A Closer Look at Givot Olam

Just south of Zion Oil’s Joseph license in Northern Israel lies the 60,000 acre Rosh Ha’ayin production lease belonging to Israeli oil company Givot Olam. A production lease, according to Israeli petroleum law, can only be issued after the exploration company has proven existing oil and/or gas reserves in place. In 2004 Givot Olam, through their three exploration wells, the Megeds 2, 3 and 4, proved to the Israeli government that there was oil under their exploration license … to the tune of nearly a billion barrels.

Despite attempts to develop the exploration wells, Givot Olam has yet to get commercial quantities of their oil discovery to the surface. The company began drilling the Meged #5 well last month, hoping to change their luck, take advantage of what they’ve leaned in the last five years and produce a sellable amount of oil.

Here’s something interesting; Givot Olam’s founder, Tovia Luskin, a trained petroleum geologist, began his quest for oil in Israel when he read about the prediction of vast petroleum reserves waiting to be discovered in the Holy Land. Would you like to know where Mr. Luskin first read about this possible discovery? The Bible … more accurately, the Torah.

Sounds familiar doesn’t it? Let’s put aside for a moment the fact that oil was discovered in Israel in 2004, by a company that based their search on scripture. Let’s put aside for a moment what the first fact does to the credibility of every critic and self-rising opinionater that has, over the last five years, trashed the idea that oil could ever be discovered in Israel based on scripture for the sole reason that it was based on scripture. Let’s put aside for a moment the fact that we’re not waiting for someone to discover oil in Israel – it’s already been done; we’re just waiting for someone to bring it up and put it in barrels. Let’s put all that aside and take a quick look at the man who first discovered the oil prophesied by Jacob to his sons nearly 4,000 years ago.

Tovia Luskin

In a story that seems to be dominated by Christian oil explorers, it’s a little ironic that the only oilman, using the same scriptures as the Christian explorers, to actually have a proven oil discovery in Israel, is Jewish.

Tovia Luskin, like his evangelical Christian counterparts, has been searching for oil in Israel for a long time now – more than twenty years. Like his Christian counterparts, Tovia used the Bible as his guide for finding oil in the Holy Land. Unlike his Christian counterparts, Tovia has actually discovered the oil promised to the Children of Israel in Genesis and Deuteronomy!

Luskin, a Russian Jew and a geologist, earned degrees in geophysics at Moscow State University. As a former lead geologist for Shell Oil and advisor to Bridge Oil in Sydney, Australia, his extensive background in the oil industry gave him the professional credence to back up his religious conviction that there was indeed, oil in Israel.

Working in Australia in 1988, Tovia, new as a practicing Jew, came upon a passage in the Torah in Deuteronomy.

Tovia is naturally quiet about sharing his religious beliefs concerning the oil with skeptics who would use them to discount his professional and technical efforts on the project. But to those sincerely interested, he happily quotes from memory the passage that began his quest:

About Joseph, he (Moses) said: “May the Lord bless his land with the precious dew from heaven above and the deep waters that lie below; with the best the sun brings forth and the finest the moon can yield; with the choicest gifts of the ancient mountains and the fruitfulness of the everlasting hills…”

(Deut. 33:13 NIV)

This passage in Deuteronomy along with his discovery that the medieval Jewish scholar Rashi interpreted the passage to mean that the “everlasting hills” were much older than the surrounding countryside was proof that he was on to something.

Rashi’s interpretation struck home with Luskin. He knew, as a geologist, that the concept of one geological feature (the hills) being of a different age than the land surrounding it was an accepted fundamental of modern geological science. But this concept was unknown in the time Rashi wrote his interpretation. In Luskin’s view, Rashi had no way of interpreting the passage this way other than by divine guidance.

These two proofs were enough for him to write to Rebbe Menachem Mendel Schneerson, one of the world’s renowned Jewish scholars, for his review and consideration of the interpretations. After reviewing his material, the Rebbe, responded noting, “I had pleasure in reading your discussion …” and “… You will tell me good news ….”

This was enough for Luskin to take action. He traveled to New York for a personal audience with the Rebbe. The Rebbe pronounced over him a Bracha (blessing) regarding his proposed search for oil in the Promised Land, “You have my blessing that you will have good news in the near future.” This innocuous sounding blessing carried tremendous authority for Luskin. He believed the Rebbe to be G_d’s Moshiach (Messiah), the one to bring redemption to the Jews. This was enough for Luskin to sell his home in Sydney, Australia and immigrate to Israel.

