* 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 effortto challenge a local government decision that has blocked itshunt for oil just over 40 kilometers from Jerusalem, a seniorofficial at the group said.
Genie, backed by media mogul Rupert Murdoch, says it aims tosecure energy independence for Israel, a country that has neverhad a serious oil find despite years of exploration.
But Genie is battling a growing number of setbacks. Lastweek, the Supreme Court put on hold a separate plan to drillexploratory wells in the Israel-controlled Golan Heights.
Drilling in the Ella valley outside Jerusalem is key forGenie, however, and Geoffrey Rochwarger, head of Genie'soperations in Israel, said on Monday that the company couldappeal to the Supreme Court to overturn the ruling last month.
"We were a bit surprised -- shocked is probably a betterword for it," Rochwarger, also vice chairman of Genie.
Genie had been due to begin drilling in the biblical valleywhere David is said to have fought Goliath. The area of itslicense alone contains 40 billion barrels of oil, the companyestimates, 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 andresidents, a Jerusalem local committee last month stopped workon the project, citing historical interest and possibleenvironmental impact. It also expressed concerns about scalingup to commercial production.
"We now have to decide what do we want to do. What's ournext step?"
Rochwarger said Genie's technique causes minimal damage tothe surroundings. A similar method, he said, will soon be usedby Royal Dutch Shell in neighboring Jordan.
Help in promoting the project, however, could also come fromMongolia, where Genie last month received permission to conducta similar pilot - even if collecting data could take years.
"In Mongolia we would probably try...to replicate, or justemulate, as many of the characteristics as possible, to be ableto then use the data afterwards," he said.
GOLAN DRILLING
Genie Energy was spun off from telecoms group IDT Corp in 2011. As well as Murdoch, it has attracted investmentfrom financier Jacob Rothschild. Together they own a 5.5 percentstake worth $11 million. Former U.S. Vice President Dick Cheneyis on the advisory board.
"What we're doing, energy independence for Israel, makes alot of sense to them," Rochwarger said.
Genie plans to drill 10 exploratory wells over three yearsin 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 findcommercially viable deposits.
The plan has received government approval, but since Oct. 20faces a two-month, court-imposed injunction after anenvironmental group petitioned for further discussion.
"The delays affect not only the company, but also dozens ofsuppliers from the Golan and Israeli workers," Rochwarger said.
Israel captured the Golan Heights from Syria in a 1967 warand annexed it in a move not recognized internationally.
"If we can prove the resource, we believe that this becomesa project of national significance, and that the government willdo what it can to protect its rights to this resource," he said. (Editing by Clara Ferreira Marques)
