The deepest oil well drilled in Israel’s 65-year history may be the most important.
Houston’s Noble Energy Inc. (NBL) will probe 6,500 meters (4 miles) below the Mediterranean seabed later this year, targeting as much as 1.5 billion barrels of crude, equal to about 15 years of Israeli demand.
While explorers have found enough natural gas in the past five years to turn Israel into an exporter, a major oil discovery would break new ground. The Middle East’s third-largest economy spends about $10 billion a year importing 98 percent of the oil it uses. Domestic production would increase tax revenue, boost the country’s balance of payments and reduce vulnerability to supply disruptions.
“The economic impact on Israel would be far greater than that of natural gas,” David Wurmser, director of the Washington-based Delphi Global Analysis Group, said in a phone interview. “Finding the oil would mean big money for the Israeli companies and the government.”
(from Natural Gas Asia) Delek Drilling-LP (DEDRL) and its partners in Israel’s Tamar gas field have signed a $5 billon agreement to supply Dalia Power Energies Ltd. with natural gas for 17 years.
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.
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.
The Myra and Sarah leases have a best estimate of 6.5 trillion feet of natural gas with a 54% chance of geological success, but the range between the high and low estimates are quite large.
Modiin Energy owns 19.3% of Myra and Sarah, ILDC Energy and its affiliates own 48.4%, drilling operator GeoGlobal Resources Inc. (AMEX: GGR) owns 5% through its Indian unit, Israel Petroleum Company Inc. (IPC) owns 13.1%, and Blue Water Oil and Water Exploration Ltd. owns 8.8%.
Modiin Energy’s share price fell 2.1% in morning trading today to NIS 0.046, giving a market cap of NIS 902 million, but ILDC Energy’s share price rose 2.4% to NIS 1.13, giving a market cap of NIS 932 million.
Published by Globes [online], Israel business news - www.globes-online.com – on July 24, 2011
* The two countries have no agreed maritime border
BEIRUT, Jan 4 (Reuters) – Lebanon has asked U.N. Secretary-General Ban Ki-moon to ensure that Israel’s plans to drill for gas in the Mediterranean do not encroach on its own offshore reserves, the National News Agency said on Tuesday.
It said 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”.
Shami’s letter came a week after Texas-based Noble Energy (NBL.N:Quote) 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. [ID:nLDE6BS10F]
Lebanon says that seismic surveys have identified promising quantities of natural gas in its own waters.
But Israel, which fought a month-long war with Lebanese group Hezbollah in 2006, has no agreed maritime border with Lebanon. Lebanese politicians say they fear Israel may drill in Lebanon’s waters or extract gas from common fields. Israel has said the gas falls within its own waters.
Shami stressed “Lebanon’s right to exploit fully its hydrocarbon resources, which fall within its exclusive economic zone, based on legitimate rights established by international law,” according to the news agency.
“Any Israeli exploitation of this resource would be a blatant violation of these laws and an attack on Lebanese sovereignty,” he added.
Spurred on by Israel’s plans to drill for gas, Lebanon’s parliament ratified a long-awaited energy law last August, which paves the way for exploration of offshore reserves.
But it still has a long way to go to catch up with Israel. It must identify blocs for exploration, supply data to interested investors, select bidders and have companies start work, while the Israelis already have firms drilling for gas. (Reporting by Dominic Evans; Editing by Jane Baird)
The oil and gas exploration scene in Israel, a year after the “Tamar” and “Dalit” discoveries in the Mediterranean, is making the likes of Nochi Dankner’s IDB group and Ofer Nimrodi’s Israel Land Development enter the sector.
But according to Fred Zeidman, a US energy industry expert, and Adam Meislik, who has advised oil and gas companies on investment for ten years, it is highly likely that in the future we will hear about far bigger names, as more international companies, in addition to Noble Energy (the partner in the discoveries with Delek and Isramco), join the exploration efforts on Israeli territory.
“It happens all the time,” says Zeidman, “We see in the US that the moment a company discovers oil or gas that can be transported, there’s a crazy rush to the region by other companies, and that’s a function of the size of the reserves found. Around the world, as soon as Noble goes to a place, many other companies follow in its wake. The prospects here are amazing, and I have no doubt that we’ll see an economic boom, and a rush of more companies to Israel from overseas following Noble.”
Is there no concern at the political problems in the region?
