Saturday's pipeline explosion at a gas terminal in Egypt's northern Sinai Peninsula led to gas flows from Egypt to Israel being temporarily shut down.

Egypt supplies about 40 percent of Israel's natural gas, most of it used in power stations.

The suspension of Egyptian gas supply to Israel has lighted a fire under the feet of Israeli officials, businessmen and stakeholders trying to assess how events in Egypt will affect Israel's energy economy.

The gas deal is a cornerstone of peaceful relations, but Israel fears Egyptian instability in the wake of massive anti-government protests could render the agreement worthless.

Initial assessments that it is in Egypt's interests to keep the lucrative gas deals with Israel may prove right when the dust settles. But the shake-up in Egypt is a wake-up call for Israel, too.

Minister of National Infrastructures Uzi Landau urged hastened development of the Tamar gas field Sunday. Meanwhile, Israel can increase quantities from its southern reserve and may have to compensate for the loss of Egyptian gas by using more coal and oil-based fuels to produce electricity.

Israel was hoping to move away from such dirtier energy sources for various reasons, including a pledge to reduce greenhouse emissions. Recently the government approved a national plan to develop technologies to reduce global use of oil in transportation. Global dependence on oil and the countries that produce it is bad for both the environment and economic stability, Prime Minister Benjamin Netanyahu said.

But industries and economies still rely on fossil fuels. Increasing costs and depleting reserves are driving new technologies to produce energy.

And surprise (OK, maybe not to geologists) -- Israel is sitting on a potential fortune.

In 2008, Israel licensed a vast shale deposit at the foot of the Judean Hills to Israel Energy Initiatives, which is currently conducting a pilot project to produce 500 barrels of oil. If testing proves technically and economically feasible, the company believes Israel will have a source of high-grade oil worth several decades of energy security.

There are, of course, environmental concerns. The 238,000 dunam deposit licensed to IEI overlaps with the natural expanse of the Adullam region, a scenic national park with national heritage and archaeological sites being submitted to UNESCO as a world heritage candidate. The communities in the area, 3 kilometers away, are afraid of what the drilling will do to the environment..

"This is a humongous project, and a very energy-intensive one" said Rachel Jacobson, a concerned resident and art therapist whose sabbatical morphed into spokesmanship for the campaign. "The company insists it will have no environmental impact, but you look at the other developments and say 'No way this is true'," she said. Jacobson noted the company was granted an exclusive permit within Israel's antiquated oil law that allowed developers liberties with resources but "didn't take into account environment, public safety and other issues on today's agenda."

It's "not a NIMBY thing," she stressed. "This is everyone's backyard; water and air aren't local." The campaigners would love for Israel to be energy-independent and reject what they call "scare tactics" about the project being a component of national security. Jacobson asked: How safe is Israel going to be if its air or water are poisoned?

"We're on the residents' side. We drink the same water," responded On Levy, a spokesman for IEI. The company has done extensive -- and expensive -- testing that shows no adverse affect on the environment or resources, he said. The precious groundwater is protected by a thick layer of impenetrable rock, the geology being very different from other ventures overseas, which Levy said he assumes spooked some residents. Not only will water not be exploited, he said, the process will also produce a considerable amount as a byproduct, making the project a double boon for the country. IEI is committed to the environment and to Israel, Levy reiterated, pledging complete transparency.

Where there's big money, there are big names too. IEI is largely owned by Genie Oil and Gas. Lord Jacob Rothschild and Rupert Murdoch recently bought into Genie. Jacobson worries that  "American billionaires have jumped on this because they know there are no stoppers in Israel."

Yes, there are foreign investors and players, said Levy, but they are people who have Israel's interests at heart, he said.

Even the campaigners will agree with him on some points while remaining suspicious of others.

"Let's face it,"  Jacobson said. "Dick Cheney doesn't exactly have a reliable track record in protecting the environment." Cheney is on Genie's strategic advisory board.

Read the full article from the Los Angeles Times HERE