Natural Resources Minister Joe Oliver left for the country on Friday. His trip will be focused on pitching Canada to his counterparts in government, oil company executives and leading academics as an ideal partner to help Israel develop its newly discovered bounty of unconventional oil and gas.
“Our presence in energy there, it creates a potential that did not exist before,” Mr. Oliver said in an interview.
Since its founding six decades ago, multiple failed exploration attempts have led many to conclude the country, just a third larger than Prince Edward Island, was devoid of any significant energy resources.
But the discovery last year of a field 30 kilometres southwest of Jerusalem estimated by the London-based World Energy Council to contain up to 250 billion barrels of shale oil, together with 16 trillion cubic feet of natural gas found offshore, have suddenly put Israel’s name on the energy map. The oil find rivals global oil superpower Saudi Arabia’s 260 billion barrels in proven conventional reserves and was publicly dubbed “the equivalent of Saudi extra-light” by Harold Vinegar, former chief scientist for Royal Dutch Shell.
At minimum, it could mean energy independence for Israel. The country currently imports nearly its entire oil supply mostly from Russia and the former Soviet bloc. Several times throughout history and as recently as the 2006 Hezbollah conflict, those supplies have been blocked off, spawning fuel shortages.
“For them, obviously energy security is a critical strategic issue. I think it is for every country, but for them in particular,” Mr. Oliver said. “There has been talk, and this isn’t a prediction, but there has been discussions of them maybe even being an exporter.”
Canada, meanwhile, has led the development of shale technology, a costly and complex process.
“There are Canadian companies, Canadian science and technology which might be able to be helpful to them,” Mr. Oliver said.
Michael Byers, a political science professor at the University of British Columbia who holds the Canada Research Chair in global politics, said the impact to the region would have been far more dramatic had Israel discovered those resources 40 years ago.
Today, “the most significant impact will be in Israel’s comfort level, [but] that is a significant factor in a dangerous and unpredictable part of the world,” Mr. Byers said.
A free trade agreement has been in place between Canada and Israel since 1997, though despite subsequent expansions it still lacks provisions for the transfer of services, investment or government procurement. Ottawa first announced plans to “modernize” the agreement in 2010 and Mr. Oliver stressed time is of the essence.
“In some cases there are contracts that are going to be signed or are being signed as we speak that could leave us out of markets,” he said, adding the global energy picture in 10 years is “going to look very different and we need to stay ahead of the curve.”
“If we are nimble we could get there in time.”
Bob Schulz, professor of petroleum land management at the University of Calgary’s Haskayne School of Business, said the possibility of Canadian technology and investment going to Israel “would certainly change the [political] dynamics of the Middle East,” in that energy revenue would give it the means to finance much of its own defence instead of continuing to rely heavily on Western support.
If the plan is to maximize output, then Mr. Schulz said Canada’s energy producers could face even lower oil prices as a result of the jump in global supply.
“If I were a producer I’d want to talk to the minister when he got back and try to figure out what Israel’s plans are,” he said.
With the environmental debate over shale raging in Israel just as hard as it is here, those plans may require more than one state visit to learn.
Source: Financial Post