Photo Credit: Ishai Parasol via flickr.com.

In the world of energy, anything is possible. We drill for oil and gas at depths that would equate to drilling through all of Mount Everest, and go to the absolute end of the earth to get it. That is why when Israel's National Planning Commission recommended building a man-made island miles off the Israeli coast for natural gas processing facilities, no one laughed them out of the room. Let's look at what the country has planned now for its new-found wealth of natural gas, and how it will affect Noble Energy (NBL) and the other players in this high-stakes game. 

Straight from a Bond film
When you find a natural gas field that has the size and strategic location to be a resource that could change the geopolitical climate of the entire Middle East, then obviously you want to build a James-Bond-supervillian-type stronghold to serve that resource, right? In this case, that may not be so far away from the truth. A consortium of companies -- including Noble Energy -- is looking for space to build processing facilities and storage terminals for the Leviathan natural gas field in the Mediterranean Sea, which has enough natural gas to significantly change Israel's position in the global energy trade market. The problem, though, is that they are having an extremely difficult time finding a home for all of this new infrastructure. Not only is real estate in Israel already at a premium as the worlds seventh-most densely populated nation, but many communities are also resistant to having these facilities built on the mainland. Also, as with anything Israel, there is the security angle that needs to be considered. 

To alleviate these issues, the government has proposed that the consortium build two receiving terminals, processing facilities, and potentially natural gas-fired power plants on a man made island about 5 miles off the coast. 

There goes our start-up date
As completely harebrained as it may sound to build an island miles offshore in thousands of feet of water, this isn't a completely unprecedented move. ExxonMobil (XOM 0.23%) and Royal Dutch Shell (RDS.A) (RDS.B) have also built man made islands in the Caspian Sea as part of the Kashagan oil project. Then again, any company that draws comparisons to the Kashagan project is probably not in a good place. That project is over a decade past schedule and tens of billions of dollars over budget. 

Not the project anyone wants to be compared to (Source: Eni Media Relations)

This could be a major problem for the companies involved in Israel's Leviathan field. Unlike Exxon and Shell, none of the companies is large enough to cover the billions and billions of dollars it could potentially take to build such a project, and that's if the project gets done on time and on budget. What will complicate the issue even further, though, is it will be equally challenging to bring on a deep-pocketed partner to bear some of the costs. Exxon, Shell, and just about every other major oil company has some sort of connection to an Arab nation in the region through production sharing or service contracts. If you didn't know, Israel doesn't have many friends in the Middle East, and any oil company willing to join Noble on the Israel project would probably jeopardize its other relationships in the region. 

It may be a bit presumptuous to say that if this proposal ends up being the path Noble and its partners in the project decide to take, then there is no chance on earth that the Leviathan gas field is up and running by 2017 as the company hopes. However, building a man-made island in thousands of feet of water miles offshore to then construct billions of dollars worth of natural gas processing facilities will probably take more than three years. 

What a Fool believes
Israel had long lamented its complete lack of oil and gas when it is surrounded by oil rich nations, and its dependence on foreign sources of energy has always been a challenging issue for the nation. Today, the country and the members of the project are starting to realize that having these natural gas fields is equally challenging. Noble Energy and its partners will struggle to get the financing necessary to build such a massive-scale project, and the increasing size and complexity of the project will almost certainly lead to delays and larger than expected budgets. Investors who have been following this development should probably remain on the sidelines for a while longer while this situation plays out, because it still remains a very high-risk, high-reward situation for Noble.