Drill Baby Drill!

Who would of ever thought that Israel, a tiny country the size of New Jersey, which was bereft of all
natural resources would be in the process of becoming not just self sufficient in the energy sector but
an exporter as well in the beginning of 21st century. Besides some Christians (the Bible states that Israel
has large amounts of petroleum deposits which the finding of will cause attacks on Israel and create the
final battle of Armageddon) no one thought it would be possible. However Israel proves ones again what
genius and innovative Jewish brain can accomplish.

I am speaking of the natural gas reserves found off shore of Haifa (a major city in Israel). This discovery
was made by a Texas based oil and gas producer called Noble Energy along with 3 other Israeli
companies which are Delek Drilling, Avner Oil and Gas and Ratio Oil Exploration. The first natural gas
reserve that was found in 2009 was Tamar. Tamar is 56 miles off shore of Haifa. It was thought that it
contained 5 trillion cubic feet of natural gas but the later findings proved that it contained even more,
8.7 trillion cubic feet of natural gas. Everyone involved and Israel supporters were quite thrilled with
this finding however there were more grand surprises to come especially when the Leviathan field was
discovered. The Leviathan gas field is 81 miles out to sea from Israel and the findings there were of
astounding amounts, 16 trillion cubic feet of natural gas to be exact. These findings were the largest
that the world has seen in a decade.

To put this into perspective we have to realize that Israel spends 5% of its GDP on importing natural
resources. It is surrounded by countries which are overflowing with natural resources which in theory
they can provide to this small but mighty Jewish state but because they view it as an enemy they refuse
to supply it. Therefore Israel has to go through other countries/continents to acquire the resources it
requires which obviously adds on to the cost and time. It is interesting to note a point in time in history
when Israel did not have to spend this chunk of its GDP on natural resources, that was during Israel’s
rule over the Sinai Peninsula. Israel had control over the Sinai Peninsula after the 6 Day War, in 1967,
until the peace Treaty that it signed with Egypt in 1979. By giving up Sinai Peninsula for peace (which is
shaky and can end at any moment in time) Israel gave up approximately over 100 billion dollars in oil.
Needless to say, the Sinai Peninsula has an exuberant amount of oil reserves.

It is estimated that the time needed to build the pipelines to on shore facilities will take a few years.
Tamar is scheduled to start producing gas in the year 2013, while Leviathan is scheduled to start
production in 2016. However full scale production is set to take place in 2020. This will not only make
Israel self sufficient but it will become an exporter of natural gas. Experts have predicted that these
incredible discoveries will add 300 billion dollars to the Israeli economy overtime which is 150% of its
GDP which will double Israel’s account surplus.

Another major issue to be decided by the Israeli government is the amount of taxes to be levied on the
energy companies involved. When this discovery was found Israel’s taxes on oil was just at 30%, the
same that it has been since 1952. This percentage was extremely low compared to what other countries

in the OECD charged. Prime Minister Benyamin Netanyahu created a committee called the Sheshinski
committee (headed by Eytan Sheshinksi who is a distinguished economist) to come to a conclusion as to
what tax percentage Israel should charge for drilling the reserves. The final decision was a tax hike to
62%, the average tax levied by other OECD counties. This tax was approved by the Israeli cabinet.

We should rejoice in this phenomenal discovery. This will minimize Israel’s reliance on other countries
and it will increase its wealth. What a phenomenal country that is just 62 years old. In the words of
Sarah Palin “Drill baby drill!”