Jerusalem (CNSNews.com) – An oil discovery in the Dead Sea region that sat dormant for more than 20 years is being dusted off to see if it might yield a profitable amount of precious crude for the domestic Israeli market.
Although the amount of oil in the area is relatively small, any domestic oil source is significant given Israel’s longstanding dependence on foreign oil sources. Fully 99 percent of Israel’s oil comes from foreign suppliers.
The largest consumer of petroleum in the eastern Mediterranean, Israel has sought rely less on oil and more on natural gas. That change is largely dependent on how quickly two offshore natural gas fields can produce the amount needed.
With oil prices currently standing at about $45 a barrel, compared to $15 when the oil in the southern Dead Sea area was initially discovered, the licensing company Israel Opportunity feels that the time is right.
“It’s a cheap project for us,” said Eyal Shuker, CEO of Israel Opportunity of the project, known by its licensing name Hatrorim. “It will be very easy to sell it to the refinery.”
The company is working through a partnership group and is seeking 25 percent of the Hatrorim license. Other portions of the license will go to other Israeli entities including Zerach (31.25 percent), Ginko (31.25 percent), the Ashtrom Group (10 percent) and Avner Partnership founder Dr. Eli Rosenberg (2.5 percent).
The 94 square miles of licensed area where Hatrorim exists could turn a nice profit for those invested in the project. It will be an investment of approximately $4 to 5 million to execute the project.
If gas prices stay near their current levels, the profit could ultimately be about $310 million.
The project area is just west of Ein Bokek in the southern section of the Dead Sea. Although there are no environmental concerns currently linked to the project, environmentalists have been sounding the alarm on the Dead Sea’s stability and the area surrounding it in the past few years.
According to veteran Jerusalem-based journalist Khaled Abu Toameh, the Palestinian Authority (P.A.) is challenging the legitimacy of the project.
“Israel has no right to use oil reservoir near Dead Sea because it's under Palestinian sovereignty according to international law,” Toameh quoted the P.A. as stating on his Twitter feed earlier this week.
According to maps of the region, however, the reservoir is well within the “green line” – the 1949 armistice line between Israel and the then Jordanian-controlled West Bank – and thus not in territory generally considered to be disputed between Israel and the Palestinians.
The company has until May 2017 to file the necessary paperwork and test the production capacity of Hatrorim. When it was discovered in 1995, it produced about 300 barrels per day. Things could be much different for the site that has a total of about 7 to 11 million total barrels – still considered a small amount.
“In the past 20 years, technology has advanced significantly,” said Shuker. The production of barrels per day in 2016 could be far beyond 300 a day. In addition to being a safe bet, the Hatrorim area has already proven to contain oil and extensive geological information already exists on the site.
Israel’s total current production of petroleum stands at just under 6,000 barrels per day.
According to Shuker, that geological information was never filed and has sat in the office of Rosenberg, the geologist who initiated the original discovery of the well, called Halamish.
“Most of the information on the Halamish Well has been kept in Eli Rosenberg’s office,” said Shuker. It was Israel Opportunity who dug into the paperwork to explore the feasibility and potential benefits of opening the project again.
The lowest point on earth and long a drawcard for tourists and those seeking the health benefits of the sea’s mud, the Dead Sea has also suffered from a steadily sinking shoreline. The water level has been sinking by about 3.3 feet a year, according to experts. Industrial projects are believed to be partly to blame for that.
Dangerous sinkholes have also increasingly appeared near the sea’s shoreline, making some areas so dangerous that they’ve been closed down to visitors. Just this past year, a popular free beach about an hour from Jerusalem was closed due to sinkholes.
Israel has had a narrow road to oil and natural gas production over the past few decades, which have been defined by major offshore discoveries. Things could be shifting, though. In the case of Israel Opportunity, their last offshore project was in 2012.
“There is a lot of uncertainty in the sector of oil and gas in Israel,” said Shuker.