the new petro power paradigm - Diplomat Magazine

ENERGY|Di spatches
U.S. Coast Guard photo
The Gulf of Mexico oil spill last year demonstrated to the oil industry the need to protect its bottom line by upgrading safety.
lion barrels — or five Saudi Arabias — are
potentially recoverable.
All told, the United States has more
oil recoverable from shale than any other
country in the world. Remarkably, the
new technologies now in use allow many
of these wells to become profitable in a
mere eight months, compared to a typical
two years for conventional oil operations,
helping to explain the new oil rush.
Not that the United States even needs
shale and tight rock oil to blow off OPEC.
According to the U.S. government’s Congressional
Research Service, America’s
federal lands contain an estimated 163
billion barrels of technically recoverable
conventional oil, enough to replace all
Persian Gulf imports while maintaining
America’s current rates of production.
Most of those conventional barrels are today
beyond reach, either because the cost
of pulling them out of the ground is too
high with today’s technology or because
government policies either discourage or
ban their exploration on environmental
grounds. The ban is especially sweeping
for offshore oil, where some 85 percent of
the 1.76 billion acres of American coastal
waters is off limits to new drilling.
Those bans would largely be swept
aside should any Republican become
president in 2012, or under any president,
Democrat or Republican, in 2016. One
large reason, ironically, is the aftermath
diplomat and international canada
of the horror that was the BP Gulf oil spill
last year. That seemingly never-ending,
worst-case blowout demonstrated to the
oil industry the need to protect its bottom
line by upgrading safety. It demonstrated
to government regulators the dangers in
their laxity. And it demonstrated to the
public at large the resiliency of Mother
Nature: One year after the blowout, the
damage is seen to be much smaller than
once feared and most consider the cleanup
to be all but complete, thanks less to human
efforts than to nature’s awesome
recuperative capacities.
America’s will to wean itself off foreign
oil dependency will come less from the
declining credibility of environmentalists,
however, than from economic imperatives
— the need of the federal government
and many states to avoid a default
on their debts and to avert bankruptcy.
The United States spends US$1 billion a
day on imported oil, making it the chief
contributor to America’s balance of payments
deficit. A drill-baby-drill policy
would represent America’s single biggest
boost to the economy and the single biggest
spur to new jobs, providing hundreds
of billions in royalties and taxes a year to
governments as people and companies get
back to work. Most important, it would
put a lie to the sinking sense that so many
Americans have, that America’s best days
are behind it.
Israel’s Shfela Basin holds
vast oil supply
The old energy order in the Middle
East is crumbling, with Iran and
Syria having left the Western fold
and others, including Saudi Arabia, the
largest of them all, in danger of doing so.
Simultaneously, a new energy order is
emerging to give the West some spine. In
this new order, Israel is a major player.
The new energy order is founded on
rock — the shale that traps vast stores of
energy in deposits around the world. One
of the largest deposits — 250 billion barrels
of oil in Israel’s Shfela basin, comparable to
Saudi Arabia’s entire reserves of 260 billion
barrels of oil — has until now been unexploited,
partly because the technology required
has been expensive, mostly because
the multinational oil companies that have
the technology fear offending Muslims.
“None of the major oil companies are
willing to do business in Israel because
they don’t want to be cut off from the
Mideast supply of oil,” explains Howard
Jonas, CEO of IDT, the U.S. company that
owns the Shfela concession through its
subsidiary, Israeli Energy Initiatives. Jonas,
an ardent Zionist, considers the Shfela
deposit merely a beginning: “We believe
that under Israel is more oil than under
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