Boogeymen Trifecta: Murdoch Allies With Oil Company, Cheney

Rupert Murdoch is one of the world'sbest known media barons andmay or may not be a bud to Steve Jobs. But as hype swelled around his iPad digital project,The Daily, Murdoch was also investing in anIsraeli-American oil shale company with ties to Dick Cheney. Can hislegendary business savvy help out an upstart oil firm?

Oil shale may be the answer to worries about peak oil, but it is highly expensive to extract and has a high ecological cost.

Lord Jacob Rothschild and Murdochjustpurchased a joint 5.5% stake in Genie Oil and Gas Inc., adivision of the IDT Corporation. The equity stake purchase by Murdochand Rothschild is worth approximately $11 million. Genie is a newface in the energy market; the company justlaunched this summer.

Murdoch is slated to join Genie'sadvisory board. Other members include:

• American Shale OilCTO Alan K. Burnham

• Former Vice President Dick Cheney

• Genie chairman and Midland, Texas mayor Wes Perry

• FormerExxon Mobilexecutive vice president Eugene A. Renna

• Allan Sass, former president and CEO ofOccidental Oil Shale

• Hedge fund investor and philanthropist Michael Steinhardt

• Stephen M. Trauber ofUBS Investment Bank

• Harold Vinegar, former chief scientist atRoyal Dutch/Shell

American Shale Oil is a joint venturebetween IDT and French firm Total S.A.

Public statements by both Genie andtheir investors have stressed the firm's American andIsraeli (read: non-Arab, non-Iranian, non-Venezuelan) roots. According to a statement by Murdoch,“I believeGenie Energy's technologies and vast shale oil licenses have realpotential to spur a global, geo-political paradigm shift by moving amajor portion of new oil production to America, Israel, and otherwestern-oriented democracies.” Murdoch also said that “Coveringand distributing news has been my life's work {…} If Genie's effortto develop shale oil is successful, as I believe it will be, then thenews we'll report in the coming decades will reflect a moreprosperous, more democratic, and more secure world.”

Perry was even more explicit, statingthat“Both America and Israel have significant shale oil reserves.It’s difficult to overstate their potential to improve ourrespective economies and national security. {…} Genie Energy isdeveloping the technologies America and Israel want to make rapidprogress toward energy independence, whileIDT Energy is poised forcontinued growth in the consumer market. I’m very excited to workwith their management team to help meet the energy needs of the U.S.and Israel for decades to come.”

Genie is currently working on two oilshale exploration projects in the United States and Israel.

In Colorado, Genie is involved inAmerican Shale Oil's extraction testing project in Colorado'sGreenRiver Formation. The Green River Formation is the largest oilshale deposit in the world and is believed to contain anywherebetween 1.2 and 1.8 trillion barrels of oil. Much of the oil iscurrently inaccessible; however, even the currently accessible amount of 800 billion barrels in Green River exceeds SaudiArabia's explored oil reserves. American Shale Oil is one of fourcompanies that was given a tender to develop the Green RiverFormation; the firm's portion of Green River is believed to contain10 billion barrels of oil.

Meanwhile, Genie is embarking on alarge-scale project that could turn Israel into a major oil producer.Genie is the 89% owner ofIsraelEnergy Initiatives(IEI), which just landed a shale oilexploration and production license covering 238 square miles in theJudean Hills. According toAmiramBarkatof Israeli business publicationGlobes,“The company believes that its shale oil cracking technology canfree the world from dependence on Arab oil and turn Israel into anenergy powerhouse able to produce 300 billion barrels ofnon-conventional oil at a cost of up to $40 per barrel.” IEI isembarking on a pilot project in the Valleyof Elah in the JudeanHills to produce 500 test barrels of oil, despite fierce residentialopposition. Communities around the Valley of Elah have becomewell-off bedroom suburbs of Jerusalem and are home to alargenature reserveand a thriving wine industry.

Geopoliticaltroubles may prove to be a future headache for Genie: The shale oilformation their Israeli tender gives license isadjacentto the borderbetween Israel proper and the West Bank. Areas ofthe shale oil formation may spill over into the West Bank; theseparation wall between Israel and the West Bank runs adjacent to thebelieved oil-containing lands.

According to Rothschild,“Rupert Murdoch's extraordinaryachievements speak for themselves and we are very pleased he hasagreed to be our partner. Genie Energy is making good technologicalprogress to tap the world's substantial oil shale deposits whichcould transform the future prospects of Israel, the Middle East andour allies around the world.”

{Photo viaWorldEconomic Forum}

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