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Bloomberg reports that Tel Aviv-based Dalia Power is building a power station using natural gas at the Tzafit site in central Israel. Once completed, the plant would supply some 8 per cent of national energy consumption, making it one of the country’s biggest privately operated power stations.
Israel is encouraging the development of independent power producers to introduce competition in a market monopolized by state-owned Israel Electric Corp.
“This is one of several deals that we expect to come,” said Richard Gussow, an analyst at Deutsche Bank AG in Tel Aviv.

In November of last year, South Korean giant Daewoo signed a deal with the partners in the Tamar field, (Noble, Delek Group and Isramco Inc.) to develop the Tamar gas field. Daewoo expects to produce liquefied natural gas from the field by the end of 2016. Estimates put the field to have 240 billion cubic meters of natural gas.

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“We are trying to make Greece the hub for gas transit to northern European countries either via Italy or through the Balkans,” Greece’s environment, energy and climate change minister stressed to The Jerusalem Post in an exclusive interview on Monday morning in Jerusalem.

The minister, Giorgos Papakonstantinou, was the first Greek official to visit Israel since the country’s November 11 formation of a new coalition unity government headed by interim Prime Minister Lucas Papademos.

(Read Full Jerusalem Post Article)

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New Zion President/COO Victor Carrillo at Zion Drilling Rig

Dallas, Texas and Caesarea, Israel – October 18, 2011 – Zion Oil & Gas, Inc. (NASDAQ GM: ZN) announced today that Mr. Victor G. Carrillo has been appointed as President and Chief Operating Officer of the Company, replacing Mr. William L. Ottaviani who, by mutual agreement with the Company, left to pursue other opportunities on October 14, 2011. Mr. Ottaviani resigned from the Company’s Board of Directors, as provided for in his employment agreement with the Company.

Mr. Carrillo, age 46, has been serving as the Company’s Executive Vice President since January 2011 and as a director since September 2010. Mr. Carrillo will continue to serve on the Company’s Board of Directors.

Mr. Carrillo is a petroleum geologist and geophysicist, attorney, former city councilman, former county judge and former statewide elected official in Texas. For almost eight years, ending in January 2011, Mr. Carrillo served as a commissioner of the Railroad Commission of Texas (the State of Texas Board with regulatory jurisdiction over oil and gas exploration and production) having served as chairman of the three-member statewide elected board twice. Mr. Carrillo holds a law degree from the University of Houston Law Center, a Master of Science degree in geology from Baylor University, and a Bachelor of Science degree in geology from Hardin-Simmons University.  Mr. Carrillo also received an honorary doctorate degree from Hardin-Simmons University in May 2006. Mr. Carrillo’s background in petroleum geology and geophysics and regulatory experience as Chairman of the Railroad Commission of Texas furnishes to our board access to a greater understanding of both petroleum science and regulatory issues. Mr. Carrillo currently also serves as a director of Magnum Hunter Resources Corporation; an oil and gas company engaged in the acquisition, development and production of unconventional oil and gas resource plays in the United States and Canada. He also serves on the advisory board of the Maguire Energy Institute at Southern Methodist University in Dallas, Texas.

Zion’s Chief Executive Officer, Richard Rinberg, said today that, “I want to thank Bill Ottaviani for his contribution to Zion and wish him well in his future endeavours.

I am very pleased to announce Mr. Carrillo’s appointment as our President and Chief Operating Officer. Victor Carrillo has a wealth of experience in the petroleum industry and is an experienced petroleum industry professional. His skills as a petroleum geologist and geophysicist will serve our Company well as we strive to identify drilling prospect opportunities in our license areas, confirm our next drilling locations and implement our multi-well strategy, as we continue our pursuit to recover hydrocarbons in Israel.”

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(Zion CEO Richard Rinberg (c), VP Victor Carrillo (l), and President Bill Ottavianni (r))

What’s in Store for Zion Oil & Gas?
I get e-mails and comments to this website (a lot of e-mails and comments) with questions about the future of Zion Oil & Gas. The emails and comments traffic goes way up whenever there’s a big rise or a big dip in Zion’s daily stock price. When the stock goes up Zion fans are dancing in the streets; when it goes down there’s sackcloth and ashes. The questions that come to me invariably take the form of, “What has Zion done to make their stock go up?” or “What have they done to make their stock go down?”

The answer? From my perspective, a definite long term perspective, nothing unusual. Zion operates day to day, week to week, month to month, and now year to year, in a pretty methodical manner. Plan, test, explore, review, repeat. I’ll admit, it’s not a very exciting methodology, but I’d rather have a dull methodology with exciting (long term) results than exciting methodology with no results (there’s been too much of that from other ‘explorers’ already).

So why does Zion’s stock go up and down? I’m no stock whiz, but from what I’ve seen at least some of it has to do with what’s happening outside of Zion. Earlier this year Zion’s share price spiked from under $4.50 to nearly $6.00 in a few days. The reason? Zion Oil & Gas attended the National Religious Broadcasters Convention in Nashville where religious (and secular) press took advantage of the situation, asked for interviews with Zion Founder John Brown and CEO Richard Rinberg and reported Zion’s story. The stock went up – there wasn’t a change in the company’s exploration strategy or operations, John and Richard just shared Zion’s story.

