Interview: Genie Energy eyes options to revive Israel oil plans

Zion Oil & Gas

27/10/2014 11:09

* Debate over oil shale deposits in central Israel 
    * Genie looks to Mongolia to prove technique for Israel 
    * Company supporters include Murdoch, Rothschild, Cheney 
 
    By Ari Rabinovitch 
    JERUSALEM, Oct 27 (Reuters) - U.S.-based Genie Energy 
 GEN.N  could turn to the courts or even Mongolia in its effort 
to challenge a local government decision that has blocked its 
hunt for oil just over 40 kilometers from Jerusalem, a senior 
official at the group said. 
    Genie, backed by media mogul Rupert Murdoch, says it aims to 
secure energy independence for Israel, a country that has never 
had a serious oil find despite years of exploration. 
    But Genie is battling a growing number of setbacks. Last 
week, the Supreme Court put on hold a separate plan to drill 
exploratory wells in the Israel-controlled Golan Heights. 
    Drilling in the Ella valley outside Jerusalem is key for 
Genie, however, and Geoffrey Rochwarger, head of Genie's 
operations in Israel, said on Monday that the company could 
appeal to the Supreme Court to overturn the ruling last month. 
    "We were a bit surprised -- shocked is probably a better 
word for it," Rochwarger, also vice chairman of Genie. 
    Genie had been due to begin drilling in the biblical valley 
where David is said to have fought Goliath. The area of its 
license alone contains 40 billion barrels of oil, the company 
estimates, more than what the world consumes in a year. 
    The company spent over $20 million preparing for the pilot. 
    But after years of lobbying from environmentalists and 
residents, a Jerusalem local committee last month stopped work 
on the project, citing historical interest and possible 
environmental impact. It also expressed concerns about scaling 
up to commercial production. 
    "We now have to decide what do we want to do. What's our 
next step?" 
    Rochwarger said Genie's technique causes minimal damage to 
the surroundings. A similar method, he said, will soon be used 
by Royal Dutch Shell  RDSa.L  in neighboring Jordan. 
    Help in promoting the project, however, could also come from 
Mongolia, where Genie last month received permission to conduct 
a similar pilot - even if collecting data could take years. 
    "In Mongolia we would probably try...to replicate, or just 
emulate, as many of the characteristics as possible, to be able 
to then use the data afterwards," he said. 
 
    GOLAN DRILLING 
    Genie Energy was spun off from telecoms group IDT Corp 
 IDT.N  in 2011. As well as Murdoch, it has attracted investment 
from financier Jacob Rothschild. Together they own a 5.5 percent 
stake worth $11 million. Former U.S. Vice President Dick Cheney 
is on the advisory board. 
    "What we're doing, energy independence for Israel, makes a 
lot of sense to them," Rochwarger said. 
    Genie plans to drill 10 exploratory wells over three years 
in the Golan Heights, at a cost of $25-$30 million. 
    Rochwarger argues Genie's geological evidence is strong -- 
even though not far away, Zion Oil and Gas  ZN.O  and Givot Olam 
 GIVOp.TA  have been drilling for years and have yet to find 
commercially viable deposits. 
    The plan has received government approval, but since Oct. 20 
faces a two-month, court-imposed injunction after an 
environmental group petitioned for further discussion. 
    "The delays affect not only the company, but also dozens of 
suppliers from the Golan and Israeli workers," Rochwarger said. 
    Israel captured the Golan Heights from Syria in a 1967 war 
and annexed it in a move not recognized internationally. 
    "If we can prove the resource, we believe that this becomes 
a project of national significance, and that the government will 
do what it can to protect its rights to this resource," he said. 
 
 (Editing by Clara Ferreira Marques) 
 ((ari.rabinovitch@thomsonreuters.com;  +972-2-632-2202; Reuters 
Messaging: ari.rabinovitch@thomsonreuters.com@reuters.net)) 
 
Keywords: GENIE ENERGY ISRAEL/