By 1993 Tovia Luskin had assembled a team of geologists and oil experts (most of them Russian from his previous acquaintance at Moscow Sate University) to form Givot Olam Oil Exploration, LLC. Givot Olam, Hebrew for “everlasting hills,” secured a 62,500 acre exploration license just north and east of Tel Aviv.

Their first well, the Meged 2, was drilled in 1994 and successfully tested 40° API oil at 17,000 feet. In 1998 the Meged 2 was retested and showed a 400 barrel per day flow rate. The Meged 3 well was drilled two years later a few miles to the west of the Meged 2. This well logged 47 feet of pay (the vertical area of the well from which to extract oil) at 15,000 feet deep, but had to be shut down because of mechanical problems in the hole. The Meged 4, north of the Meged 2 and Meged 3, was drilled in 2003. At 16,000 feet the Meged 4 began flowing oil and gas. The rate of flow was unspecified but Givot Olam reported a commercial discovery of 980 million barrels. With the Meged 4 discovery the Givot Olam eighteen month exploration license became a thirty year production lease.

Today Givot Olam is in the process of developing the Meged Oil Field with plans for 10 wells in a 50 square kilometer project area. With proper development each well is conservatively estimated to produce over 900 barrels per day for the first year, and then decline to a steady 400 barrels per day over each well’s seven year expected lifespan. The ten wells in this field, roughly one-fifth of Givot Olam’s production lease area, in the conservative view is capable of producing over 12 million barrels of oil over the next seven years.

Israel has only produced 20 million barrels in its entire fifty year history of oil production. Personally Luskin estimates the Givot Olam lease area to hold as many as a billion barrels of oil. Twenty percent of those billion barrels, Luskin believes, is recoverable. Two hundred million barrels … not bad for Jewish Russian immigrant using the Torah and his Rebbe’s blessing as a guide!

Givot Olam Resumes Drilling

“The blessings of your father excel the blessings of my ancestors and the bounty of the eternal hills. May they rest on the head of Joseph, on the crown of the prince of his brothers.” (Genesis 49:26)

Zion Oil & Gas Prepares for 2009 Drilling in Israel

December has been a busy month for Zion Oil & Gas, Inc. (Dallas, Texas and Caesarea, Israel) as they prepare for drilling activities scheduled for early 2009.

The company issued three press releases over the last thirty days that, if we look a little deeper, may give us a forecast on what to expect in 2009.

The first press release, issued on November 14, reported the company’s third quarter financial results. Quarterly reports from public companies are required by SEC regulations. Zion Oil reported a net loss of $865,000 for the quarter (that’s eight cents per share). A loss like that sounds pretty glum unless we remember that Zion, at this point, is an exploration company. They explore for oil. That means they don’t produce income until they find oil. Now about finding oil – here’s something interesting you may miss if you don’t read the press release closely:

“Zion is moving forward with its exploration and drilling plans. We anticipate that the refurbished 2,000 horsepower drilling rig, with which we plan to drill Zion’s planned Ma’anit-Rehoboth #2 well ‘directionally’ to below 18,000 feet, will be shipped into Israel during January 2009. We have almost finished preparing the drill site and expect to commence drilling shortly after the rig arrives on location.”

Zion expects the delivery of a “2,000 horsepower drilling rig” in January. The new rig has a drilling depth capacity of 20,000 feet. Why is that important? In 2005 Zion Oil drilled the Ma’anit #1 well to a depth of 15,500 feet. The deeper they drilled the stronger the oil shows became. So why stop at 15,500 feet? That was all the rig they were drilling with could stand. They wanted to go to 18,000 feet but they would have lost the well due to rig failure if they had kept going. The rig Zion used in 2005 was a 1,000 horsepower rig with at total depth drilling capacity of 15,000 feet. It was the biggest rig in Israel.

So now you can understand why the rig Zion has coming from Turkey in January is such an important part of a commercially viable oil discovery in Northern Israel. Zion discovered oil at the Ma’anit #1 in 2005. They didn’t have the equipment finish the job. Come January they will.

The next press release, issued December 2, announced Zion issuing units and the second closing of their current public offering. Zion issued 350,994 units. A unit is one share of Zion stock and one warrant, giving the purchaser the option to buy one more share at a fixed price ($7.00) any time between the closing of the offering and January 31, 2012. Zion’s stock, as I write this post is at $6.20; it’s been bouncing between $6.10 and $6.50 over the last thirty days. That stock was issued at $7.00 in January of 2007 when the company went public. The fact that the stock has pretty much held its value for two years without any oil production or revenue, and in light of the current global economic meltdown is more than impressive. Makes me wish General Motors and Bank of America stock were as stable. By the way, this public offering has its final closing on January 9. After that, the public will not be able to buy more units (one share of stock & one warrant).

