New layer of gas discovered at Tamar field off coast of Haifa

Deep Sea Rig at Tamar

Haaretz, ‘The Marker’ July 22, 2011

Amount of natural gas and economic implications of discovery at Mediterranean Sea site yet to be determined.

A deeper layer of natural gas has been discovered at the Tamar field, off the coast of Haifa, according to a report published on Thursday by Delek Drilling and Avner Oil Exploration.

The impact of the newly discovered reserve has not yet been analyzed nor released in full. The significance of the newly discovered structure will depend on the amount of natural gas at Tamar and on the estimations of additional layers in other areas of the Mediterranean Sea that have not yet been discovered.

The new reserve, ‘Layer D’, was discovered beneath ‘Tamar 3′, and is said to be up to 25 meters wide.

According to the report, Noble Energy – the American partner leading the consortium – is gathering data on Layer D and analyzing the implications of the extent of the reserves at Tamar. It is currently not possible to determine the size and economic implications of the newly discovered reserve.

Noble owns 36% of Tamar, while Isramco Negev owns 28.75% and Delek Group, controlled by Yitzhak Tshuva, has a 31% percent stake through two units with equal shares of 15.6% each, Avner Oil Exploration and Delek Drilling.

The Tamar site is the largest natural gas discovery in Israel and plans on selling natural gas to Israel in 2013.

The Lebanese proposal of its maritime border with Israel that is currently under dispute does not include the Tamar and Leviathan gas prospects.

Myra, Sarah drilling could start in December

Fueling Israel’s Future

Israeli Power Plant at Hadera

From: Jewish Ideas Daily, Alex Joffe, July 21, 2011

Are abundant natural resources a blessing, or a curse? This is the sort of question that economic theorists love to play with, usually concluding that, depending on other factors, they can be either or both. Israel, thus far burdened with a crippling dependency on imported oil and gas, has had astonishing success in developing its human resources—so much so that it has flourished economically even in the current global recession. Would it have done even better with adequate sources of domestic energy? Or worse? A formerly theoretical dilemma is poised to become a pressingly practical one.

Trillions of cubic feet of natural gas have been discovered in several titanic fields off Israel’s coastline. They promise both an abundance of domestic energy, as much as 200 years’ worth by some estimates, and the possibility of the country’s becoming a major energy exporter. The total value of the gas is currently worth close to a half-trillion dollars. On the macro level, and from the point of view of ensuring the country’s national security, the prospective boon is almost unimaginably beneficial. The question, as always, is what is entailed in realizing it, and how to mitigate any attendant social and political costs.

Begin with the issue of where to locate a gas terminal. Israel’s coastline is 170 miles long, the site of several cities and numerous competing uses, including ports, water-desalinization and sewage-treatment plants, military operations, and recreation. Thanks in part to ecological changes in the Nile delta (themselves the long-term effects of the Aswan high dam built in the early 1960s), the coastline is also being eroded and becoming more vulnerable to storm damage. Millions of Israelis, Jews and Arabs, vie for access to the few parks and undeveloped beaches on the seafront.

One pressing issue is strategic. Gas-receiving terminals include the infrastructure to process raw natural gas and remove contaminants, as well as storage tanks and links to distribution systems. They may also include facilities to create liquefied gas for transportation and storage by radically reducing its volume. Such facilities have the explosive potential of small nuclear weapons. In Israel’s case, any such facility will also automatically become a major target for adversaries ranging from Hamas to Iran. Already the single pipeline carrying natural gas from Egypt to Israel and Jordan has been repeatedly attacked since the fall of the Mubarak regime, and the electrical-power stations at the two coastal towns of Hadera and Ashkelon have been targeted by, respectively, Hizballah and Hamas rockets.

If the strategic implications of locating a gas terminal are significant, the domestic aspects are almost equally problematic. One plan would have placed the terminal at Dor, just south of the Hadera power station, effectively cutting through a beachfront kibbutz, nature reserve, and major archaeological site. Another proposal would expand the existing gas terminal at Ashdod, which serves a smaller offshore field. In both cases, those affected would be among the less powerful sectors of Israeli society, kibbutzniks and residents of outlying cities. (For both strategic and domestic reasons, there is no chance the terminal will be located anywhere near north Tel Aviv or its affluent suburbs.) And in both cases the sites have already been targeted by rockets.