A few months ago Zion’s stock took off again (from about $4.75 to nearly $7.00). Why? Part of the reason may have been that Zion announced it had reached target depth on their Ma’anit-Joseph #3 well. Another part may have been that the Dow Industrial Averages jumped at the same time … most stocks were going up, Zion’s did too.
Just lately, Zion’s stock has taken a nosedive. Why? Part of the reason may be that testing showed Zion’s Ma’anit-Joseph #3 to be ‘non-commercial’. Another part of the reason may be that Stock markets (in the US and abroad) took an historic nosedive in the last few weeks. Noble Energy has discovered the largest gas find in Mediterranean history and their stock dove 20% when the markets went into free fall.

What’s the moral to my story?
I’m not a stock analyst and don’t want to be. To me it’s just gambling; trying to predict tomorrow with averages, spreadsheets and theories … or rumors. Events are going to happen outside and inside a company that’ll probably make it’s stock go up and down. If you’re a day-trader (someone who buys and sells daily, gambling on tomorrow’s stock report) I guess daily ‘events’ float your boat.

But (I don’t believe) a company like Zion Oil & Gas is for day traders. It’s for those of us in it for the long run. The only two ‘events’ worth paying attention to would be a commercial discovery or Zion closing up shop. They haven’t made a commercial discovery (yet) and they have no intention of closing up shop. So until either of those two events transpire I’ll look for long term strategy to achieve long term results. Is the company doing what it set out to do?

Zion Oil & Gas was founded to discover oil and gas in Israel. They’re doing just that. They’ve drilled four wells to date, none commercial, but they’ve learned from each well. Zion’s Chief Geologist Stephen Pierce says that, on average, only one in nine exploration wells produces oil or gas in commercial quantities. A few years ago, because they knew they had to go deep, Zion flew to Turkey and secured a drilling rig twice the size of anything available in Israel. That rig just finished the deepest well ever drilled in Northern Israel. This week Zion geologists will participate in advanced mapping methods training host by one of the world’s best (if not the best) seismic software companies. Zion’s geology and exploration teams work every day to cut down those one-in-nine odds.

Zion started out with a 28,800-acre license. Today they have 218,000 acres of exploration territory and have applied for another 312,000 acres. 530,000 acres of exploration territory would make Zion the largest, by far, onshore exploration company in Israel.

In the last few years Zion has continued to successfully raise capital in spite of the worst economic/investment environment this country has experienced in decades. Today, they’ve got $29,260,00 in the bank.

When Zion started, discovering oil and gas in Israel was a myth; today it’s a fact, backed up by the world’s biggest gas find in more than a decade, a USGS study stating (conservatively) that there are significant oil and gas reserves in Israel, and recent news that Israel contains the world’s second largest deposits of oil shale.

Bottom line:
I’ll look at Zion’s stock price after they’ve discovered oil. Until then, I’ll look at Zion for how well they’re accomplishing their mission. More importantly, I’ll look to the One who gave Zion the mission. Israel has already discovered more natural gas than they will ever use. I believe oil is right behind it – G-d has already promised it.

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Israel's Offshore Gas Fields

Ratio is the investment bank’s stock pick in the energy sector.

2 August 11 12:15, Hillel Koren

Leviathan partner Ratio Oil Exploration (1992) LP (TASE:RATI.L) is Barclays Capital’s top pick in Israel’s energy sector. The bank reiterates it “Overweight” recommendation but lowered its target price from NIS 0.74 to NIS 0.71, still a 69% upside on today’s opening price of NIS 0.41.After a four-day road show with Ratio CEO Yigal Landau and Geologist Josh Steinberg, Barclays analyst David Kaplan says that the company compares favorably with its European peers. “Even in our worst-case scenario where we drop the oil targets from our valuation entirely we still see 13% upside from the current share price,” he says. Under the most optimistic scenario, which include the oil prospects and the LNG facility, Barclay’s valuation is NIS 2.27 per share – 441% above the current share price

Kaplan says that Israel current offshore discoveries at Mari-B, Tamar, and Leviathan, are only the first in the Levant basin. While it is clear that there will be disappointing drills, he believes that current best estimate of 25 trillion cubic feet of natural gas “is still the tip of the iceberg,” citing a 2010 US Geological Survey report, which estimates 122 trillion cubic feet of gas and 1.6 billion barrels of oil in the Levant basin.

Kaplan says that Ratio, with $100 million in cash and no debt, is properly capitalized for its 2011-12 capital expenditure plan, which includes bringing in a marine operator for its Gal license (south of Leviathan), and the upcoming Leviathan 3 exploratory well and the resumption of the Leviathan 1 well to oil targets in deeper strata.

Ratio owns 100% of Gal, and 15% of Leviathan; Delek Group Ltd. (TASE:DLEKG) and Noble Energy Inc. (NYSE: NBL) own the rest.

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Modiin Energy’s partners previously announced that drilling would begin in January or February 2012.

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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.

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