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Page added on September 28, 2014

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Israel’s natural gas bonanza is an illusion


The national consensus holds that the discoveries of huge offshore natural gas fields in recent years amount to an economic revolution, one that will put the economy on easy street for generations to come. A leading British energy expert, however, says it’s an illusion.

“Exporting gas as LNG [liquefied natural gas] is very expensive. Israeli gas isn’t competitive enough to compete with LNG from other countries,” says Nick Butler, one-time senior energy adviser to former Prime Minister Gordon Brown, and former vice president for strategy and policy development at British Petroleum Group, in an interview with Globes’ Hedy Cohen.

The chief cost in exporting LNG lies in transporting it to market, and Israel is too far away from the major Far East consumers to be able to deliver the product economically, Butler said. “Israeli gas will have to compete with gas from East Africa, Indonesia, Qatar, Turkmenistan, and Australia, and will be the most expensive of all those options,” he said.

Closer to home, the prospects aren’t any better, adds Butler: “Jordan doesn’t need much gas, and exporting by pipeline to Egypt and Turkey incurs many political risks, of which you are very well aware.”

Butler: Keep home fires burning

He suggests that Israel use its natural gas resources mainly for domestic consumption. Asked if this wasn’t a meager option given that Israel already uses gas to produce 55-60 percent of its electricity, the highest proportion in the world, Butler said the country wasn’t being ambitious enough.

The idea that Israel has exhausted natural gas’ potential for electricity “is correct only if the target is to reach 70% of electricity production using gas. In my opinion, however, the target is wrong,” he said. “The government should aim at having 90% of electricity production based on gas. In addition to electricity, the government should introduce the use of gas in transport and the petrochemicals industry. All these ventures will generate large investments and many jobs in the country.”

Butler also urged Israel to follow Britain’s lead in delivering LNG directly to people’s homes for household use.

“The energy efficiency of coal-fired power plants is 35%, while that of gas-fired power plants is 45%. By the time electricity reaches homes from the power station, we’re left with 27% efficiency for coal and 37% for gas. If the gas is brought directly to homes, on the other hand, we’re left with 75% efficiency. That is a prodigious saving,” he said. “In the UK, for example, gas reaches people’s homes, and they use it, among other things, for heating, air-conditioners, and cooking. Why shouldn’t Israelis benefit from gas like any European country?”

20 Comments on "Israel’s natural gas bonanza is an illusion"

  1. Nony on Sun, 28th Sep 2014 2:59 pm 

    Any chance they can sell it directly (to Egypt or another neighbor?) Liquifying and then re-expanding NG is a waste if not needed.

  2. rockman on Sun, 28th Sep 2014 3:37 pm 

    This article makes no sense:

    In the midst of some of the worst Middle East tensions in a decade, one-time enemies Egypt and Israel are negotiating deals that may mean the sale of $60 billion in Israeli natural gas to liquefaction plants in Egypt. The talks come as Israel resumes air strikes on Gaza after Hamas, which the US and the European Union (EU) classify as a terrorist group, fired rockets following a breakdown in Egypt’s efforts to broker a ceasefire.

    And then there’s this:

    A group of energy companies that discovered large amounts of natural gas off Israel’s Mediterranean coast said they were in talks to export the gas to Europe via a pipeline to Turkey. They are also studying options to export gas to Jordan, Egypt and the Palestinian Authority, Avner Oil & Gas said yesterday.

    A spokesman for Delek Group, the parent company for Avner and for Delek Drilling, said the group – led by Noble Energy – was already in advanced talks with companies in Turkey, Jordan, Egypt and the Palestinian Authority about buying Israeli gas and building pipelines.

    The talks show that the gas project is moving ahead, with prospects of eventually boosting Israel’s export revenue and economic growth. They also indicate reduced tensions between Israel and Turkey. A pipeline could improve relations between the two countries, which have been poor since 2010.

  3. Nony on Sun, 28th Sep 2014 3:48 pm 

    ““In the UK, for example, gas reaches people’s homes, and they use it, among other things, for heating, air-conditioners, and cooking.”

    Do they actually have gas-powered, residential air conditioners?

  4. antaris on Sun, 28th Sep 2014 4:31 pm 

    Google “natural gas fired air conditioner”.
    Yes they actually do have them.

