Israel’s Future as an Energy Exporter

Will Israel become a major exporter of natural gas in the near future? Most likely. How about an oil exporter? Maybe. Is there any chance of Israel joining OPEC (Organization of Petroleum Exporting Countries)? With Iraq, Iran, Saudi Arabia, Kuwait and Venezuela on the membership committee, probably not.

But the reality is that Israel has already made the largest natural gas discovery – ever – in the Mediterranean and the largest discovery worldwide in 2009. Of course those figures were based on the initial Tamar gas field reserve estimates of 5 trillion (that’s ‘trillion’) cubic feet. Since then the Tamar estimates have jumped to 8.7 trillion cubic feet. But wait, there’s more! The Leviathan field, discovered after Tamar, is estimated to hold an astonishing 16 trillion cubic feet of natural gas. The piece of news offshore operator Noble Energy isn’t ready to make too public yet is that they believe that underneath the natural gas fields, there could be oil. That’s the story offshore.

Onshore, Givot Olam claims the field below their Meged #5 well may hold 1.5 billion barrels of oil (we’ll find out how real that estimate is next month). By the way, the Meged #5 has been pumping oil in the midst of the latest arguments over how big the field may or may not be. Zion Oil & Gas, just yesterday, spudded (began drilling) their Ma’anit-Joseph #3 well. This is Zion’s third attempt to discover commercial quantities of oil in the Ma’anit structure. The first two wells were frustratingly close; they actually extracted oil from the Ma’anit-Rehoboth #2 test well. Zion isn’t going into the Ma’anit-Joseph #3 blind; based on results from the first two wells and their best science, this well will be at the location and depth they need to be to hit commercial oil.

Bottom Line: Israel is not waiting for a major hydrocarbon discovery – it’s already happened – the largest natural gas discovery worldwide in 2009 (of course that was when they believed they only had 5 trillion cubic feet in the Tamar field and before the Leviathan discovery). The Tamar field is 90 kilometers (56 miles) offshore and Leviathan is 130 kilometers (81 miles) out to sea. Producing the offshore gas (bringing to market by building pipelines to onshore facilities)  will take a few years (up to five). But it will happen. It’s a pretty good bet that all of Israel’s domestic natural gas needs (that includes electricity) will be fully supplied and that more than a few European and the Japanese households (at least) will be heating their morning tea with Israeli natural gas in the next decade. Up until 2009 nobody imagined that Israel could supply her own needs, let alone become a world exporter of natural gas. In 2019 it will be a major Israeli export.

Is oil far behind? I don’t think so. If oil and gas is discovered onshore in the near future, it will most likely beat the offshore gas to market. If a lot of oil is discovered – beyond Israel’s domestic needs – oil is much easier (and quicker) to export than natural gas.

Little old Israel, a major energy exporter – imagine that! Of  course Israel has accomplished a lot of things in the last sixty-plus years the world never imagined. That may be because the world doesn’t know it’s Bible as well as it should. About 2,700 years ago Israel (the northern kingdom) was decimated by her enemies (ancestors of some of the same enemies Israel has today) and many in Israel were taken as captives back to conquering Assyria.  Later the Babylonians conquered Assyria, but Israel remained captives in exile, away from their home land. In this dark time an Israeli living in exile, his name was Yechezk’el,  saw a vision of his people’s future. He saw dry bones coming together to form a nation of people, he saw a wasteland spring to life and become a garden. Yechezk’el’s (we westerners use the name Ezekiel) vision of dry bones became reality on May 14, 1948 when Israel, after 1,900 years of exile, became a nation. In 1948, the Land of Israel wasn’t too different from the ‘wasteland’ Ezekiel saw in his vision. Today the ‘wasteland’ has become a garden.  In Ezekiel’s vision G-d made a promise to the Land of Israel: “I will settle people on you as in the past and will make you prosper more before.” (Ezekiel 36:11)

A nation of people from dry bones … wasteland springing into gardens … a nation in exile for 1,900 years returning to its homeland and prospering today more than in any time in history … imagine that!