More recently a proposal has emerged to locate a floating liquefied natural-gas terminal a few miles off the shore of Hadera, in what would amount to a giant ship that could temporarily move out of range of missile and other security threats. Australia is building a similar facility 120 miles off its western coastline, at a cost of $10 billion. In Israel, the state will of course remain responsible for its citizens’ security, but the size of the price tag inevitably raises the vexing question of who will pay for the infrastructure, and who will enjoy the proceeds.

The Israeli and American companies that have invested hundreds of millions for exploration stand to reap a windfall of billions. In January, the Israeli cabinet overwhelmingly approved taxing oil and gas profits at between 50 and 62 percent, effectively doubling the tax rate under which exploration had been launched. The new rates are in line with those in most Western countries, but the change prompted a complaint from the U.S. State Department about the deleterious retroactive effect on American investors. For their part, some Knesset members have been railing angrily about “greedy tycoons.” Prime Minister Benjamin Netanyahu has promised that the state’s share will be allocated toward education and security, but these debates can only become more heated, and more polarized, as time goes on.

No less fraught are the regional and international implications. Israel’s gas discoveries have prompted negotiations with Cyprus regarding the delineation of the two countries’ maritime borders and exclusion zones. Some entrepreneurs are talking about an undersea pipeline heading toward Europe. And, as has been well reported, there have been threats from Lebanon, which has already accused Israel of stealing “its” offshore natural gas.

Just south of the national park at the imposing ruins of Roman and Byzantine Caesarea, including the remains of the ancient aqueducts that supplied much-needed fresh water, and of the modern town of Caesarea that is home to some of Israel’s elite citizens, lies the Hadera power station. Its smokestacks dominate the horizon; a jetty protrudes offshore to carry coal from cargo ships.

The view from Caesarea beach thus already offers a juxtaposition of old—very old—with new infrastructure, as well as of the conflicts and divides that characterize Israeli society internally and its relations with its neighbors without. One can only hope that, with agility and political wisdom, the Jewish state will successfully navigate its course between the blessing and the curse of immense amounts of fuel, and the forms of power that come with it.

Alex Joffe is a research scholar with the Institute for Jewish and Community Research.

Flare Up Between Israel and Lebanon Over Gas

Jerusalem Center For Public Affairs

• The potential oil and gas fields off the Lebanese and Israeli coasts look set not only to become a long-term source of heavenly bounty – but also a source of conflict in the years ahead. Behind the tensions over the potential gas discoveries is the fact that the maritime border between Israel and Lebanon has never been delineated because the two states are still formally at war.

• Lebanon has a real interest in developing potential fields and a possible confrontation with Israel will not assist in reducing its energy dependence. However, the sudden interest in potential offshore fossil-fuel wealth has turned the Mediterranean into a potential theater of confrontation between Israel and Hizbullah.

• Hizbullah already boasts an amphibious warfare unit trained in underwater sabotage and coastal infiltration. Its ability to target shipping – and possibly offshore oil and gas platforms – was exposed in the war with Israel in 2006 when Hizbullah came close to sinking an Israeli missile boat with an Iranian version of the Chinese C-802 missile.

• Responding to this threat, Israeli Prime Minister Benjamin Netanyahu declared in January that the offshore gas fields were a “strategic objective that Israel’s enemies will try to undermine” and vowed that “Israel will defend its resources.” It would be a fair assessment that any damage incurred due to Hizbullah’s activities would generate retaliation that would be aimed against the infrastructure of the Lebanese state.

Israel and Lebanon: Still Technically at War

The basis for a future confrontation between Israel and Lebanon is being sown today. But unlike the past, the scene of the next armed conflict between the two neighboring Mediterranean states might be confined to the gas and oil concessions scattered along their common but disputed maritime border. The potential oil and gas fields off the Lebanese and Israeli coasts look set not only to become a potential long-term source of heavenly bounty – but also a source of conflict in the years ahead.