Let’s put two and two together. Zion is taking delivery on the rig that will reach the depth they couldn’t get to when they drilled in 2005. Zion’s public offering is closing January 9. Those who bought or buy  (we still have a few weeks left) during the current offering get one share of stock and the right to buy another share at $7.00 any time before January 31, 2012. If Zion’s stock has held its value in the last two years in spite of it not producing any oil revenue and a world economic collapse, imagine where it could go with an oil discovery. I’ll leave the rest of the math to you.

Finally, the last press release issued December 16; Zion announced the purchase of over $1 million in drilling pipe, crating up the drilling rig for transport to Israel and final preparations at the drill site. This isn’t just a post on the internet, folks. It’s the real deal. Zion Oil will be drilling at the first of the year. And who will be a part of whatever happens to Zion in 2009 will be determined when the public offering closes in January.

You can read all of Zion Oil’s press releases at http://zionoil.com/press-releases. The brilliant analysis and all news about oil and Israel, you can get right here at http://oilinisrael.net.

High Tech Entreprenuer, Nir Barkat, is Jerusalem’s New Mayor

Nir Barkat, 49 years old, has spent his entire life in Jerusalem and served six years in the Israel Defence Force, as a member of the paratrooper’s brigade. In 1988, Nir Barkat founded the BRM Group, one of the first entities worldwide to develop anti-virus software and, as CEO, initiated joint ventures with U.S. companies such that BRM became a technological incubator. At the beginning of 2000, Nir was a founding partner of BRM Capital, a $150 million Venture Capital Fund focusing on software and communication infrastructures, specializing in investments in Israeli related companies and helping them become global leaders in their field.

Zion Oil & Gas Founder, John Brown, met Nir Barkat in Washington, in July 2008, during Christians United for Israel’s Third Annual Washington-Israel Summit, when Zion Oil sponsored the “Night to Honor Israel” banquet.

Does Israel Have Oil? Wrong Question.

Does Israel really have oil? That seems to be the question everyone’s asking. Maybe it’s the wrong question. Turn’s out, Exxon and Shell have known about Israel’s oil for nearly ten years. Here’s a clipping from The Jerusalem Post, March 5, 1999. I’ll copy the text here since the clipping is a little hard to read (click on the clipping for a cleaner version).

ISRAEL IS OIL-RICH, EXPLORATION-POOR

Sir-

As a geologist and managing director of various oil exploration companies in Israel over the past 20 years, I was quoted in several paragraphs of Michael Arnold’s article “Slippery dreams” (January 22). I would like to amend and add certain facts as follows:

The oil potential of Israel was evaluated twice at the request of the Israeli government. In 1962, Lewis Weeks, the former chief geologist at Exxon, determined that “the potential ultimate oil resources of Israel should be of the order of 500 to 2,000 million barrels from primary recovery… The figures do not include gas… which may equal 50% and upwards of that of the oil.”

In 1979, James Wilson, former chief geologist or Shell (US) determined that on-shore Israel (the off-shore and the Dead Sea Rift Valley were not included) has a potential of330 to 2,000 million barrels of recoverable oil.

Both these experts have been president of the American Association of Petroleum Geologists.

Since the Wilson evaluation in 1979, extensive data have been accumulated relating to on-shore and off-shore Israel. From this data, it becomes clear that the total may exceed 2,000 million barrels.

Israel’s per annum consumption amounts to about 70 million barrels.

The 1962 evaluation predicted that “the finding and recovery of this oil and gas may require many decades” -and evidently assumed that such efforts would be made. Unfortunately, this has not been the case.

It is most likely that this failing is one of the main reasons why the forecast potential has not yet been discovered.

YOSSI LANGOTSKY

Herzliya

 2,000 million barrels? That’s 2 billion barrels. That’s Exxon and Shell saying it. So the question isn’t “does Israel have any oil?” The question is, “If the big boys have known about this for so long, why haven’t they done anything about it?” The answer, unfortunately, is pretty easy. They’ve got larger, established assets in the Arab world and the Arab world has told them, “If you do business with Israel, don’t bother doing business here.” That’s what the 1973 oil embargo was all about.