Zion Oil & Gas Starts Drilling the Ma’anit-Joseph #3 Well

Dallas, Texas and Caesarea, Israel – August 26, 2010 – Zion Oil & Gas, Inc. (NASDAQ GM: ZN) announced today that drilling operations have begun on its Ma’anit-Joseph #3 well, in its Joseph License area, onshore Northern Israel. The drilling operations are expected to last approximately six months.

Utilizing the 2,000 horsepower drilling rig used to drill Zion’s previous wells, Zion has commenced drilling its Ma’anit-Joseph #3 well, initially towards its secondary target, Triassic age lithology, expected below approximately 10,827 feet (3,300 meters). Zion then plans to continue drilling to its primary target, Permian age lithology, down to a planned total depth below approximately 19,357 feet (5,900 meters).

The rig will operate on a 24-hour basis utilizing two drilling crews on 12-hour shifts. On a continual basis, samples will be collected by Zion’s wellsite geologists, analyzed for both hydrocarbon content and lithology and then stored.

Zion’s Chief Executive Officer, Richard Rinberg, said today, “We are excited to be drilling the Ma’anit-Joseph #3 well and continue to be optimistic 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 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.”

Givot Olam Meets with Investors

Haaretz August 24, 2010

Givot Olam at investors assembly: Meged-5 is like granting of Torah

Fossil fuel company attempts to allay investor uncertainty with confident claims of oil abundance.

The people at Givot Olam Oil Exploration presumably were tired of being excoriated by investors and the press over the opacity of their announcements, and called a shareholders assembly on the premise of explaining their results at the Meged-5 drill.

Hundreds of investors convened yesterday at the International Convention Center in Jerusalem to hear Tuvia Luskin, the partnership’s geologist, expand on the topic. At the entrance to the building, investors were greeted with a modest holiday present: a jar of the crude oil extracted from the site, and a matching jar of honey.

Luskin and the members of the board of directors were accompanied by legal counsel Arik Harari, whose function was to supervise Luskin, given his penchant for making “forward-looking statements.”

The geologist began the meeting by reviewing the company’s results (in English ), and compared the Meged-5 exploration to the Israelites’ exodus from Egypt.

“For years we were in the dark, with ’signs of oil’ but no light,” he said. “Meged 5 is like the granting of Torah for us. It’s a revelation.”

Luskin called for patience, however: It will take years to produce the oil, he said.

Production tests at Meged-5, a field by Rosh Ha’ayin, were held at 8 segments, at the end of which Givot stated that it had produced 480 barrels of oil, which disappointed investors relative to expectations.

Last week the partnership’s participation units soared after it stated that the estimated potential of Meged-5 was 1.53 billion barrels. On September 15, the partnership is scheduled to receive a final report from its consultants, detailing how much the segments 1 to 6 are likely to produce, he said.

Luskin counseled shareholders to differentiate between “static oil” found on the site and extractable oil, which isn’t the same thing, he said.

He expanded on how many barrels each segment is believed to contain, and qualified that the estimates would change as testing proceeds. Only after all that will be it possible to begin estimating how much the field could be worth, the geologist said.

One shareholder commented that based on Luskin’s statements, Meged-5 should be able to produce more than 2,000 barrels of oil a day. “Is that really the number?” he inquired. Luskin responded, “You have no patience.”

That said, he himself told the shareholders, “The press tells you that this is just another Heletz [a field in southern Israel that has been eking out miserly amounts of oil since the 1950s.] Pay no attention to them,” Luskin urged. “We have a lot more wells to drill and a lot more oil to produce. We have a lot more to do,” to which Nogah Ben David, director and Jerusalemite businessman, added, “With the help of God.”

Christians United for Israel Announces Zion Oil & Gas’ Washington Summit Sponsorship

SAN ANTONIO – Christians United for Israel, the nation’s largest pro-Israel organization, announced Monday that Zion Oil & Gas, Inc. (NASDAQ GM: “ZN”) will sponsor the Night to Honor Israel and the Ambassador’s Reception at CUFI’s 2010 Washington Summit.

