* Debate over oil shale deposits in central Israel
* Genie looks to Mongolia to prove technique for Israel
* Company supporters include Murdoch, Rothschild, Cheney
By Ari Rabinovitch
JERUSALEM, Oct 27 (Reuters) - U.S.-based Genie Energy could turn to the courts or even Mongolia in its effort to challenge a local government decision that has blocked its hunt for oil just over 40 kilometers from Jerusalem, a senior official at the group said.
Genie, backed by media mogul Rupert Murdoch, says it aims to secure energy independence for Israel, a country that has never had a serious oil find despite years of exploration.
But Genie is battling a growing number of setbacks. Last week, the Supreme Court put on hold a separate plan to drill exploratory wells in the Israel-controlled Golan Heights.
Drilling in the Ella valley outside Jerusalem is key for Genie, however, and Geoffrey Rochwarger, head of Genie’s operations in Israel, said on Monday that the company could appeal to the Supreme Court to overturn the ruling last month.
“We were a bit surprised — shocked is probably a better word for it,” Rochwarger, also vice chairman of Genie.
Genie had been due to begin drilling in the biblical valley where David is said to have fought Goliath. The area of its license alone contains 40 billion barrels of oil, the company estimates, more than what the world consumes in a year.
The company spent over $20 million preparing for the pilot.
But after years of lobbying from environmentalists and residents, a Jerusalem local committee last month stopped work on the project, citing historical interest and possible environmental impact. It also expressed concerns about scaling up to commercial production.
“We now have to decide what do we want to do. What’s our next step?”
Rochwarger said Genie’s technique causes minimal damage to the surroundings. A similar method, he said, will soon be used by Royal Dutch Shell in neighboring Jordan.
Help in promoting the project, however, could also come from Mongolia, where Genie last month received permission to conduct a similar pilot - even if collecting data could take years.
“In Mongolia we would probably try...to replicate, or just emulate, as many of the characteristics as possible, to be able to then use the data afterwards,” he said.
Genie Energy was spun off from telecoms group IDT Corp in 2011. As well as Murdoch, it has attracted investment from financier Jacob Rothschild. Together they own a 5.5 percent stake worth $11 million. Former U.S. Vice President Dick Cheney is on the advisory board.
“What we’re doing, energy independence for Israel, makes a lot of sense to them,” Rochwarger said.
Genie plans to drill 10 exploratory wells over three years in the Golan Heights, at a cost of $25-$30 million.
Rochwarger argues Genie’s geological evidence is strong — even though not far away, Zion Oil and Gas and Givot Olam have been drilling for years and have yet to find commercially viable deposits.
The plan has received government approval, but since Oct. 20 faces a two-month, court-imposed injunction after an environmental group petitioned for further discussion.
“The delays affect not only the company, but also dozens of suppliers from the Golan and Israeli workers,” Rochwarger said.
Israel captured the Golan Heights from Syria in a 1967 war and annexed it in a move not recognized internationally.
“If we can prove the resource, we believe that this becomes a project of national significance, and that the government will do what it can to protect its rights to this resource,” he said. (Editing by Clara Ferreira Marques)