  5. bobinget on Sun, 28th Sep 2014 4:46 pm 

    Home fuel cells us natty gas as fuel stock. Can produce hydrogen, electricity, heat, domestic hot water.

  6. Nony on Sun, 28th Sep 2014 5:40 pm 

    I did Google it. I am familiar with industrial LiBr gas powered units. My impression from the Google is that residential units are rare. At least in America (also based on personal experience). Just curious if they are more common in UK.

  7. Lyle Stevick on Sun, 28th Sep 2014 7:24 pm 

    As long as there is a strong commitment to desalination plants, it makes sense to design a gas power plant combined with a desalination plant from square one. Even with a membrane process, there could be overlap and savings.

  8. KRIS SCHADE on Sun, 28th Sep 2014 7:24 pm 

    Aren’t these the wells on the Lebanese border that are being drilled horizontally into their country?
    That would’t be very nice…kinda contentious too.
    Cyprus should boycott the Israeli’s.
    You should too.

  9. Makati1 on Sun, 28th Sep 2014 7:41 pm 

    Pipelines are pipe dreams in the ME. Especially from Israel, not exactly the best of Muslim friends. They are years away and those years are going to be packed with wars and destruction in all of the involved countries, perhaps even including Israel. We shall see.

  10. David R. Allender on Sun, 28th Sep 2014 10:40 pm 

    Apparently the British who wrote this article are not readers of the Bible, or they would know better. They will learn the truth very soon.

  11. David R. Allender on Sun, 28th Sep 2014 10:41 pm 

    Apparently the British agent who wrote this article isn’t a reader of the Bible, or he/they would know better.

  12. David R. Allender on Sun, 28th Sep 2014 10:42 pm 

    This outfit must be athiest also. they won’t let my commits go thru.

  13. Gary Anderson on Sun, 28th Sep 2014 11:59 pm 

    This is why Israel wants Syria broken up. Genie Energy is owned by many including NWO Rothschild, Murdoch and Cheney. Israel gave it permission to find oil in the Golan Heights. Israel wants Yinon Zionism, ie, regime change, and not just for defense, but also for greed.

    We should extricate ourselves as a nation from Israeli desires which also include leading America around by the nose.

  14. Bart H. on Mon, 29th Sep 2014 12:47 am 

    When Egypt wants a break on natural gas prices from Israel, they do favors for them, like closing off the border to Gaza, something that might not have ever happened before.

  15. Arttai on Mon, 29th Sep 2014 12:52 am 

    How could he omit that the most important export being considered is Europe who needs replacement urgently to the Russian Gas.Via a pipeline to Cyprus and Greece collecting on the way Capriot Gas that has been recently discovered?

  16. Archibald Bomwitz on Mon, 29th Sep 2014 1:34 am 

    Has this “expert” not heard of the EU and its potential problems with Russia as a supplier of gas? Apparently not, as he is British! A pipeline along the bottom of the Mediterranean is the only thing what is needed! He should take a look at a map!

  17. Catman on Mon, 29th Sep 2014 3:30 am 

    All Israel has to do is steal the NG from fields owned by Lebanon and Palestine.

  18. Davy on Mon, 29th Sep 2014 5:59 am 

    Man, the thread above is like Swiss cheese. Guys review the facts. Oh, bible buddy, do you really think God thinks like that or is it you that are feeling exceptional with your interpretations of his thoughts? I think “higher power posts” are tough to get across in two sentences.

  19. dn32844 on Mon, 29th Sep 2014 8:47 am 

    Zionists true Bonanza is their propaganda media that keeps brain washing America’s simpleton. Rest of everything they do and say is lies and deceit.

  20. Wake Thehellup on Mon, 29th Sep 2014 11:14 am 

    Some here are not being realistic. If the nat-gas finds off Israel’s coast are of the capacities and are as wide-spread as has been suggested by some, then Egypt and Lebanon has them too. Jordan has it’s own reserves and I can’t see Turkey going with Israel over say Iraq, Iran, The UAE, or a number of other Islamic state sources in the area. Such projections seem to be intently made up. For what purpose, I do not know, ’cause most entities large enough for it to matter to, also have the geological research tech and savvy to know better.

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