The evening will feature remarks from Pastor John C. Hagee, CUFI’s Founder and National Chairman. He will be joined on the stage by keynote speaker Michael Oren, Ambassador of Israel to the United States.

“This sponsorship is very good news,” said Pastor John Hagee. ”We appreciate Zion’s support for our efforts to strengthen the US-Israel relationship.”

Christians United for Israel is the largest pro-Israel organization in the United States and one of the leading Christian grassroots movements in the world. CUFI spans all fifty states and reaches millions with its message. Each year CUFI holds hundreds of pro-Israel events in cities around the country. And each July, thousands of pro-Israel Christians gather in Washington, D.C. to participate in the CUFI Washington Summit and make their voices heard in support of Israel and the Jewish people.

Zion Oil & Gas, Inc., a Delaware corporation, explores for oil and gas in Israel in areas located on-shore between Haifa and Tel Aviv with a total area of approximately 327,000 acres in petroleum exploration rights.

Noble: ‘We say potential, Israelis hear discovery’

Investors should be cautious and differentiate between concepts and reality, says chairman of gas explorer.
By Eytan Avriel Haaretz

The probability that natural gas will be found in the deepwater prospects being explored by Noble Energy and Delek Group – the Leviathan prospect – is 10% to 15%. That is a probability, which by definition does not mean “sure thing.” However, says Charles Davidson, CEO of Noble Energy, he hesitates to talk about the prospect because some people in Israel relate to announcements of potential as though they were announcements of actual discoveries.

“That worries me,” he said on a panel on oil and gas exploration at a conference of the Tel Aviv Stock Exchange in London on Thursday: Oil exploration is a high-risk business.

What Noble does, Davidson said, is manage risk in a portfolio of opportunities. Investors should be cautious and differentiate between concepts and reality. Reality is the gas discovered at Tamar.

At the lowest part of the areas the partners looked at, there is the potential of oil, but – Davidson stressed – that doesn’t mean there is oil there. It has never been tested.

Systems of the type down there can produce oil, Davidson said, but one has to check whether a reservoir of trapped liquids of the type is actually there.

Gideon Tadmor, CEO of Delek Energy, fielded a question about the difference between investment in fossil-fuel exploration for the long-term, and as a speculative investment. In his view the difference lies in the company’s diversification: picking a company involved in one project is speculative. The more projects the company has, the better it is, Tadmor said.

One also has to check the company’s ability to actually do the job, Davidson added. For instance, to drill at Tamar, the partners had to bring in a rig from Africa. By the time the exploration was done, the cost had reached $300 million. Not every company could pull off a job like that.

On the geopolitical risk of drilling in Israeli territorial waters, given claims by Lebanese and Cypriot elements that they own a share, Davidson said Noble employs companies that analyze risks unrelated to the actual drilling, and in their opinion, Israel ranks well. Noble has been working in Israel for 12 years, Davidson said; obviously it feels comfortable about it.

“There are areas more problematic than Israel,” Tadmor added; Israel is relatively safe. “I see no geopolitical risk in our explorations.”

Israel’s Levant Basin, How Much is it Worth?

Back in April I wrote that the United States Geological Survey (USGS) released a report that the Levant Basin contains 1.689 billion barrels of undiscovered oil and 122.4 trillion cubic feet of undiscovered natural gas. The Levant Basin lies both onshore and offshore and includes most of middle and northern Israel and coastal Lebanon and Syria. The basin includes the exploration areas of Noble Energy offshore and Zion Oil & Gas onshore.

Most of the data the USGS report contained came from research conducted between 2000 and 2008 by Dr. Michael Gardosh, a researcher at the Geophysical Institute of Israel, and Dr. Yehezkel Druckman, who until a few years ago was Petroleum Israel’s Commissioner. Dr. Druckman now serves on the Zion Oil & Gas Board of Directors.

