Israel Matzav

After pipeline explosion, Israel can meet energy needs but at a cost

In the aftermath of Wednesday's sabotage explosion of a gas pipeline near El Arish, the Israel Electric Company says that it can fulfill the country's energy needs, but at both a financial and an environmental cost.

“The Israel Electric Corporation has the means to guarantee a continuous supply of electricity to meet the country’s demands for all of its users, regardless of the cessation in the Egyptian gas supply,” said Dr. Amit Mor, CEO and energy specialist at the Eco Energy consulting firm. “IEC will do this by utilizing the Ashkelon and Hadera coal plants at maximum capacity.”

Coal currently fuels the production of 62 percent of Israel’s electricity, while natural gas accounts for 36% – two-fifths of which is supplied by Egypt, according to Mor.

Senior officials at the IEC convened on Wednesday for a discussion headed by Chairman Yiftah Ron-Tal and CEO Eli Glickman to appraise the situation and determine potential alternative methods for running power plants, including the use of petroleum, the corporation said in a statement.

“We do not expect that as a result of the latest event there will be any drops in the supply of electricity from our power plants,” said National Infrastructures Minister Uzi Landau at a press conference on Wednesday afternoon.

“The IEC is well-equipped to deal with such incidents.”

While he agreed that the IEC is completely prepared to handle the situation, Mor said that the current case will be slightly more difficult to manage than that of February “because the demand for electricity during these upcoming days and weeks is significantly higher than the demand for electricity back in the winter,” due to increased use of air conditioning.

“It was a mild winter,” he said.

In addition to making extra use of the coal plants, the IEC will probably convert several of the stations that currently run on natural gas to operate on heavy fuel oil and diesel instead, Mor predicted.

Though sufficient to fulfill Israel’s energy needs, these switches to coal and oil will cost the IEC an additional $1.5 million-$2m. per day, however, according to Mor.

“Coal prices have increased significantly in the past few weeks, due to an increasing demand for coal in China and in the international market. Now coal is more costly than the Egyptian gas,” he said.

Egyptian gas currently costs Israel somewhere between $4.10- 4.50 per million British thermal units (there are 6 million British thermal units in one barrel of oil), while heavy fuel oil costs $20 per million and diesel costs $25 per million, Mor explained.

“[Diesel] is six times higher than the price of Egyptian gas,” he continued.

“At the end of the day, we, the electricity consumers, will pay that additional cost through the price of electricity.

“If the halt of the gas supply is short, then the increase in the electricity price will be marginal, but if the halt is long or permanent, then the resultant increase in the electricity price will be significant.”

After last summer, which saw temperatures in Jerusalem soar over 100 degrees Fahrenheit, many people in this city have installed central air conditioning for the first time. That means that electric use this summer is likely to spike much faster than it did last summer. And the costs aren't just financial.

“Burning coal and fuel oil has adverse environment impacts because of the higher emissions of sulfur dioxide, nitrogen oxide and particulate metals, which have negative health effects, as well as carbon dioxide, which contributes to global warming and climate change,” Mor said.

“Although heavy fuel oil is significantly cheaper than diesel, due to environmental reasons, the priority should be to utilize the diesel-based power plants before the utilization of the heavy fuelbased power plants.”

Some of you asked yesterday when Israel's newly discovered natural gas (not oil) supply from the fields off the Haifa coast would be coming online. Current estimates of that are 2013-14. Not soon enough.

And one other little tidbit I heard on Wednesday. You know how we're constantly hearing how cheaply Israel is buying natural gas from Egypt? Well, we're paying multiples of what Jordan, Lebanon and Syria are paying.

Labels: Egyptian gas pipeline, Israel Electric Corporation, natural gas, sabotage

posted by Carl in Jerusalem @ 7:30 AM