gasoline and electricity. But if all goes well, Israelis will soon begin to reap the benefits from the recent major natural gas finds off the country’s coast.
Drilling has already begun at the Tamar gas field off Israel’s central northern coast, and the first of the estimated 8.3 trillion cubic feet of gas in that field should begin having an impact on the economy as early as next year, with the gas replacing coal in electricity production. One of the partners managing the Tamar field, Dalia Power Energies, plans to build a large power plant to supply cheaper electricity to Israeli consumers. That project will be completed in 2015.
The Tamar “bonus,” however, is just a prelude to the benefits to be reaped from the Leviathan field north of the Tamar find, which is estimated to have double the amount of gas Tamar has. That larger field is expected to come online in 2016-2018, and could make Israel one of the top natural gas exporters in the world if the country decides to get into that business.
If Israelis are perhaps not totally convinced, no one today laughs at the notion that Israel has the potential to be energy independent. But things were far different two decades ago when Tovia Luskin, arguably the father of Israel’s energy industry, began searching for oil. Thanks to Tamar and Leviathan, today it’s easy for believers in Israel’s energy future to have faith that, sooner or later, the country will benefit from the vast quantities of natural gas offshore. Back in 1993, seeing Israel as an energy power required pure faith — the kind of faith that Luskin actually had.
It was that faith that led Luskin, who rarely gives interviews, to the Lubavitcher Rebbe, the late Menachem Mendel Schneerson, for a beracha, a special blessing to help him in his work. “It’s not true that the rebbe told me where to drill,” Luskin told The Times of Israel, dispelling part of the myth that has grown up around him and his company, Givot Olam. “The blessing I got was that my work in finding oil would succeed. He didn’t provide me with a timetable or a map,” Luskin said.
The map and timetable, Luskin came up with himself. According to the stories that circulated at the time, Luskin, a Russian-born geologist who was working in Australia, was inspired in 1988 when he came upon the passage in Deuteronomy 33:15 where Moses blesses the children of Joseph, Menashe and Ephraim. In the blessing, Moses says that God will bless the tribes with “the choicest gifts of the ancient mountains and the fruitfulness of the everlasting hills.” Commenting on the difference between “ancient mountains” and “everlasting hills,” the medieval commentator Rashi says that the latter are older, and were already in existence when the former were created.
The structure of the sentence reminded Luskin of geological structural traps, associated with petroleum reservoirs. He shared his insight with the Rebbe, who responded by blessing him that he would “report good news, and that it will be very soon.”
“The story of the blessing is true,” Luskin said, but he based the idea of searching in the area of Rosh Ha’ayin in central Israel — part of the tribal area allocated to Menashe — only after a professional geological evaluation of the terrain. The more he investigated the most likely spot, which became known as the Meged field, said Luskin, “the more it confirmed the story in the Bible. I have worked on oil fields in Australia, Indonesia, and Canada, and I have never seen a structure so likely to contain oil as the Meged field.”
And, as it turned out, his hunch and his research were correct, Luskin said. “It took us a while to explore, and we had plenty of dry holes, but today the Meged field is producing oil, and our company, Givot Olam [named for the biblical Hebrew term for "everlasting hills"], which has the licenses to explore and produce in the field, is profitable.”
The first oil in the Meged field was found in 2004, and the Meged-5 drill site began producing commercial quantities of petroleum in late 2010. The proved reserves of the field stand at 1.5 million barrels, but Luskin said he believes that the number is closer to over 200 million barrels, or even more — not enough to make Israel into another Saudi Arabia, but enough, said former MK Efraim Sneh, an expert on energy matters, to supply 10% of Israel’s oil needs on a long-term basis.
The Palestinian Authority has said that some of the Meged oil belongs to it, because the field extends onto areas administered by the PA. Sneh sees this claim as an excellent opportunity for Israel and the PA to cooperate on a project that will benefit them both.
Luskin said he hopes to extract as much of the oil as possible, and is planning to drill more wells — as many as 40. But there are several factors working against that plan, he said. Bureaucracy is always a problem, and bureaucrats have stood in the way of his plans several times — most recently this past January, when the government rejected a request by Givot Olam to drill three exploratory wells. In a statement to the Tel Aviv Stock Exchange, the company said that it appeared that the drilling request was rejected “because of a retroactive change in the planning procedures for oil wells” — bureaucratese par excellence, Luskin said.
But even more debilitating to the energy exploration business, said Luskin, was the implementation of the recommendations of the Sheshinski Commission. The commission was established several years ago by the government over concerns that licenses for oil and gas exploration had been leased too cheaply — perhaps with the expectation that nothing would come of the exploration. Now, however, the stakes are much higher, and the commission, headed by Hebrew University economist Eytan Sheshinsky, last year recommended retroactively increasing the state’s take by hiking some of the fees associated with leasing, and the net profit from production.
Luskin slammed the Sheshinsky plan, barely avoiding using terms “state-sponsored theft.” According to Luskin, “Sheshinsky without question is going to hamper exploration and production. The government came in the guise of a thief and changed the deal we explorers had with them. Not only does it retroactively raise the tax from 40% to 75% of the total value of what we find, it retroactively punishes success. I would not be surprised if the Tamar and Leviathan people stopped their work, although in truth the Sheshinsky plan hurts us at Givot Olam more than it hurts them.”
The loss is not only to his pocket, but to the state, as well, Luskin said. “I had every intention of building a university that would train engineers in oil exploration and energy management, an area that is crucial to Israel’s future. Now I’m not sure I will be able to,” considering how much money he is going to have to give up.
And learning how to develop oil and gas is important not only for Israel, but for the entire world. “The alternative energy projects like solar and wind are all nice, but they’re just projects. For the foreseeable future we are going to be dependent on fossil fuels, a finite resource.”
New technologies are needed to maximize the existing oil supply and to find new sources of oil and gas, and given Israel’s penchant for technology, this would be the perfect place for such a university. “We need to invest in a new generation of scientists, and Israel is the place to do it. If a solution to the energy crisis is to be found, it will be here,” he said, adding that “the world needs the Jewish brain.”
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