What’s Israel’s answer? Keep supporting those who are exploring for the oil they know is there. What can we do about it? Stop wondering if Israel really has any oil. It does. If you want to see it come to the surface, support the exploration already in country. This piece of history will come about, and it won’t be long until it does. Those involved in that effort are destined to be written in to the story of Israel’s future.

Israel Strikes Oil

(Prophecy Today Archive October 13, 2006) Story by Shofar Communications Jerusalem Bureau Chief Ed Horner; Photos by Allison Horner. Article courtesy of Prophecy Today. The original article can be viewed at http://jimmydeyoung.gospelcom.net/pp/israelifront/2006_10_13_archive.html.

Surrounded by the richest oil countries in the world, many would wonder why Israel has never found oil. Now they have. Ginko Oil Exploration, led by Dr. Eli Tannenbaum, has located a potentially large oil field in the Dead Sea region of Israel.

The Dead Sea, near a large oil deposit

Dr. Tannembaum and other specialists on site

In an effort to attract financial partners to harvest the oil, Ginko Oil Exploration reopened a small previously drilled oil well near the Dead Sea and began extracting oil. In an on site interview with Dr. Tannenbaum, he said this first strike is very exciting because it shows that there is oil in the region that can be harvested. He said that Ginko will begin drilling the second well within two months and that the second well should produce a much more significant amount of oil.

An exploration oil rig

One step in the process of oil extraction

Dr. Tannenbaum says that this oil region is not directly connected with surrounding oil fields, but that the sources of the oil deep inside the earth’s crust could be related. He said the oil field in the Dead Sea region is on a deep rift (or tear) similar to Libyan or Egyptian oil fields. The Dead Sea region is the lowest point on earth at almost 400 meters below sea level. Tannenbaum says that he does not foresee Israel’s drilling of oil to be detrimental to surrounding nations’ oil fields.

Ed speaks with Dr. Tannenbaum

Ed speaks with Ginko Exploration’s Site Supervisor

Ginko Exploration’s Site Supervisor said that Israel currently has two oil refineries that could refine the newly extracted crude oil. The extracted crude oil would be taken to the refineries by truck. Israel does not currently have an oil pipeline from this region, and it would most likely not need one in the near future.

Here is Israel’s future oil field

Lead Geologist, Dr. Eli Tannenbaum

My wife and I had the privilege of watching some of Israel’s first oil being pumped from 1800 Meters beneath our feet. Ginko began dismantling the exploration rig while we were on site. They were then going to place a permanent pump on the well as the first of many in the region.

The flow of oil must be carefully monitored

A head on oil well

Israelis currently pay the highest gas prices in the Middle East. Gasoline is approximately $6.50 per gallon and Diesel is $5 per gallon. If Israel could produce its own fuel, it could mean lower prices at the pump for the average Israeli.

The oil is just flowing from this dig

Oil being extracted

Oil in Israel can mean less economic dependence on oil from surrounding countries. It could also mean fewer political negotiations with oil producing countries that routinely plot the demise of Israel.

Parks Authority okays drilling for oil in Judean reserve

The search for oil in Israel got a big push forward on Tuesday night after The Nature and Parks Authority general assembly approved plans for the drilling of an exploratory hole to search for oil in the Judean nature reserve. Two Israeli companies, Ginko Oil Exploration and Delek Energy Systems, believe there could be as much as 6.5 million barrels below the reserve.

The assembly approved Zuk Tamrur 4 on the condition that the Authority comes up with strict guidelines to reduce the environmental damage as much as possible. The assembly also demanded that the companies rehabilitate the area afterwards. In addition, if oil were to be found, the assembly ruled, the pumps to remove it would have to be placed outside the reserve.

Until now, the Authority’s administration had rejected all attempts at drilling, but they were overruled Tuesday by the general assembly, which comprises representatives of environmental organizations and the government.

Avraham Poraz, former internal affairs minister and now consultant to the oil companies, told The Jerusalem Post Tuesday night how he explained the issue to the assembly a month ago in the run-up to the decision.

“I put it to them very simply. One third of Israel is nature reserves. It cannot be that we can’t search for oil in one third of the country.

“Moreover, I told them that according to our ecological estimations, the damage would be minimal because we are talking about 1.25 acres without fences, or dogs or anything like that,” he told the Post.

The Society for the Protection of Nature in Israel (SPNI) decried the decision.

“We are distressed that the assembly gave in to the pressures of the initiators, did not heed its own science committee’s recommendation against the plan and so will cause unnecessary damage to the reserve,” the organization said in a statement.

