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Natural Gas Assures Israel's Future

During the last year, using exploration technology similar to British Petroleum's [BP] three mile deep oil well [my BP Oil Spill live TV interview CBS12 Sunday June 27, 2010], trillions of cubic feet [TCF] and billions of cubic feet [BCF] of natural gas have been discovered in the Mediterranean Sea off the coast of Israel. This find makes Israel energy independent -- assuring its continued growth and prosperity.

The search for a native energy source in Israel has been on-going for decades. Initially, this search sought to achieve economic parity with other Middle East nations; the latter used their oil-rich financial leverage to impose a subtle but forceful constraint against global international firms contemplating developing business relations with Israel. During the Arab Oil Embargo, these sanctions were imposed to a greater degree -- isolating Israel from the international business arena. The huge find of Israeli Natural Gas changes the geo-economic and geo-political landscape. Instead of spending over 10% of its budget on foreign energy, Israel can divert these monies to other areas to further expand its economic growth. The global international business community, recognizing the potential for developing natural gas deposits, will be inclined to invest in Israel -- dismissing the threat to anti-Israeli recriminations. Energy independence allows Israel to emerge from its present "Start-up Nation" status to a more established economically viable nation. Given the intellectual wealth of Israel coupled with the Natural Gas (i.e. energy independence) provides another avenue of financial growth while ensuring a stronger economic basis.

Based upon my having worked in Israel as Project Engineer Dan Sewage Reclamation Project [1969-72], I know that oil companies have been searching for oil in Israel for decades without success. The Natural Gas discoveries -- Tamar 8.4 TCF, Leviathan 10 TCF, Dalit 500 BCF -- could satisfy Israel's energy needs for 100 years plus provide sales revenue. Coal represents 70 percent of Israel's energy usage while natural gas makes up 20 percent. Bear in mind, that Israel purchases coal [e.g. South Africa] and natural gas [e.g. Gaza]; having its own source of energy would significantly improve Israel's economic growth and reduce taxpayer burden.

Having said this, the Israel's government is reconsidering changing its 1950s energy royalties and tax regime to increase their share from natural gas discoveries. Israel's Finance Minister stated that he was considering retroactively changing the terms on previously assigned leases. Noble Energy and Israel's Ratio Oil Exploration LP opposed this potential change stating that it "would quickly move Israel to the lowest tier of countries for investment by the energy industry". According to the Organization for Economic Development, the "profit tax" on such producers averages 62 percent, although Noble and Israeli Developers have said that if Israel raises its taxes that high, the gas will stay put. Israel is pondering a proposal to double its profit tax to around 55 percent, something the developers have called "unacceptable." This proposed change escalated to the highest levels -- former President Bill Clinton met privately with Prime Minister Benjamin Netanyahu.

Israel should not kill the `Golden Goose' but successfully develop these energy finds for the future growth of their tiny but valiant nation.

References

(1) Silverstein, K; "Israel's New Natural Gas Discovery"; EnergyBiz, Jan. 11, 2011

(2) Levinson, C. and Chzan, G.; "Big Gas Finds Sparks a Frenzy in Israel"; The Wall Street Journal, Dec, 30, 2010

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Richard Goodwin, Ph. D., P.E.'s picture

Thank Richard for the Post!

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Discussions

Len Gould's picture
Len Gould on Feb 25, 2011 7:00 pm GMT
Curious. Is this gas in a "tight" formation, or just very deep?
Jim Beyer's picture
Jim Beyer on Feb 28, 2011 7:00 pm GMT
16 TCF, about 5000 to 6000 feet down. Not enough to change the world NG economy, but a good find for the state of Israel.
Don Hirschberg's picture
Don Hirschberg on Mar 1, 2011 7:00 pm GMT
Maybe Moses should finally be rehabilitated. Didn’t he wander the Israelis around that part of the world for 40? years only to eventually select the only place in the region without oil?
Malcolm Rawlingson's picture
Malcolm Rawlingson on Mar 7, 2011 7:00 pm GMT
Perhaps he was an advocate of solar energy Don - that part of the world is very sunny.

Malcolm

Malcolm Rawlingson's picture
Malcolm Rawlingson on Mar 7, 2011 7:00 pm GMT
16 tcf isn't an awful lot of gas but it does make you think what else lies beneath the Mediterranean.

With all the natural gas discoveries one wonders how long it will be before cars are powered by it thus removing the need for gasoline as a transportation fuel.

Malcolm

Len Gould's picture
Len Gould on Mar 8, 2011 7:00 pm GMT
BNN says Sasol is planning to build a GTL plant in Nortern BC gas fields, just bought out a major existing gasfiled owner. My question is "What will they do with the output?" Oil sands outputs are already depressing the WTI way below Brent. Perhaps a pipeline to a Pacific port?
Malcolm Rawlingson's picture
Malcolm Rawlingson on Mar 10, 2011 7:00 pm GMT
Len, TransCanada has a number of pipeline projects in the works but none that connects to a Pacific port. They are starting to connect into the US and Canadian shale gas fields and into the Bakken oil shale. If the Keystone Extension Project does not get US State Department approval I would expect a Pacific Coast pipeline to be under consideration to move oil to the Chinese and other Asian markets including Sasol production. TransCanada is already delivering half a million bbl/day directly into US refineries through the new Keystone Pipeline. The extension will bring that to about 1.1 million bb/day.

Malcolm

Ferdinand E. Banks's picture
Ferdinand E. Banks on Mar 11, 2011 7:00 pm GMT
Interesting, that business of having an assured future.

I failed math twice my first year in engineering school, and was expelled. When I came back after the army, in the first math course I took (analytic geometry) I was first in the class. I was first in some other courses too, but even so it was quite clear that my future was NOT assured. So, when I came into contact with these neurotics in the academic world I did not make the mistake of relaxing.

Malcolm Rawlingson's picture
Malcolm Rawlingson on Mar 11, 2011 7:00 pm GMT
Agree Fred - nothing in life is assured.

Malcolm

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