Israel, once dependent on imports to supply its energy, now has a growing natural gas industry. Recent discoveries of offshore natural gas fields have the potential to provide adequate amounts of energy to meet domestic demand, while allowing the country to export excess volumes.
In 2015, Israel’s primary energy consumption came mainly from petroleum and other liquids (43%), natural gas (30%), and coal (26%), according to the latest BP Statistical Review of World Energy. In the ten years from 2005 to 2015, energy consumption from coal has decreased by 15%. At the same time, energy consumption from natural gas grew more than fourfold.
Petroleum and other liquids
As of January 2016, Israel had estimated proved oil reserves of 14 million barrels. The country has virtually no crude oil and condensate production, but in February 2015, exploratory drilling for oil began in the southern part of Golan Heights. Additionally, plans to begin drilling at a site near the Dead Sea are scheduled for November 2017. The site, discovered in 1995 but abandoned until recently, is estimated to contain from 7 to 11 million barrels of oil reserves. Oil discoveries in the Golan Heights and near the Dead Sea have the potential to positively impact Israel’s quest for energy independence.
In 2015, Israel consumed 240 thousand barrels per day (b/d), all met by imports. A majority of Israel’s oil imports are from crude oil, and the country exports small quantities of refined products. Israel plans to reduce its dependence on oil imports through an expansion of its rapidly-growing natural gas sector.
Israel is home to two refineries, with a combined capacity of nearly 300,000 b/d. The capacity of the Haifa refinery is 197,000 b/d, while Ashdod’s capacity is about 100,000 b/d after an upgrade in 2013.
Natural gas
Historically, Israel had been an importer of natural gas, with a substantial portion of its natural gas needs supplied through the Arish-Ashkelon pipeline from Egypt and a small amount from liquefied natural gas (LNG) imports from a floating regasification terminal installed in 2013. The recent discoveries of natural gas fields are expected to provide enough fuel to meet Israel’s rising domestic needs, and extra gas resources will likely be exported. In 2015, Israel consumed 297 Bcf of natural gas, nearly all met by domestic production.
At the end of 2015, Israel had proved natural gas reserves of 7 trillion cubic feet (Tcf). Energy exploration over the past several years has uncovered significant natural gas resources in Israel, primarily in the country’s offshore areas.
The Mari-B field—discovered in 2000—provided the first significant volumes of domestically-produced natural gas to Israel’s markets. However, in 2012 production plummeted as the field entered the final stages of depletion, and the field stopped producing gas in 2013. In prior years, the Mari-B field met up to 40% of Israel’s natural gas demand.
The Tamar field was discovered offshore near Haifa in 2009. Israel began commercial production from this field in late March 2013. Over half of Israel’s electricity generation requirements and virtually all of its industrial fuel needs are met by the Tamar field’s production. The natural gas produced from the Tamar field travels through existing onshore facilities at Ashdod via a pipeline that links to existing infrastructure at the Mari-B development site.
In 2013, the Tamar Southwest field was discovered 8 miles southwest of the Tamar field. This is a smaller, separate field that is estimated to contain 700 Bcf of natural gas. Negotiations regarding the development of Tamar Southwest are taking place between the Israeli government and the gas companies that discovered the field.
The most significant find offshore Israel is the Leviathan field, located approximately 80 miles off the coast and situated in water that is more than 5,000 feet deep. Assessments of the Leviathan field indicate that there is around 22 Tcf of recoverable natural gas in place. In May 2016, the Israeli government approved a deal allowing the Leviathan partners to begin development on the field. Exports from the Leviathan field are expected to begin by 2019.
In 2014, the Royee field was discovered nearly 100 miles off the coast. Best estimates place Royee’s reserves at 3.2 Tcf, but range from 1.9 Tcf and 5 Tcf.
Most recently, the Daniel East and Daniel West fields were discovered off the coast of Israel. Preliminary estimates show the reserves of these adjoining fields to total around 9 Tcf, which is nearly the size of the Tamar field. Exploratory work to corroborate the estimates is underway, and no date has been set for development.
There are competing proposals to develop pipelines and LNG infrastructure to support natural gas exports, but deliberations about how Israel will get its natural gas to market are ongoing. As of 2016, the focus is on developing regional gas pipelines. A natural gas pipeline to Jordan is under construction and scheduled to begin operating in 2017, with a second pipeline slated to come online sometime after that.
As Israel shifts to become an energy exporter, multiple export agreements have been proposed with various countries. In January 2014, the Israeli government approved plans to supply the Palestinian Authority with natural gas from the Leviathan field once production commences. Noble Energy signed a natural gas sales agreement with two Jordanian companies to provide supplies from the Tamar field in early 2014. The initial term of the agreement with Jordan is 15 years, for a total gross quantity of 66 Bcf, with exports beginning in 2016. Other countries that have entered into proposed agreements with Israel include Egypt, Turkey, Greece, and Cyprus.
In June 2013, the Israeli Cabinet approved exports of 40% of the country’s natural gas reserves. With the 40% cap in place, Israel’s reserves are estimated to supply the country for 25 years.
Electricity
While coal has long been Israel’s primary source of electricity, its use is declining as the country’s natural gas sector continues its rapid growth and natural gas-fired generating capacity supplants coal-fired generating capacity. As of 2016, natural gas from the Tamar field supplied more than half of Israel’s electricity needs.
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