Indeed, the stakes are tremendous. Both Lebanon and Israel are currently dependent on neighboring countries for importing fuel for power generation. Israel presently relies on Egypt for most of its gas, but the durability of that arrangement has been cast into doubt following the ouster of Hosni Mubarak’s regime. The Egyptian pipeline supplying gas to Israel and Jordan has been blown up numerous times since the change of regime in Egypt, disrupting the flow of gas to Israeli, Jordanian and Lebanese power stations.

Key to the tensions over the potential gas bonanza is that the maritime border between Israel and Lebanon has never been delineated because the two states are still technically at war.

Two gas fields off the northern Israel coast – Tamar and Leviathan – contain an estimated 8.4 trillion cu. ft. (238 billion cu. m.) and 16 trillion cu. ft. (453 billion cu. m.), respectively, sufficient to satisfy Israel’s energy needs for the next half-century. What remains unknown is if the fields stretch into Lebanon’s territorial waters. Even if neither of them stretches that far, Tamar and Leviathan are part of much bigger potential oil and gas reserves in the eastern Mediterranean. Last year, the U.S. Geological Survey estimated that the Levant Basin Province, encompassing parts of Israel, Lebanon, Syria and Cyprus, could contain as much as 122 trillion cu. ft. (3.4 trillion cu. m.) of gas and 1.7 billion barrels of recoverable oil. (For comparison, Libya has gas reserves of 53 trillion cu. ft. [1.5 trillion cu. m.] and oil reserves of 60 billion barrels.)¹

Lebanon Looks to the UN

As expected, Lebanon declared on July 10 through its various spokesmen that it would file a complaint with the United Nations against Israel, after the Israeli Cabinet approved a map of its proposed maritime borders, which Lebanon is calling an aggression and an infringement on its right to an exclusive economic zone (EEZ).²

Commenting on the Israeli decision, Lebanon’s newly appointed Foreign Minister Adnan Mansour declared in an interview: “For sure we will [file a complaint]. This is an aggression on our gas and oil rights and we will not remain silent.” “This is a de facto policy that will not bring peace for Israel. Israel is creating a new area of tension,” he added.³

Mansour said that the borders drawn by Israel constituted an aggression against Lebanon’s economic borders: “When there is an economic zone linked to a number of states, demarcating borders does not happen by one state unilaterally or by two states at the expense of the third,” he said.⁴

According to the Israeli press, Israel will submit the map approved by its Cabinet to the UN for an opinion, as the neighboring states face off over offshore gas fields. The Israeli map lays out maritime borders that conflict significantly with those proposed by Lebanon in its own submission to the UN last summer.

At the Israeli cabinet meeting, Prime Minister Benjamin Netanyahu said that “the outline that Lebanon submitted to the UN is significantly further south than the one we propose.” “It [Lebanon's map] also conflicts with the line that we have agreed upon with Cyprus and, what is more significant in my eyes, it conflicts with the line that Lebanon itself agreed upon with Cyprus in 2007.” “Our goal is to determine Israel’s position regarding its maritime border, in keeping with the principles of international maritime law,” Netanyahu said.⁵

Mansour said that Israel’s demarcation of its maritime borders with Cyprus had infringed on Lebanon’s right to its economic zone. “This contradicts international law,” Mansour said. In the 2007 agreement between Cyprus and Lebanon on their common maritime border, the parties had left “in Area 23 of the agreement map an unmarked line 17 km. long that has been now included by Israel in its EEZ which she has no right to.”⁶ Mansour said that the area included in the Israeli map was equivalent to 1,500 square kilometers of Lebanese territory lost to Israel.⁷