So in today’s dollars, how much oil and gas does the USGS say the Levant Basin holds in undiscovered resources? A friend ran the numbers for me:

Levant Basin Dollar Values
122 Trillion Cubic Feet Natural Gas	122,000,000,000,000
Price per 1000 Cubic Feet (6/22)	$4.79
Convert Trillion Cubic Ft	122,000,000,000
Total $ Value – Natural Gas	$584,380,000,000.00
1.7 Billion Barrels of Oil	1,700,000,000
Price per Barrel Oil (6/22)	$77.87
Total $ Value – Oil	$132,379,000,000.00
TOTAL VALUE – LEVANT BASIN	$716,759,000,000.00

That’s nearly $718 Billion. Most of the Levant Basin lies within the land and territorial water of Israel. Offshore, some of the ‘undiscovered’ the natural gas has been discovered and will be powering Israel in the next few years. Onshore, the ‘undiscovered’ oil, I believe, will be discovered soon.

Zion Releases Drilling Company Video

Zion Oil & Gas released a company video last week in which Bill Ottaviani (Zion’s President and Chief Operating Officer) and Richard Rinberg (Zion’s Chief Executive Officer) explain why Zion Oil & Gas, Inc. has decided to establish Zion Drilling, Inc. and purchase Aladdin Middle East Ltd’s 2,000 horsepower drilling rig, as soon as practicable. Filming took place in both Israel and Turkey, and gives us a chance to learn the strategic thinking behind some of Zion’s business decisions.

The film was shot and produced by British filmmaker Tom Boulting. Boulting’s company, Charter Films, Ltd. is also working on the full length documentary, “49:1 The Zion Story”. News on the making of the film can be found at www.zionthemovie.com.

Israel Gas Ignites Tough Talk From Neighbors

Israeli Natural Gas Find Keeps On Getting Bigger But Could Ignite Trouble

Vosizneias Tel Aviv – Israel’s natural gas bonanza in the eastern Mediterranean just keep getting bigger, with reserves currently pegged at around 25 trillion cubic feet.

That’s enough to guarantee the Jewish state, dependent on imported energy since it was founded in 1948, energy security for at least two decades.

The strikes at three fields, dubbed Tamar, Dalat and Leviathan, could even turn Israel into a gas exporter and transform its economy. There are indications that there’s oil down there as well.

But the offshore finds may become a casus belli (case for war) as Lebanon, Israel’s northern neighbor and longtime battleground, lays claim to the gas fields as well.

Lebanon’s As-Safir newspaper reported June 8 that the biggest field found off Israel, Leviathan, extends north into Lebanese waters and could well aggravate tensions between the countries.

Under the headline “Israel prepares to steal gas fields in Lebanon’s waters,” the leftist daily said if Israel tried to siphon gas from Lebanese territory, Beirut would be forced to defend its resources.

One of Hezbollah’s top leaders, Hashem Safieddine, head of the Iranian-backed movement’s executive council, has declared it won’t allow Israel to “loot” Lebanese gas resources.

Israel’s military chiefs say Hezbollah currently possesses around 45,000 missiles and rockets, which could be fired at Israel’s emerging energy infrastructure centered on the port of Haifa.

The city was repeatedly hit by Hezbollah rockets during the 34-day war with Israel in July and August 2006.

These days, Hezbollah purportedly has long-range weapons that have greater accuracy and carry more destructive warheads than those used in 2006. These are capable of hitting just about anywhere in Israel.

In the event of renewed hostilities, and both sides are talking tough again, Israel’s energy installations would be prime targets.

Lebanon’s parliament speaker, Hezbollah ally Nabih Berri, has urged the Beirut government to move swiftly to start its own offshore exploration or risk Israel claiming whatever resources there are.

“Israel is racing to make the case a fait accompli and was quick to present itself as an oil emirate, ignoring the fact that, according to the maps, the deposits extend into Lebanese waters,” said Berri.

The speaker, who has submitted a parliamentary bill to launch exploration of Lebanon’s potential offshore reserves, declared: “Lebanon must take immediate action to defend its financial, political, economic and sovereign rights.”

Israeli officials insist that the gas fields lie within Israeli territorial waters.

However, the liberal Haaretz daily noted Tuesday, “Israel has yet to declare its exclusive economic zone, though this usually applies to what in the sea, such as fish, and not what lies under the continental shelf.”

