Noble's cause: Can an independent manage Israel's Leviathan?

FORTUNE -- Crude is still the Holy Grail for energy companies exploring new places to drill. But while oil may be the most profitable form of energy, there's a growing market for natural gas, which is turning up in unexpected places.

The latest big find happened in Middle East when an independent gas exploration and production company called Noble Energy (NBL) struck gold, in the form of gas, off the Israeli coast in the Mediterranean Sea. The play, called Leviathan, is in the Levant Basin Province, which is an area that the majors passed over because no one thought anything valuable was there.

But Noble found a reservoir that could produce 16 trillion cubic feet of gas--the world's largest deepwater gas discovery in the past decade. Now, the company must figure out the best way to develop it.

A supermajor might feel more comfortable in a play this size, says Robert Attai, a partner who specializes in energy deals at the law firm Husch Blackwell. "When you're an independent you say 'great, what the hell do I do with this thing?' It's like the dog that caught the car it was chasing."

A smaller company such as Noble will have to face numerous obstacles without the kind of financial clout or experience of bigger companies. "[Leviathan] is the biggest find in their history," says Phillip Weiss, a senior energy analyst with Argus Research Group, who says that the gas coming out of the Leviathan could mean a 15-20% increase in Noble's entire production level. "That's huge. Relative to what would happened if an Exxon (XOM, Fortune 500) or a Chevron (CVX, Fortune 500) or a Shell (RDS) found it, it's much more meaningful."

The play is so big, in fact, that someone is going to profit from it, and Noble will most likely do well from the find. It has a strong balance sheet, and other good energy assets. But the Leviathan situation will be challenging for Noble for several reasons.

For example, Noble would have to liquefy the natural gas it drills at Leviathan in order to transport it to other countries. The biggest liquefied natural gas operations in the Middle East are in Qatar, which ExxonMobil developed over a ten-year period. In that time, Qatar went from having no hydrocarbon exports to being the leading liquefied natural gas exporter in the globe.

But there's a difference between these two finds. One of which is simply the size of the developer. Noble is a big independent--its market cap is about $15 billion. But it's nothing close to Exxon, with a market cap of almost $400 billion, experience with big projects that finish on time and the cash to fund parts of the project like, for example, the pipeline infrastructure to export natural gas from the country where its being drilled.

Noble's find won't work that way for several reasons. First, the company is on a tighter schedule than a major. Noble doesn't have the same cushion in the form of a diverse range of energy assets. It's going to have to time its project pipeline so that other plays produce right when it would need to spend a chunk of capital in Israel.

For example, Noble will probably have to fund some portion of a liquefied natural gas facility. If it didn't, it would have to use the gas from Leviathan for local energy in Israel. But Israel can already access enough gas to fulfill its natural gas needs in the short term due to the company's 2009 find in the Tamar gas field. Tamar, which is in the same basin as Leviathan, holds over 8 trillion cubic feet of gas and is set to come on line in 2012.

Instead, the gas would need to be exported, most likely to European and Asian markets, where there's demand, according to Platts, which reported that global demand for liquefied natural gas will actually outstrip supply as early as 2011, thanks to increased need in markets in Asia, South America and Europe.

Once the facility is built, getting the gas out of the country will be challenging. "The area is technically in a war zone," says Attai. That makes it difficult to lay down pipeline to transport the gas. "Every country around Israel would like to see it no longer exist, so there's not a whole logistical support from neighboring countries."

The Leviathan play actually straddles the maritime border between Israel and Lebanon-the two companies have a long history of political tension. Any company that would develop a resource such as Leviathan would have to risk foregoing other energy plays in the area, which Noble must have known before accessing the play.

Finally, this particular situation is different because Noble only has a 40% stake in Leviathan. Part of the rest is owned by Delek Drilling, which has ties to the Israeli government. The Israeli government is going to try to maximize profit from the play any way that it can. Already, the government is planning on jacking up the tax on exported oil and gas.

None of these issues will likely come to a head in the next year. For now, Noble is still surveying the project. It also has promising assets in West Africa that are set to produce in 5-7 years, which is about the time that anything out of Leviathan would start to require an influx of cash.

So Noble is good for now, sitting on the latest, major find that the company will probably cash in on in some capacity. But soon, Noble will likely have to navigate a series of partnerships to pull the most profit that Leviathan can offer. Worst case scenario, a change in risk or an unexpected hole in Noble's pipeline could mean it would sell its stake before there's a massive profit margin on anything coming out of Leviathan.

The company's main strength is its innovative approach to exploring somewhat riskier plays. But when the exploration phase is over, it's unclear who will ultimately reap the benefit of the find.

*Editor's Note: A previous version of this piece referred to Noble Energy as Noble Corporation. The error has been corrected.