Mansour added that no agreement can be obtained without the acquiescence of the three parties involved. But with Lebanon being in a state of hostility with Israel, Lebanon had asked UNIFIL to intervene and assist in drawing the maritime line between the parties. UNIFIL declined to accept the request arguing that this was not in its mandate.⁸ Mansour reported on July 10, 2011, that following this refusal, Lebanon had requested help from the UN to demarcate its maritime borders with Israel. However, the UN had yet to respond to the request.⁹

Lebanon’s Energy and Water Resources Minister Jibran Bassil assured the Lebanese that the country’s natural resources were “not in danger.” Bassil said that Lebanon had acted in accordance with maritime law and “Israel should first sign this law before invoking international law.” Bassil added that Lebanon would wait and see what Israel is presenting to the UN: “If it respects international law, then no problem. But Lebanon has been accustomed to Israeli aggressions on its sea, waters, skies, and now on Lebanon’s oil and gas rights.”¹⁰

Answering Israeli Foreign Minister Avigdor Lieberman, who said that Lebanon was acting under pressure from Hizbullah, Bassil said: “If Israel wants to aggress us, then Hizbullah is not the only one concerned, but it is the whole state of Lebanon. No Lebanese will agree to desist himself of his oil and gas rights.” Bassil pointed out (as did the Lebanese foreign minister before him) that no international oil and gas company will be active in an area of conflict.

“We are determined to defend our rights, especially since we are fully committed to the law of the sea. If Israel violates this law, it will pay the price.” Bassil said that Lebanon had given its maritime maps to the UN and the “UN should behave in line with the law.” The minister said that he would call for placing the issue first on the agenda of the next Cabinet session.¹¹ “We will take the suitable measures, like launching a diplomatic and political campaign [to defend our right],” he said.¹²

On January 4, 2011, Lebanon had requested UN Secretary-General Ban Ki-moon to ensure that Israel’s plans to drill for gas in the Mediterranean would not encroach on its own offshore reserves. Lebanon’s then foreign minister, Ali al-Shami, wrote to Ban asking him to “exert every possible effort to prevent Israel exploiting Lebanon’s maritime hydrocarbon resources which fall within its exclusive economic zone.”¹³

Shami’s letter came a week after Texas-based Noble Energy and its Israeli exploration partners said the Leviathan prospect – 130 km. (80 miles) off the Israeli port of Haifa – was the world’s biggest deepwater gas find in the past decade.¹⁴

Shami stressed: “Lebanon’s right to exploit fully its hydrocarbon resources, which fall within its exclusive economic zone, is based on legitimate rights established by international law….Any Israeli exploitation of this resource would be a blatant violation of these laws and an attack on Lebanese sovereignty.”¹⁵

Spurred on by Israel’s plans to drill for gas, Lebanon’s parliament adopted a long-awaited energy law on August 17, 2010, which paves the way for exploration of offshore reserves. Representatives of energy companies are already in Beirut lobbying for potentially lucrative oil and gas concessions. In an October statement, Norway-based Petroleum Geo-Services confirmed that Lebanese waters contained potential valuable deposits and may prove to be an “exciting new province for oil and gas.”¹⁶

Indeed, the prospect of oil and gas beneath Lebanon’s coastal waters could have immense benefits for a country with one of the highest debt rates in the world – around $52 billion, or 147 percent of gross domestic product. But progress has slowed down because of the collapse of the government in January and the delay in the formation of a new Cabinet due to political bickering.¹⁷

Moreover, Lebanon is well aware of the UN reluctance to venture into this field. A reflection of this was seen during the visit of the UN Special Coordinator for Lebanon, Michael Williams, who declared after his visit on March 3, 2011: “I assured the Minister that the United Nations is considering how best it can help Lebanon…in regard to the maritime border between Lebanon and Israel. But I also stressed to the Minister that there are many steps that Lebanon itself can take….For example, Lebanon can move towards defining the maritime borders with other neighbors, for example Cyprus and Syria, through the ratifications of agreements that have already been negotiated, or through the negotiation of other agreements. We also look forward to Lebanon accelerating the implementation of the oil and gas exploration law, which Parliament adopted last year.”¹⁸(The agreement between Cyprus and Lebanon has not been ratified by the Lebanese parliament because the government has not submitted it for ratification, in order not to antagonize Turkey that is fiercely opposed to any deal with the Cyprus government regarding resources.

