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Wed, May 04, 2011 | The Maritime Executive | By Dr. Michael J. Economides and Benjamin Shylabopersky

Israeli Natural Gas: A Game Changer

Barry Rubin writes in his blog, Rubin Reports, in a short note about the “incredible importance of Israel’s natural gas discoveries”. He draws attention to a recent and interesting article on this subject in the Maritime Executive written by Dr. Michael J. Economides and Benjamin Shylabopersky. Barry Rubin writes: “The discovery of major natural gas deposits off Israel’s coast in the Mediterranean may turn Israel into an exporting country and provide immense wealth for an already long-successful economy. This article [see below] in a trade journal argues the development of these fields could be a game-changer.”

Energy has always been at the center of the Arab-Israeli conflict, creating alliances and influencing the policies of allies and adversaries alike. Israel, most of all, has had a very complex relationship with its neighbors, mainly Egypt, which has been a supplier of energy to Israel since the Camp David Accords in 1978.

In the past few years and with a stunning announcement by Noble Energy in late December, Israel’s energy situation has changed dramatically. With Noble’s blockbuster Leviathan gas discovery and 2009’s Tamar discovery, Israel now enters the energy big leagues. Leviathan and Tamar are perhaps the largest purposeful gas discoveries in the world in each of the last two years, and Israel is likely to play a highly enhanced regional and geopolitical role as a result. Moreover, given the fact that the country has emerged as a global leader in many high-tech industries with a resultant expansion of energy usage, Israel may well become a trendsetter in the widespread use of compressed natural gas (CNG) and electric vehicles. Gas-to-liquids may not be far behind.

Without question the future of Israeli energy is tied to natural gas. Starting in 2004, Noble Energy, a Houston-based independent oil company — relatively small but quite capable in deepwater, began gas production from the Mari-B field. This marked the beginning of Israel’s shift towards natural gas and away from coal and even further away from fuel oils. The Noble partnership consists of Noble Energy and three Israeli firms — Delek Drilling, Avner Oil Exploration, and Delek Investments.

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