* 19 new wells to be drilled in next two years
* A serious spill could cripple Israel's coastal economy
* Environmental groups call for stricter regulation
By Ari Rabinovitch
JERUSALEM, Aug 7 (Reuters) - Israeli officials said they recognise the need to protect the unique and fragile marine environment of the Levant basin in order to ensure the success of the oil and gas industry there.
The promise of natural gas wealth is enticing an increasing number exploration companies to the eastern Mediterranean, where huge deposits were recently discovered and whose marine ecosystem, Israel's influential environmental groups say, is now potentially under threat.
Nearly half the Levant basin -- which holds an estimated 122 trillion cubic feet (tcf) of recoverable natural gas - is in Israeli economic waters. The rest lies off of Cyprus, Lebanon and Syria.
"Protecting the environment and security is necessary for the exploration industry to succeed. If, heaven forbid, a catastrophe or severe damage happens, it will most likely freeze or paralyze the industry for many years," Energy Minister Uzi Landau told Reuters.
One of the biggest challenges in the Levant basin is the depth of the wells. The largest fields so far discovered are deeper than the site of the disastrous Gulf of Mexico spill in 2010, where rescue efforts were hindered so far beneath the water's surface.
As a result, Israel is focussed on preventing any environmental disasters.
Israel was caught by surprise when two of the past decade's largest deep sea gas fields were discovered off its coast and it has been trying to maintain order in the exploration frenzy that ensued.
Nineteen new wells are expected to be drilled in the next two years at a cost of about $2 billion in a drilling area larger than the country itself. The companies hope to find oil in the layers beneath the gas deposits, as well.
U.S-Israeli consortiums led by Noble Energy and Delek Energy were responsible for the discoveries at Leviathan, with estimated reserves of 17 tcf, and Tamar, which holds about 9 tcf of natural gas. ILD Energy recently started drilling at the Sara field nearby.
DEEP SEA PERIL
Shortly after the colossal Leviathan gas field was discovered in 2010, 80 miles (130 kilometers) off Israel's coast, the World Wildlife Fund (WWF) warned that concerns for irreversible environmental damage were being ignored.
"The deep-sea floor in the Levant is teeming with life of a very special and unique kind," said Sergi Tudela, the head of fisheries at WWF Mediterranean.
Tudela called for comprehensive environmental assessments to determine how the drilling will affect the deep-sea ecosystems.
Landau's office is ultimately responsible for shaping the country's nascent exploration industry, and he is conscious of the perils of deep-sea drilling.
"The dilemma is not a simple one," Landau said. "We are learning how to find the middle ground -- how to develop while preserving environmental values."
Caution is crucial, he said, and there is still much to be learned.
Indeed, there has already been indications that these projects may be technically challenging.
In May, Noble had to suspend drilling at one of its wells at the Leviathan field where it hoped to find oil due to technical problems. At 21,400 feet, the deepest known penetration in the Levant basin, they were forced to stop because of high well pressure and the mechanical limits of the wellbore design.
In Israel, environmental protection groups have notable sway and have managed to hold up the construction of new reception stations along the coast, leaving the country in the precarious position of having just one gas pipeline coming ashore.
They are also petitioning a government panel, which is setting long-term policy for the natural gas sector, to hold firms to higher standards and to make sure market conditions are not overly attractive, saying it would encourage risky behavior.
The committee's final recommendations are due in the coming weeks. No delays in exploration or production are expected, officials say, and one or two new gas receiving facilities will likely be built on the Israeli coast in the coming years.
But concerns over environmental damage could complicate preparations required by companies.
Last month a team of experts from the U.S. Department of Interior came to Israel to share tips on how to best proceed and lessons from the Gulf of Mexico oil spill.
"We in Israel, it needs to be said, don't have the ability to deal with events of that magnitude," Rani Amir of the Marine and Coastal Environment Division at Israel's Ministry of Environmental Protection said after meeting the U.S. experts.
In the meantime, regulators are focusing on prevention.
Landau said his Energy Ministry has already been stepping up demands from drilling companies, drafting new provisions on monitoring and emergency response plans, insurance requirements and performance guarantees.
Gilad Erdan, the Minister of Environmental Protection, warned that Israel's short and crowded coast along the Mediterranean -- a closed body of water -- is relatively more susceptible to pollution and spills than many countries.
"With deep-sea drilling, in water deeper than a kilometer and a half and drilling more than four kilometers, it's clear that with all the good will and professionalism ... accidents happen," he said at a recent conference.
"(An environmental disaster here) can damage neighboring countries. It can even damage our relations with our neighbors," he said. "And that is without mentioning the economic collapse or damage to strategic facilities."
Israel's Levant Basin Drilling Opportunity Shadowed By Environmental Concerns