Implications of the Dispute

The dispute over the gas fields along the Lebanon-Israel maritime border has been described by some analysts as another Shab’aa Farms issue, which historically has been a periodic clash point between Hizbullah and Israel. However, on the gas issue it seems that the parallel is misplaced. Lebanon has a real interest in developing potential fields and a possible confrontation with Israel will not assist in obtaining the energy independence it is seeking. Analyzing Lebanese declarations, it is clear that the Lebanese have chosen first to seek a diplomatic solution either through the UN apparatus or through international courts and bodies of arbitration that specialized in those disputes.

It comes as no surprise, however, that the sudden interest in the potential fossil-fuel wealth off the Israeli and Lebanese coastlines has turned the Mediterranean into a potential theater of confrontation between Israel and Hizbullah. The Lebanese group already boasts an amphibious warfare unit trained in underwater sabotage and coastal infiltration. Hizbullah’s ability to target shipping – and possibly offshore oil and gas platforms – was exposed in the war with Israel in 2006 when Hizbullah came close to sinking an Israeli missile boat with an Iranian version of the Chinese C-802 missile. Hizbullah fighters have since hinted that they have acquired larger anti-ship missiles with double the 72-mile (116 km.) range of the C-802 variant.

Last year, Hizbullah leader Nasrallah warned that his organization now possesses the ability to target shipping along the entire length of Israel’s coastline. Nasrallah even promised that if Israel threatens future Lebanese plans to tap its oil and gas reserves, “only the Resistance [Hizbullah] would force Israel and the world to respect Lebanon’s right.”¹⁹ In this context, one cannot dismiss the possibility that in time of conflict Hizbullah would use its weapons to target and hit Israel’s gas installations in the Eastern Mediterranean basin.

Responding to this threat, Israeli Prime Minister Benjamin Netanyahu declared in January that the offshore gas fields were a “strategic objective that Israel’s enemies will try to undermine” and vowed that “Israel will defend its resources.”

No doubt the U.S. has a keen interest in preventing any conflagration in the region, especially in an area where American drilling and oil and gas exploration companies are involved. A report in Ha’aretz²⁰ pointed to the U.S. as having adopted the Lebanese position on the issue, but this has been denied by government spokesmen. It is clear that the U.S. will not blindly accept either of the two positions: the U.S. will follow the legal lines of international jurisdiction and encourage both parties to do so. In this realm it seems that the U.S. will advise the Lebanese government to exercise some restraint over Hizbullah and will signify that any military intervention by Hizbullah could come at the expense of Lebanese interests.

As for Israel, the Cabinet has already approved a budget to protect Israel’s “strategic maritime energy sources.” It would be a fair assessment that any damage incurred due to Hizbullah’s activities would generate retaliation that would be aimed against the infrastructure of the Lebanese state.

*     *     *

Notes

1. Liban-Israel: la bataille du gaz offshore,l’ONU refuse de se prononcer sur ce conflit, http://www.lepost.fr/, 8 January 2011; Nicholas Blanford, “The Next Big Lebanon-Israel Flare-Up: Gas,” TIME, 6 April 2011; http://lebanonmatters.com/2011/04

2. www.dailystar.com, 10 July 2011

3. Ibid.

4. Ibid.

5. Israeli TV Channel 22, 10 July 2011

6. http://www.annahar.com/, 10 July 2011

7. http://www.assafir.com/, 10 July 2011

8. annahar.com.

9. www.yalibnan.com, 10 July 2011

10. annahar.com

11. Ibid.

12. assafir.com

13. Ibid.

14. www.yalibnan.com, 5 July 2011.

15. Ibid.

16. Ibid.

17. Nicholas Blanford.

18. http://unscol.unmissions.org/, 3 March 2011.

19. Nicholas Blanford.

20. http://www.haaretz.co.il/, 10 July 2011.

