Leviathan the future of Natural Gas?

According to a Wall Street Journal article published October 18, 2010 drilling began last week in Israel on a recently discovered natural gas well known as Leviathan. Leviathan is the second large natural gas well found of the coast of Israel in the Mediterranean Sea in the past year, the first being the natural gas well Tamar. Leviathan is currently projected to have upwards of 16 trillion cubic feet of natural gas, which would be enough to supply Israel’s energy needs for the next 100 years. This is the largest Natural Gas find in Israel’s history and one of the largest in the world in recent years. Noble Energy Incorporated and Delek Energy Limited are currently leading the initiative on the Leviathan project and together own approximately 86% of Leviathan and are expected to report the findings of their 150 million dollar exploratory drilling in March of 2011.

I think that it will be interesting to see what happens with Leviathan in the long run especially with the Israeli Finance Minister recently announcing that he has ordered a review of how the Israeli government taxes oil and gas exploration. The Israeli Knesset has been advised to not change royalty rates because it could lead Noble Energy to sue the Government of Israel at The International Court of Justice in The Hague. Also it will be intriguing to see how the Leviathan find will impact natural gas sales in both the Middle East and on the international level. It remains to be seen whether investment in the Leviathan natural gas well will expand or whether companies will choose not to invest because of the current uncertainty due to the possibility of making less profit. From a macroeconomic and political perspective it will shift the way that Israel currently conducts business with energy since they will no longer have to rely on receiving some of their oil from hostile countries.