Oct 26, 2011 7:48 PM GMT
GOLDA MEIR, the former prime minister of Israel, used to tell a joke about how Moses must have made a wrong turn in the desert: “He dragged us 40 years through the desert to bring us to the one place in the Middle East where there was no oil.’ ”
As it turns out, Moses may have had it right all along. In the last couple of years, vast amounts of natural gas have been found deep under Israel’s Mediterranean waters, and studies have begun to test the feasibility of extracting synthetic oil from a large kerogen-rich rock field southwest of Jerusalem.
Israel’s swing of fate is just one of many big energy surprises developing as a new generation of unconventional fossil fuels take hold. From the high Arctic waters north of Norway to a shale field in Argentine Patagonia, from the oil sands of western Canada to deepwater oil prospects off the shores of Angola, giant new oil and gas fields are being mined, steamed and drilled with new technologies. Some of the reserves have been known to exist for decades but were inaccessible either economically or technologically.
Put together, these fuels should bring hundreds of billions of barrels of recoverable reserves to market in coming decades and shift geopolitical and economic calculations around the world. The new drilling boom is expected to diversify global sources away from the Middle East, just as the growth in consumption of fuels shifts from the United States and Europe to China, India and the rest of the developing world.
“Use whatever hackneyed phrase you want, like tectonic shift or game-changer,” said Edward L. Morse, global head of commodity research at Citigroup. “These sources will dramatically change the energy supply outlook, and there is little debate about that.”
This striking shift in energy started in the 1990s with the first deepwater wells in the Gulf of Mexico and Brazil, but it has taken off in the last decade as a result of declining conventional fields, climbing energy prices and swift technological change.
The United States may now have the means to reduce its half century of dependence on the Middle East. China and India may have the means to fuel the development of their growing middle classes. Japan and much of Europe may have the chance to reduce dependence on nuclear power. And, at least theoretically, poor African countries might be able to lift themselves out of poverty.
For consumers around the world, the new fuels should moderate future price increases.
But giving new life to fossil fuels is a devil’s bargain, probably making solutions to climate change, and the development of renewable energy, even more difficult. “Not only are you extending the fossil fuels era,” said Daniel Lashof, director of the climate program at the Natural Resources Defense Council, “but you are moving into fossil fuels that are dirtier and release more carbon pollution in the process of extracting and using them.”
James Burkhard, a managing director of the energy consulting firm IHS Cera, said that competition between fossil fuels and renewable energy development was driven by the price of oil and gas as well as by government policy.
“The unconventional boom will guarantee that the competition is strong for years to come,” Mr. Burkhard said. “If oil costs $200 a barrel, that would provide more headroom for electric vehicles. But if oil is at $90, alternative, renewable energy will need to compete better on an economic basis.”