Innovator: Howard S. Jonas

Howard S. Jonas holds a jagged rock that smells like the floor of an auto-repair garage. It's oil shale. Jonas, a lanky 54-year-old, sees it as the future of IDT (IDT), the Newark (N.J.)-based telecom company he founded in 1990. IDT's stock fell 99 percent between early 2004 and late 2008, bottoming at 66 cents a share, as telecom soured and the company lost half a billion dollars. Since then it has zoomed back up, to $12.75 on June 29, thanks to enthusiasm for IDT's oil-production experiment in western Colorado. Says Jonas: "This is the richest shale in the world."

Oil shale has broken many hearts. It doesn't contain oil but kerogen—a low-energy, solid substance that must be heated to 600F to 700F before it turns into oil and bleeds out of the rock. Mining and heating shale are costly and energy-consuming and leave behind piles of waste. Companies are experimenting with heating the shale while it's still underground and then pumping the oil to the surface, but that increases the risk of groundwater contamination.

Jonas says his approach is clean and energy-efficient: Capture the combustible gas that comes out of the ground with the heated oil, inject it back into the ground, and burn it. That should heat up and crack more shale, yielding additional oil and gas in what Jonas hopes will be a self-sustaining process. He plans to extract oil only from a layer of shale 2,000 feet below the earth's surface. That's beneath the water-rich layers known as aquifers, minimizing the risk of drinking-water contamination. (Royal Dutch Shell (RDS), which does plan to seek oil in the aquifer layer, has devised a complex method of freezing the ground around the heated shale to keep water away from oil.)

The technology comes from EGL Oil Shale of Glenwood Springs, Colo. IDT acquired 75% of EGL in 2008 and renamed it American Shale Oil. Last year, Jonas brought in France's Total as a 50-50 partner. The venture will test the extraction method on a 160-acre plot of federal land in northwestern Colorado. The Bureau of Land Management is giving the company 10 years to show what it can do.

It will take that long to know if Jonas' latest adventure will pay off. Adviser M. Nafi Toksoz, a Massachusetts Institute of Technology geophysicist, says "it's hopeful but never for sure." David Abelson, a policy adviser to environmental group Western Resource Advocates in Boulder, Colo., says shale oil is a "looking-in-the-rearview-mirror fuel source," and the U.S. should focus on clean renewables.

Jonas, an avid supporter of Israel, is developing shale oil there through a separate venture chaired by Michael Steinhardt, who made his fortune in hedge funds. Steinhardt sees his investment as a way to do good and make money at the same time. "On those kinds of investments," Steinhardt says with a laugh, "I have a near perfect record—of failure." Not what Jonas was hoping to hear.


Bronx-born and -raised; married with nine children

Prior Jobs

Internet entrepreneur, movie producer, hot dog vendor


Quotes Ronald Reagan and is friends with Dick Cheney

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