Texas and Israel Partner to Extract Israel’s Natural Gas

November 6, 2015

5 min read

There might be some bureaucratic hurdles, but Israel is an ideal environment for investment and opportunities are aplenty. That was the message the Jewish state’s energy minister conveyed to oil and gas companies during his recent visit to the “energy capital of the world.”

Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz (Likud) was in Houston from Oct. 19-20 for a series of meetings and events pertaining to the energy and water industries. America’s fourth-largest city is home to Noble Energy, which partners with the Israeli company Delek Group in the operation of Israel’s two offshore gas fields, Tamar and Leviathan.

Michal Niddam-Wachsman, head of the Israeli government’s Houston-based Economic Mission in the U.S. Southern Region, said Israel is looking for “several other Nobles”—more companies willing to be trailblazers and invest in Israel’s burgeoning natural gas industry, which according to the U.S. Energy Information Administration encompasses 6.7 trillion cubic feet and 14 million barrels of gas and oil reserves, respectively.

“The fact that [Steinitz] came [to Houston]…his presence, saying to the companies, ‘Listen, we have those opportunities, we want you to come,’ means that we as a government want to give motivation to the local companies to invest in Israel,” Niddam-Wachsman told JNS.org. “He could gave gone to other countries, but he chose to come here, to Houston.”

Steinitz’s visit came ahead of the imminent resolution of political complications regarding an offshore gas deal that the Israeli cabinet already approved in August, in a 17-1 vote. The deal would set a price cap for natural gas sales to Israeli companies and require the gas companies to finish developing the Leviathan field by the year 2020. The deal would also resolve a pricing dispute in which former Israeli antitrust commissioner David Gilo had threatened to designate the Delek-Noble partnership as a monopoly.

Despite the cabinet’s overwhelming vote in favor of the deal, the agreement’s implementation still requires the Israeli economy minister to invoke Article 52 of Israel’s 1988 Restrictive Trade Practices Law, which allows the circumvention of objections of an antitrust commissioner in matters of foreign relations or national security. Aryeh Deri (Shas), the now-former economy minister, had refused to invoke Article 52. On Sunday, the Israeli government approved Deri’s resignation as economy minister, paving the way for the gas deal.

“[We’re] saying [to the oil and gas companies] that we’re getting to a point where the regulations will be set, and there will be the right momentum to look into the opportunities in Israel, especially offshore, but also onshore….I think [Steinitz’s visit] was a beginning of a path where we want to start attracting some new companies to Israel. We do think that there are some milestones on the way, where the minister will probably come back to Houston to try to see how we can reach out to potential companies [to invest in Israel],” said Niddam-Wachsman, whose regional Economic Mission works in 11 U.S. states.

Israel’s pitch to companies, she said, is that doing business in the “start-up nation” has significant value beyond the investment itself.

“I think the environment for companies that will choose to invest in Israel is very good, because we have all the systems supporting any companies that will come,” Niddam-Wachsman said. “You’re not going to the desert. You’re going to a country that has a high-tech environment, and you can get added value on investing in Israel, you can get some innovative technologies, in water [and other areas].”

Water, in fact, was the topic of an Oct. 20 panel discussion during Steinitz’s visit at the University of Houston (UH).

“No city on Earth, I think, brings together the importance of energy and water more than the city of Houston does,” said Mark Ellison, regional director of sales for IDE Americas, the U.S. affiliate of the Israeli water desalination company IDE Technologies.

Steinitz stressed that Israel has needed to “survive and sustain ourselves in a very difficult surrounding and a very dry surrounding,” making the water supply issue a very central one since the nation’s founding in 1948. Innovation has provided the solution.

“In little Israel, with 8.2 million people, there are more high-tech and technological start-ups than the rest of Europe put together,” Steinitz told the crowd at UH.

Referring to how Israel desalinates about 70 percent of its fresh water for domestic use, he said, “Actually, we don’t squeeze natural resources, we leave more and more for nature itself, and most of our drinking water is coming from desalinating water.”

Yechezkel Lifshitz, deputy director general of Israel’s Ministry of Infrastructure, Energy, and Water Resources, explained that water in Israel has a different status than what Americans would be familiar with—if you drill or dig in Israel and find a resource, it belongs to the government, rather than whoever discovered the resource.

Dr. Udi Zuckerman, director of global business development for Israel’s national water company Mekorot, noted another distinction in the ways America and Israel treat water.

“For a typical water company, you would think of a company that would pump water, treat water, distribute water…because we (Mekorot) are the national company of Israel, actually we do everything,” he said.

Houston, too, has been a water innovator, said Mark Loethen, deputy director for the city’s departments of Public Works and Engineering. About 40 years ago, he said, city officials noticed the ground subsiding by as much as 10-14 feet in some places, posing a potential threat to the water supply.

“Our predecessors…had the foresight to think about diversification and for what Houston would eventually become,” said Loethen, adding, “There has been a mandate, a goal, a desire…to move to alternative water supplies within the region.”

An aeriel view of the Israeli 'Tamar' gas processing rig 24 km off the Israeli southern coast of Ashkelon. (Photo: Moshe Shai/FLASH90)
An aeriel view of the Israeli ‘Tamar’ gas processing rig 24 km off the Israeli southern coast of Ashkelon. (Photo: Moshe Shai/FLASH90)

To extract surface water, Houston has access to three supply reservoirs: Lake Houston, Lake Livingston, and Lake Conroe, which have a combined storage capacity of about 2.8 billion cubic meters (98.9 billion cubic feet).

“We take water very seriously and we look at all of the options that we have,” Loethen said.

Israel’s calling card of desalination is not currently part of Houston’s water strategy, but “it is in our toolbox for our long-term program,” he said.

Ellison said that “innovation takes place for water in Israel not out of a quest for curiosity, but because of necessity.” He said that it is exciting for him to work IDE Technologies, an Israeli company, because it puts him in an environment where everyone thrives on innovation.

“That is a spirit that you see throughout Israel, and I think it fits very well with the relationship with the state of Texas,” said Ellison.

Indeed, due to that spirit of innovation, more than 300 companies have chosen to build R&D centers in the relatively small country of Israel, noted Niddam-Wachsman.

“[Doing business in Israel] comes as a whole package,” she told JNS.org. “You have the potential in natural gas, the potential in oil that is already proven, and you also have all the environments that can support [your investment].”

Minister Steinitz, she said, wouldn’t expect a company “just to come and explore because it’s Israel” if the prospects weren’t economically viable.

“What the minister tried to show [during his visit] is that it’s a business opportunity for those companies to come, [telling them], ‘Why won’t you be the first to come and explore?’” Niddam-Wachsman said. “I think his main objective was to say, ‘As a government, we’ll fix all [the regulatory issues], so come and see and explore what’s here in Israel.”

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