*     *     *

Col. (ret.) Dr. Jacques Neriah, a special analyst for the Middle East at the Jerusalem Center for Public Affairs, was formerly Foreign Policy Advisor to Prime Minister Yitzhak Rabin and Deputy Head for Assessment of Israeli Military Intelligence.

Zion Oil & Gas Obtains License Extension

DALLAS and CAESAREA, Israel, July 11, 2011 (GLOBE NEWSWIRE) — Zion Oil & Gas, Inc. (Nasdaq:ZN) reported today that the Israeli Petroleum Commissioner has awarded the company a one-year extension on its Asher-Menashe petroleum exploration license in Northern Israel.

Zion’s Asher-Menashe license covers an area of approximately 78,824 acres located on the Israeli coastal plain and the Mount Carmel range between Caesarea in the south and Haifa in the north. The Asher-Menashe License had an initial three-year term, from June 10, 2007 to June 9, 2010 and, in May 2010, the License term was extended by one year, until June 9, 2011. On July 11, 2011, Zion received notification from the Israeli Petroleum Commissioner extending the term of the Asher-Menashe License by a further year, until June 9, 2012.

Richard Rinberg, Zion’s Chief Executive Officer, commented that, “In recent months, we submitted applications to the Israeli Petroleum Commissioner for three further exploration areas: the Dead Sea License Application (covering an area of approximately 74,925 acres), the Asher-Joseph Permit Application (covering an area of approximately 80,000 acres) and the Zebulun Permit Application (covering an area of approximately 157,480 acres). If all of our applications are granted, the total petroleum exploration area under Zion’s control would be approximately 530,346 acres.

The Asher-Menashe License extension carries a commitment to acquire additional seismic data and to begin drilling a well in the License Area no later than June 1, 2012.

The Jordan Valley License carries a commitment to acquire additional seismic data and to drill a well in the License Area no later than April 13, 2013.

We remain excited about the possibility of recovering hydrocarbons on our license and permit areas, onshore Israel, especially due to the U.S. Geological Survey report, published in April 2010, containing their assessment that there may be 1.7 billion barrels of recoverable undiscovered oil and 122 trillion cubic feet of recoverable gas in the Levant Basin, as all of Zion’s exploration rights fall within the area of the Levant Basin.”

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW and ZNWAZ”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Haifa and Tel Aviv. It currently holds three petroleum exploration licenses, the Joseph License (on approximately 83,272 acres) and the Asher-Menashe License (on approximately 78,824 acres) between Netanya, in the south, and Haifa, in the north and the Jordan Valley License (on approximately 55,845 acres), just south of the Sea of Galilee. The total license area amounts to approximately 217,941 acres.

Jackpot! Israel on Cusp of Energy Revolution

Julie Stahl, CBN News Mideast Correspondent

JERUSALEM, Israel — Unrest in the Middle East is threatening Israel’s energy supply.

But recent natural gas discoveries and extracting oil from shale could make the country energy independent just in the nick of time.

Energy Breakthrough?

Some are calling it a potential energy revolution.

Off the coast of Israel in the waters of the Mediterranean Sea, explorers have found what is being called the largest offshore gas reserve in the world and the biggest find in a decade.

The discovery is a major development because Israel has long been the one Middle East country without its own oil and gas resources.

“The joke was ‘Why did it take Moses 40 years to bring the people of Israel from Egypt to Israel? Because he looked for the only place in the Middle East that lacked oil and gas,’” said Gideon Tadmor, CEO of Delek Energy.

“So that was the joke. But we proved the joke to be wrong, and actually we know that Moses brought us to the right place,” he added.

Delek Energy and its American partner, Noble, are behind the discoveries that will start producing natural gas for customers in 2015.

Energy expert and former CIA director James Woolsey says the gas fields make Israel energy independent.

“They’re extraordinarily important and strategically very advantageous I think for Israel,” Woolsey told CBN News.

Shale Oil

In addition to natural gas, it appears the Jewish state is also rich in oil shale– a fine-grained rock which can be used to produce oil through a special process.