It quoted Professor Moshe Hirsch of Jerusalem’s Hebrew University, an expert in international law, as saying that problem could arise when the continental shelf is shared by more than one country.

But he maintained the gas lies squarely in Israel’s sector of the continental shelf and so there was no need top declare an exclusive economic zone.

The first strikes were made early this year at the Dalit field off Hadera, south of Haifa by a consortium headed by Noble Energy, a U.S. company with headquarters in Houston, which is working with three Israeli firms.

Tamar, 50 miles east of Haifa, was found in April. Last week Nobel raised its original estimate of the field’s size by 33 percent to 8.4 trillion cubic feet of gas.

But then came the discovery of Leviathan, double the size of Tamar at an estimated 16 trillion cubic feet of gas, further off the coast.

Nobel said that total offshore reserves could top 30 trillion cubic feet, double Britain’s giant gas fields in the North Sea, with a conservative value of some $300 billion. Nobel is moving a drilling platform from the Gulf of Mexico to step up exploration.

Gas production is to begin in 2012. Israel is planning to build a liquefied natural gas plant near Haifa but it probably won’t go online until 2015.

The gas finds, particularly Leviathan, which may turn out to be even bigger, are “nothing short of a geopolitical gamechanger,” Gal Luft, executive director of the U.S.-based Institute for the Analysis of Global Security, wrote in Haaretz Sunday.

“Altogether the basin the eastern Mediterranean … could contain an amount of gas equivalent to one-fifth of U.S. natural gas reserves.”

John Brown’s ‘The Oil of Israel’ Available on Friday

Zion Oil & Gas Founder John Brown’s book The Oil of Israel: Prophecy Being Fulfilled will be released from the printer on Friday June 11. In The Oil of Israel: Prophecy Being Fulfilled, Brown tells the story of his faith his journey and the vision he believes G-d has put on his life: to discover Israel’s oil.

In the Preface Brown writes:

“So, why did God choose Zion to discover the oil in Israel? The answer is I don’t know why, but He did, and I believe I was told by God that it was to fulfill His promises to Israel (Isaiah 14:24) (Zechariah 1:17) and to bless the body of Christ. (Isaiah 23:18 NIV) and Zion Oil only exists because of God’s faithfulness to Israel (Psalms 36:5, 89:1-5) and not because of my faith (Isaiah 25:1).”

The Oil of Israel: Prophecy Being Fulfilled will be available in bookstores and on Amazon this summer. To order copies now, directly from www.oilinisrael.net, click here.

Israel, Turkey Tensions Not Affecting Zion Oil

According to Zion CEO Richard Rinberg,  recent political tensions between Turkey and Israel are not affecting Zion’s work program or future plans. Zion Oil & Gas operates it exploration company in Northern Israel using a drilling rig and crew owned by Turkish drilling company AME. Future plans call for a new company, Zion Drilling, to to be formed between Zion Oil & Gas and AME.

Zion Oil & Gas has just released a corporate video detailing their exploration efforts and plans for the new drilling company. To view the video click here or on the photo at the top of this article.

In a recent letter to stockholders, Rinberg states that in spite of international tensions, Zion Oil and AME will conduct ‘business as usual’.

“I received a telephone call from a concerned stockholder asking about the recent event offshore Israel and its effect on the relationship between Zion Oil & Gas, Inc (in Israel) and Aladdin Middle East Ltd (in Turkey).

I have been in contact with Cetin Mumcuoglu, the General Manager of Aladdin Middle East Ltd, in Ankara, Turkey, and he is not concerned. International incidents will occur from time to time, but business continues without interruption.

He commented to me, “ We will continue with our business relationship even more strongly.”

Zion Oil & Gas and AME have excellent relations based on mutual respect and trust, so we expect that recent events will have little effect on our continuing business relationship.

Additionally, our Caesarea office and our petroleum exploration areas are in Northern Israel, well away from the Gaza area in Southern Israel, so everything is proceeding as normal.

At present, we do not anticipate that the recent event will have any material adverse effect on our business.”

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