Flow of Natural Gas, Used to Generate Half of Israel's Electrical Power, Halted Following Pipeline Fault

Repairs will be completed only Thursday, putting pressure on Israel’s power supply, possible shortages

Tamar natural gas rig, located 90 kilometers west of the city of Haifa, Israel.
Tamar natural gas rig, located 90 kilometers west of the city of Haifa, Israel. AP

In a scenario that the energy experts have long warned about, Israel’s supply of natural gas has been halted after a crack in the single pipeline linking the Tamar field to Israeli users was discovered on Thursday.

The fault in an exhaust pipe at a processing platform 20 kilometers offshore from Ashkelon forced the Tamar partners, led by the U.S. company Noble Energy, to stop supplies of natural gas, which is used to generate more than half of Israel’s electric power, until what they said could be the middle of this week.

In response, Energy Minister Yuval Steinitz to authorized Israel Electric Corporation and private power providers to use alternative fuel sources to produce electricity. “Following assessments carried out during the day, the supply of electricity to the market and gas to home clients will continue as normal, mainly because of the use of coal, auxiliary fuels and renewable energy supplies,” the ministry said.

Only two weeks ago, the government approved rules giving the minister the right to declare an energy emergency. In that context, Steinitz will also have the power to allocate imported liquefied natural gas to users according to need.

The switch to alternative fuels involves a major logistical challenge. Israel’s private power companies only have 100 to 200 hours worth of emergency fuel on hand and on Friday they were already in talks with Israel’s two oil refiners about emergency deliveries of fuel until regular deliveries are resumed, probably on Thursday.

IEC's power sources First half of 2017

That includes delivering fuel by pipeline and tank trucks, which will struggle to meet the power plants’ needs. Meanwhile, IEC will be using coal, although its ability to make the changeover is constrained by a technical problem at its Hadera plant – one of two that can generate electricity from coal. In addition, coal, diesel and fuel oil, which are pollute more than natural gas, could cause damage to generators.

Using alternative fuels could cause a shortage in household cooking gas and might lead to higher electricity rates. However, industry sources said the risk of severe power shortages are lower than if the problem has occurred during the peak demand period of the summer.

Those repairmen

The Energy Ministry originally estimated that the fault would be repaired within 24 hours and then 48 hours, but a statement on Friday said Noble engineers working to fix the fault pushed back the time it would need to complete the work to mid-week after realizing they would need to bring in parts from overseas. The fault was discovered on Thursday during routine maintenance work.

Tamar, which began production in 2013, is the primary natural gas supply for Israel and also exports to Jordan. So far it has produced more than one trillion cubic feet.

Experts have long warned that Israel needed a backup pipeline to run from the Tamar field, which is 90 kilometers offshore from Haifa, but the government has never acted, partly because it didn’t want to impose the $1 billion costs on the Tamar partners and partly in expectation that other fields, notably Leviathan, would be coming on line soon enough and have their own infrastructure.

Eitan Cabel (Zionist Union), chairman of the Knesset Economic Committee, said he would call a meeting of the panel next month to discuss natural gas policy and in the meantime asked Steinitz to prepare a report explaining why there is no national master plan for the energy economy or a second gas pipeline, and how the minister decided on energy allocations during emergencies.

“The fault is more than a warning sign. It requires we do more than learn some lessons from it, but examine and evaluate future policy,” he said.

On Sunday the Tamar partners, which also include Israel’s Delek Group, Tamar Petroleum, Isramco Negev and Alon, said the shutdown would not involve any safety or environmental risks.

The failure is not expected to have a significant impact on the partnership’s revenue from gas sales in the third and fourth quarters,” they said in a statement to the Tel Aviv Stock Exchange, estimating that the shutdown will lead to a loss in sales of about 0.1 billion cubic meters of gas, or about $3.5 million in revenue after royalty and tax payments.

Shares of Delek Drilling ended down 1.5% at 11.10 shekels ($3.18) and those of Tamar Petroleum by 0.9% to 22.63.