Harold Vinegar, chief scientist with Israel Energy Initiatives, says the amount of oil shale buried here might equal the oil reserves of Saudi Arabia.

“We think it’s conservatively estimated at about 250 billion barrels of oil contained in the Israeli oil shale – probably the second or third largest deposit in the whole world,” Vinegar said. “And it has a tremendous potential to make an oil industry here.”

Experts say there’s enough oil shale to produce at least 50,000 barrels of oil a day – enough to meet Israel’s military and civil aviation needs for 25 years.

Israel Energy Initiatives is now performing quality tests.

Vinegar, who was also a chief scientist for Shell, says the samples indicate the oil quality to be very high before it’s even refined.

As the world population increases, so will the demand for crude, and that will push up the price.

In response, countries like Israel that import most of their energy will have to develop unconventional resources like oil shale.

“There’s nothing scarier than running out of energy,” Vinegar said. “I mean, wars have been fought entirely for oil. And so this is something we feel we’re doing for Israel, which is to develop the oil shale here.”

If his group’s plans work out, the land of Israel will hold even more promise for the future.

Zion Oil Annual Meeting Highlights

Zion CEO Richard Rinberg

Zion Oil & Gas held its Annual General Meeting (AGM) in Dallas on June 21. Zion CEO Richard Rinberg’s report included the year’s exploration highlights:

• In July 2010, we completed a rights offering, raising over $12 Million.
• Late in August 2010, we began drilling operations on the Ma’anit-Joseph #3 well, within the Joseph License.
• In December 2010, we completed a rights offering, raising over $18 Million.
• In April 2011, we were awarded a new petroleum exploration license on land within Zion’s previous (and now expired) Issachar-Zebulun Permit area. We named the new license the Jordan Valley License.
• The difference between a Permit and a License is that with a Permit you can investigate the hydrocarbon potential (including shooting field seismic), but you cannot drill a well; with a License you may drill one or more wells.
• Just last week, we requested the grant of a new petroleum exploration permit area, adjacent to Zion’s Joseph License area – named by us  the Asher-Joseph Permit.
• So, in addition to the exploration areas we currently hold, we have three applications for new exploration areas pending before the Israeli Petroleum Commissioner’s Office: the Asher-Joseph Permit, the Zebulun Permit and the Dead Sea License.
• Last week also saw the milestone of us reaching our target depth of approximately 19,357 feet (5,900 meters) in drilling the Ma’anit-Joseph #3 well into the Permian geologic layer in Northern Israel. After reaching the target depth, we logged the well.

Company President and COO, Bill Ottaviani shared in his Operations Report on Zion’s exploration territory: “During the past 12 months, we have increased our potential exclusive exploratory acreage position by about 60% to around 530,000 acres. This increase assumes that Zion will be granted all the permits and licenses already submitted to Israel’s Petroleum Commissioner’s Office but not yet decided upon. While there is no guarantee that we will receive any or all of the new areas requested, based on our track record of being a responsible operator, we are optimistic that the Commissioner’s Office will look favorably upon our applications.

Victor Carrillo, Zion’s Executive VP, Presented a history of Israel’s search for (and discovery of) oil and gas, and Zion’s role in the country’s exploration efforts.

All of these presentations can be viewed or downloaded from Zion’s website ‘Investor Center’.

Zion Oil Founder John Brown

Zion Oil Founder and Chairman John Brown closed the annual meeting by reading a passage from the New Testament letter to the Hebrews: “So don’t throw away your confidence, it will be richly rewarded. You need to persevere so that when you have done the will of God, You will receive what he has promised.” (Hebrews 10: 35, 36)

Israel’s Sara, Myra May Hold 6.5 Trillion Cubic Feet of Gas

Bloomberg June 30, 2011

Holders of the Sara and Myra exploration licenses off Israel’s Mediterranean coast said today that a seismic survey showed they may hold 6.5 trillion cubic feet of natural gas.

“This is an excellent report for us and for the energy sector,” Ohad Marani, the chief executive officer of Israel Land Development Co. Energy Ltd., said at a conference in Tel Aviv. The average probability associated with the results is 54 percent, he said.

