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National Policy on the Use of Natural Gas

National Policy on the Use of Natural Gas
Researchers
Dr. Gilead Fortuna

The application of natural gas in industry requires that the dilemma concerning its transportation in Israel be studied. According to the solution that was selected, a government company transports the gas to the distribution centers and to the largest consumers, but transport to smaller industries is left to private enterprises. We believe that this leads to small and medium industries having an unequal opportunity to realize the benefits of natural gas, and that the present design will mainly affect classic industries, whose energy costs constitute a significant part of their expenses, and whose profits do not allow them to be competitive without replacing liquid fuel with natural gas. We recommended an amendment to the policy.

The application of gas in the synthetics industry seems to us certainly to be economic in terms of the domestic consumption of plastics, polymers, and fertilizers, and to be important raw material for new synthesis for export as well increasing the added value of Israel’s industry. Research aimed at understanding the options and implications of the recommended national policy continues.

The characteristics of Gas Based Industries require long range planning:

  • Very high infrastructure investments.
  • In order to achieve return on the investment, the investments need full implementation. Alternative options must evaluated and compared.
  • Gas exports require piping infrastructure or investments in liquefaction systems.
  • Tight gas prices and oil simultaneously fluctuate. It is important to evaluate which will win in the long run.
  • Gas use for electricity is rising steadily as it contributes to reduced pollution.
  • The use of gas to the chemical industry will be attractive as the cost of the gas industry will be tailored to the long - term policy agreed upon.
  • High taxation allows the implementation of gas prices policy for the new chemical industries.
  • Implementation allows industrial promotion and population increase in the Negev industrial areas.
  • The program is compatible and supports the policy for decreasing the dependence on oil through the intermediate production.

Implementation work plan is due and it will include:

  • Systematic learning the experience of other countries that have already realized industrial production based on raw natural gas.
  • Trends forecasting and sensitivity of demands and further production in the investing stages.
  • Economic analyzes based on different scenarios that incorporate assumptions of gas costs, investments and world prices.
  • Chemical analysis of already existing innovation and academic integration options with industry to develop chemistry of the downstream (e.g. heterogeneous catalysis)
  • Combining industry-leading forum, entrepreneurial industries, experts from academia, energy market experts, government representatives (Regulation and Business Development) and the Capital Market
  • Combination of push initiatives from bottom up with ascertaining top down policy.
  • Effective implementation is possible only with coordinating all of these bodies under a long range policy.

The emphasis in 2012 was on the research and application of natural gas for the benefit of the energy services in Israeli industry, and on a feasibility study on using natural gas in the synthetics industry of downstream products. One of the activities was a professional meeting of the energy forum on subject of the planned fuel mixture for the Israeli energy sector, which was held at the Samuel Neaman Institute.

During 2011 we held a series of meetings with experts in the field of natural gas, and we focused on the capabilities and feasibility of establishing a new chemical industry that produces polymers and many other products by leveraging the natural gas as raw material.

In light of the articles we have published and our participation in conferences and discussions in 2013, which placed emphasis on the importance of gas supply  to small industries and on the gap between the cost of connection to small companies and large companies, the costs of supply to small companies were significantly lowered. This helped promoting gas supply to small industries was accelerated.

This issue is not sponsored by any third party and therefore the activity in 2014 focused on participation in policy discussions and on giving opinions to government and industries that contacted us for advice.

We participated in discussions and in finding short-term solutions for the industry affected by the delay in gas supply for several years due to delays in the national gas supply. The interim solution that is being promoted is to transport compressed gas.

Presentation of an industrialization program for providing natural gas to downstream industry. In the first stage, the production of ammonia and methanol to meet the needs of the domestic market, which is also necessary to solve the problem of ammonia storage in bulk in old tanks in northern Israel, will be addressed.

Opinions on appropriate national policy solutions in light of the global changes in oil prices and the declining gas prices in the USA.

Participation in a seminar on gas policy held at the initiative of the Samuel Neaman Institution as part of the Committee for National Energy Policy.

This is a complex subject, both commercially and politically, and its implications for Israel’s energy policy are profound. We will continue to conduct research to provide an update on the situation and to participate in national discussions on the issue.

The activity on the subject continues with the intention of attempting to persuade the Ministry of Economy to adopt the conclusions in full.

Publications