The Authority had suggested drilling a hole diagonally from outside the reserve to search for oil, but a geological consultant said that would create too many problems, an Authority spokesman said.

Ginko director Rami Karmin told the Post earlier this week that Zuk Tamrur 4 represented Israel’s best bet to find oil. He said they only needed 1.25 acres for two months to drill a hole 2,000 meters deep and see if they struck oil. 6.5 million barrels would be worth about $800 million, he added.

The area where the companies want to sink their hole represents a bridge for animal populations between the Judean and Negev reserves, the Authority’s science committee had written, and putting in a hole would block that narrow passageway. It had also said that any sort of drilling was bound to cause severe environmental damage and therefore recommended rejecting the request.

Searching for oil in the Judean Desert

Two Israeli energy companies are convinced the best chance for finding oil in Israel lies at a site in the Judean Desert nature reserve and have stirred up a storm of controversy with their persistent requests to drill an exploratory hole.

The companies, Ginko Oil Exploration and Delek Energy System, want to drill in an empty corner of the desert. However, the Nature and Parks Authority Science Committee and the Society for the Protection of Nature in Israel (SPNI) contend that even exploratory drilling will destroy the fragile ecosystems in the reserve. The two sides will go head to head on Tuesday in front of the Nature and Parks Authority general assembly, the Authority’s highest body, which will decide whether to grant the companies’ request.

The situation, from an environmental perspective, has also been complicated by the fact that Environmental Protection Minister Gideon Ezra has recommended the drilling plan, although on the condition the ecological damage was reversible.

Ginko made headlines two years ago when it discovered a small amount of oil near the Dead Sea through Zuk Tamrur 3. This time around, Ginko director Rami Karmin believes Zuk Tamrur 4 in the reserve has the best chance to produce as much as 6.5 million barrels.

But even he admits that drilling for oil is “a tricky business” and there are no guarantees.

“We are talking about drilling in a spot that the Authority had already approved drilling there 10 years ago, and we requested that spot because we thought they’d approve it again. The district committee approved it two weeks ago and now we need the Authority’s approval,” he said.

“We need [approximately] 1.25 acres out of 150,000 for two months so that we can drill an exploratory hole 2,000 meters down. We had an ecological company evaluate the area. There have also been other exploratory holes in the Dead Sea area and you can’t even see them anymore,” Karmin argued.

According to Karmin, Zuk Tamrur 4 is the likeliest place in Israel to find oil because of its unique geological properties.

“There is oil around the Dead Sea but the constant little earthquakes that occur because the Sea is on a fault line release the pressure before the oil can be driven to the surface. At this spot, there is a four-way closure and there is a good chance there is oil there,” he said.

However, SPNI argued Sunday in a position paper ahead of Tuesday’s meeting that the relatively small predicted reservoir did not justify the massive ecological damage. Israel uses about 80 million barrels of oil per year, or 270,000 per day. 6.5 million barrels would meet Israel’s needs for less than a month.

Karmin contended that the amount of oil wasn’t the point, its cost was.

“Six-and-a-half million barrels is worth about $800 million. The government would be receiving about $400m. in fees and taxes – can we really afford to turn down that much money?” he demanded.

The Authority’s Science Committee, nevertheless, has submitted its assessment report to the general assembly and has counseled the body to prohibit the companies from drilling. The committee consists of, among others, two professors and two doctors, including the Environmental Protection Ministry’s chief scientist Dr. Yishayahu Baror – who apparently disagrees with his minister.

Rather than a deserted corner of the desert, the site actually sits in the middle of a very narrow corridor which serves as a natural transit area between the Judean Desert Reserve and the Negev reserve, the committee said. Disturbing the area would have a massive impact on plant and animal life in the whole area, they argued. Animal populations would be cut off from their main groups with no way to get back to the Negev, they said.

The committee addressed both the potential damage from the initial drilling, but also the greater potential impact of striking oil.

While an exploratory hole would inevitably cause some damage, if oil was found, much more damage would result, the committee wrote. A constant stream of tanker trucks and the new roads they would require would doubtless result in severe damage. Even putting up lights, as is usual for drilling sites, would adversely affect the delicate ecosystems. The inevitable accidents if oil were found would pollute the ground in the area as well, according to the report.

The committee concluded by reminding the general assembly that it was precisely their job to protect nature in the face of such threats.

Meanwhile, even if the committee voted against granting them permission on Tuesday, Karmin vowed to employ additional legal measures to get the permits.