The results for Sara and Myra follow other gas finds off Israel since 2009, including the Tamar and Leviathan discoveries that together hold an estimated 25 trillion cubic feet. The finds are sufficient to meet Israel’s domestic needs eventually and enable it to export gas, industry executives and government officials have said.

“Its always exciting to find natural resources,” said David Kaplan, a Tel Aviv-based energy analyst at Barclays Plc. “The government has shown concern about having an effective monopoly on natural gas and none of the partners in Sara and Myra are partners in Tamar.”

Tamar partnership companies fell in Tel Aviv trading. Isramco Negev 2 LP dropped 0.7 percent to 0.42 shekels at 12:41 p.m. Avner Oil Exploration LLP (AVNRL) declined 2 percent to 2.03 shekels. Delek Drilling LP lost 1.5 percent to 11.31 shekels.

Kaplan noted that Tamar is already being developed and may produce gas by 2013, while Sara and Myra are still targeted prospects rather than discoveries. “In the best case scenario, where everything goes perfectly, the first product may be two to four years from now,” he said.

Israel Land Energy fell 8 percent in Tel Aviv today after rising 13 percent yesterday on press reports of the estimates. Modiin Energy Ltd., another partner in the licenses, retreated 8.1 percent after gaining 8.8 percent in the previous session.

To contact the reporters on this story: Sharon Wrobel in Tel Aviv at swrobel4@bloomberg.net; Gwen Ackerman in Jerusalem at gackerman@bloomberg.net.

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

Zion Testing Ma’anit Well

Zion CEO Richard Rinberg at the Ma'anit Joseph #3 well

In his July 1 letter to shareholders, Zion Oil & Gas CEO Richard Rinberg wrote that Zion was planning to test the Ma’anit-Joseph #3 well in spite of disappointing wire-log reports. Based on the wire log data, Rinberg reported, “there is little chance that the Ma’anit-Joseph #3 well contains hydrocarbons in commercial quantities.”
The reason Zion decided to move forward with physically testing the well is that during drilling they experienced “significant natural gas shows.” The gas, according to Rinberg, pushed past the heavy drilling mud, indicating that it,”appears to be under relatively high pressure at depth.” Testing the well will determine exactly where the natural gas is coming from and whether there’s enough of it to make the Ma-anit-Joseph #3 a commercial well. Testing the well will also give Zion greater insight into the geology of their surrounding license area and may help them determine where to drill next.

When I first read Rinberg’s letter I was tempted to be a bit dis-heartened by the phrase describing the wire-log interpretation, “there is little chance” of a commercial discovery. But then I remembered another letter, one written to the Hebrew people about 2,000 years ago; it listed the heroes of old and the faith that allowed them to persevere in spite of the current technology telling them. “there is little chance.”

• There was ‘little chance’ that a worldwide flood would destroy every living thing that wasn’t packed in Noah’s boat.
• There was ‘little chance’ that Abraham, at 100 years old, and Sarah, at 90, would have a child.
• There was ‘little chance’ that Isaac’s life would be spared by an angel and a ram caught by his horns in a thicket.
• There was ‘little chance’ that a slave child with a death warrant on his head would be spared, raised in Pharaoh’s household, and exiled to the desert 40 years would lead his people out of slavery and into a Promised Land.
• There was ‘little chance’ that a rag-tag group of pilgrims marching around Jericho could make the city’s walls fall down.
• There was little chance that Gideon’s 300 men could rout an army of hundreds of thousand Midianites.
• There was little chance a skinny 17 year-old kid could kill a fully armored Philistine warrior giant with a sling shot.

I could go on … Hebrew history is full of heroes who were given ‘little chance’. What was the one thing they had in common that far outweighed ‘little chance’ of success? Faith.

“Now faith is being sure of what we hope for and certain of what we do not see. This is what the ancients were commended for.” (Hebrews 11:1)

Faith doesn’t come from wire-log data; it comes from the One Who does what He promises. I’m looking forward to test results.