Minister of National Infrastructures Uzi Landau will not forget that day in July 2010 for a long time. The regional planning and building committee gathered for a decisive session to discuss "the northern entrance" plan at Dor Beach. The plan included building a pipeline to the offshore Tamar well, which was the Ministry of National Infrastructures' top priority target. This was at the height of an aggressive and at times violent struggle with local residents, which included throwing of oranges and tomatoes at meeting participants. Landau, who was convinced that the plan would be approved, preferred to spend the day touring the north. However without him being there, the government suffered an embarrassing defeat. A coalition put together to reject the plan from local authority representatives, environmentalists and "renegade" government representatives won by a slight 11-9 majority. The local council instructed the government to examine other locations for the gas terminal, headed by a facility on a rig at sea.
Landau's nightmare is probably going to repeat itself soon. The national master plan to build gas treatment facilities is back on the table for discussion at the regional planning and building committee's meeting. Noble Energy Inc. (NYSE: NBL) promoted the previous plan and people critical of the plan were furious about the "privatization" of such a sensitive facility. In July 2010, it was decided that the Ministry of National Infrastructures would take over responsibility for planning. Almost 18 months later, the National Outline Plan #37 for natural gas has reached the end of the initial examination to find an alternative location for the facility. Over the next few months, the alternative sites will be subjected to a strict selection using an advanced environmental survey. The sites that pass will be considered for final approval by the council. Next Monday, alternatives will be presented to the public at a conference titled, "Energy and the Environment," organized by the Society for the Protection of Nature in Israel (SPNI) at the International Convention Center (Binyanei Hauma) in Jerusalem.
1. Why is a gas facility necessary?
Electricity rates have risen over the past few months by 15% as a result of disruptions in natural gas deliveries from Egypt, which were caused by attacks on the main Sinai pipeline. In addition to Egyptian gas, the Israel Electric Corporation (IEC) (TASE: ELEC.B22) uses Israeli natural gas from the Mary B well in the offshore Yam Tethys gas field, which will be replaced in a year or two with the Noa and Tamar wells. Damage to the underwater pipeline which carries gas from Israeli wells deep in the sea would be much more harmful to Israel than the stoppage of gas deliveries from Egypt, and could even cause electricity prices to double. Egypt has been meeting only 15% of Israel's needs to produce electricity. Israeli gas supply is expected to produce 70-80% of the state's electricity. Building a gas treatment facility is intended first and foremost to lessen the probability that such a catastrophe could occur.
Until not long ago, all electricity in Israel was produced form coal, diesel and fuel oil. Natural gas is cheaper, and pollutes less, than the other fuels, but it is much more sensitive to breakdowns during delivery. As opposed to coal and liquid gasoline, there is no way to technically store gas near power stations and therefore it is channeled directly from the wells in the depths of the sea to the station through pipes underwater and above land. Before it can move from an underwater pipeline to the above land pipes, the gas must go through a process to remove water and other materials that mixed with the gas, as well as a reduction in pressure from 450 to 110 bar. Currently this process takes place in two locations: a sea rig that is 22 km from the Ashdod coast reduces the gas's pressure and a small treatment facility near Ashdod port cleans the gas. This system works well, but is extremely vulnerable to enemy attack, technical mishaps or even earthquakes that could significantly damage it. Fixing problems at sea is also extremely expensive and can last for months, during which time Israel would be without gas. As a result, everyone involved in the energy industry agrees that Israel cannot increase the level of usage and how much it relies on gas without building another reception terminal in northern Israel. Israeli environmental organizations also support the idea in theory since gas is the only alternative currently available to the IEC, which needs to supply the power stations now being powered by coal, such as the one the IEC plans on building in Ashkelon.
2. The government prefers building a facility in Haifa Bay
A planning team headed by Gideon Lerman found 20 land-based sites that could be appropriate for building a gas treatment facility. The 20 potential land-based sites are along the coast from Rishon LeZion in the south, the Wingate Institute, Hadera and Caesarea (five locations), Dor Beach area (nine locations), Petroleum & Energy Infrastructures Ltd. (PEI) in Haifa Bay, Kfar Masaryk, and the area south of Acre where the Frutarom plant used to be. The team examined each area using technological criteria, including gas treatment on land as well as at sea on a rig. The team also checked six locations for building a sea facility and decided that due to the surface quality, it is possible to build the facility no more than 7.5 km from the beach. As a result, the facility will be visible from land, detracting significantly from the view of the sea. If the facility would be stationed off the Tel Aviv coast, the structure would be a visual hazard visible from the Herbert Samuel boardwalk in the south to Herzliya in the north.
At the end of the examination, the team recommended preparing two sites for the facility in the north, at least one of them being north of Hadera. The two sites that were found to be the most fitting were Frutarom and PEI. The team determined that these were the only sites that were fitting to house an entire land-based facility.
In the past that Delek Group Ltd. (TASE: DLEKG) was considered to be behind the deal to buy the Frutarom factory according to an assumption or information that this site would be the government's preferred location. The team, however, was more impressed with the second option - PEI's container farm. The 350 dunam (86 acre) complex is located between Kiryat Haim in the north and the industrial area in the south. In the past, there were plans to build a residential neighborhood on this land. The benefits of building the facility on the PEI farm are that it is not near a nature reserve, does not obstruct a view, is not near a water desalination plant, and is near a beach not used for bathing. The PEI site received the highest marks among the eight land-based locations for its environmental suitability, as well as for the usability of the land. The Frutarom site on the Acre coast came in second, and the Hadera power station in third.
3. The residents want a sea-based facility only.
At a recent energy conference organized by "Globes," Ministry of National Infrastructure Natural Gas Authority Chairman Shuki Stern said, "At every National Outline Plan #37 meeting there are people outside of the building protesting against the government planners. The planning issues are complex and social and environmental organizations have a lot to say. Even I was personally attacked." Despite this, Stern said, "There will be social and environmental ramifications to bringing natural gas to Israel. We cannot bring it in by air.
Tomer Rona, spokesman for the public protest against gas installation in the Acre area, said, "We do not accept any alternative that includes building a land-based facility - certainly not here at Frutarom or at other sites, such as PEI, which is slated to be a residential neighborhood."
Globes: "Are you against all the options?
Rona: "We are in favor of building a sea-based facility. Even the smallest 20 dunam land-based facility would be dangerous, since very quickly it would grow to 105 dunam and there would be no way to stop it. The planners are already speaking about the option of expanding. Storage and recycling facilities will be established and the entire area will become an area for heavy industry."
Globes: It is said that your struggle is a NIMBY (Not in my back yard) issue and that you are just protecting your real estate value.
"We are not a NIMBY protest, despite the fact that our backyard is already full of factories. We are talking about real life threatening dangers and there are plenty of examples of catastrophes and are tens of thousands of people in danger."
Planner Gideon Lerman said in response that the option of only building a sea-based facility is technically possible, but extremely problematic with respect to reliability. "The biggest problem is long-term operations. The technology has not yet been proven successful, even though the world is moving in this direction. There is one such rig in Holland (out of 140), and a few in the Gulf of Mexico (out of thousands). They have full back-up if there is a technical problem."
Master plan representatives told "Globes" that residents' concerns that the site could become an industrial area is understandable, however, "the chance of this occurring depends to a large extent on the location that will be chosen." They also said that security issues were also taken into consideration, but that a land-based facility has an important advantage since faulty equipment can be repaired easier and quicker. "When there is a problem at a land-based facility, it can be remedied in an extremely short period of time. It takes three years to build a new sea facility."
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2011
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