“It’s true that there are political risks here, but we’ve seen it happen in much more hostile places. In Israel, there isn’t the risk that there is in Africa, and so the security issue isn’t too serious.”
Zeidman points to another economic sector that will benefit from the boom in the industry. “The field of services to energy companies will also develop. Beyond the daily needs, such as accommodation and food for the workers, the big companies need local help. For example, Schlumberger (the world’s largest exploration and drilling services company, R.S.), works with many small outfits around the world that help it with logistics and transporting equipment, which leaves a lot of room for enterprise”
Zeidman pins great hopes on Israeli enterprise, and thinks that the discovery of the gas reserves will even contribute to the global energy industry. “As long as oil prices were low, the industry was dormant. As soon as oil prices rose above $100 a barrel, the industry became interesting, and young people came in using new technologies that the veteran professionals didn’t use,” he says.
With the unconcealed pride of a Jewish-American, Zeidman says, “The State of Israel, which is considered a pioneer in science, can bring creativity to this field of oil exploration. This is an industry with a great deal of technology, and considering the Israeli mentality, we’ll see big results and new inventions, and thanks to the new technology there will be fewer dry drillings.”
According to Zeidman, the main problem in Israel is a small and limited consumer base, and so besides the option of exporting, additional uses for gas will be sought. He thinks it not inconceivable that in the future we will see vehicle projects that could damage Shai Agassi’s electric car dream.
The partners in the Tamar well have so far approached foreign investment banks in order to obtain assistance in financing the construction of a production infrastructure, reckoned to cost nearly $3 billion. Meislik thinks that assessing the risks of financing the projects is not very difficult, and that the local banks can also participate. “It’s something that can be learned,” Meislik says. “The US and Canadian banks have no problem in coming to Israel and lending money to the projects, but the Israel banks should train teams overseas, that will learn how gas projects are financed and bring that knowledge to Israel.”
Published by Globes [online], Israel business news – www.globes-online.com – on April 7, 2010
On November 30 the Wall Street Journal printed the story of Yossi Langotsky, an Israeli who has been searching for oil in the Promised Land for fifty years. The WSJ story focuses on Yossi’s involvement in Israel’s recent off-shore gas discovery and how he was left behind in its reward.
I met Yossi almost five years ago and learned about his role in the search for Israel’s oil. It was early April, 2005; Elaine and I had been invited to the Zion Oil & Gas ‘Ma’anit #1′ spudding (beginning drilling operations) ceremony; the company’s first oil well drilling project in Northern Israel. Before the ceremony we were introduced to Mr. Langotsky, and then aside, we learned the unfortunate story of Yossi’s relationship to the Ma’anit #1. The hole in which Zion Oil was to begin drilling in the spring of 2005 was, at that time, already 7,661 feet deep. This spudding ceremony wasn’t the first for the Ma’anit #1; in 1995 and Yossi headed the first drilling of the Ma’anit #1, but at 7,661 feet the project had run out of money and the hole was abandoned. Zion Oil & Gas reopened the Ma’anit #1 in 2005, drilled to 15,500 feet and then abandoned the well due to mechanical problems. Earlier this year, Zion re-opened the Ma’anit #1, now dubbed the ‘Ma’anit-Rehoboth #2′ and drilled directionally to a total depth of 17,913 feet.
Today seven zones of the Ma’anit-Rehoboth #2 are being tested for hydrocarbon (oil and gas) potential. According to Zion CEO Richard Rinberg, in his October 30 newsletter, “With regard to our log analysis, an independent log analyst noted that the Ma’anit-Rehoboth #2 well does have a specified amount of potential ‘net pay’.” Although he was quick to warn readers, “You will appreciate that, until such time as we recover hydrocarbons at the surface (or not), we are not able to give any estimates of what (if anything) we believe we may recover.”
At this point, whether or not the Ma’anit-Rehoboth #2 becomes a productive well, no one knows. Whatever happens, Yossi Langotski, the man who chose the location and drilled the first 7,661 feet, once again, will have his share of the bragging rights but not the profits. Below is the WSJ story.
For One Man, Israel’s Big Gas Find Is Bittersweet Victory
By CHARLES LEVINSON
HERZLIYA, Israel — Two natural-gas fields in Israel’s Mediterranean waters were found in January to contain enough resources to meet Israel’s energy needs for 20 years — a huge find after more than half a century of lackluster carbon exploration here.
But for Yossi Langotsky, who for 10 years has been the driving force behind the project, the gusher was a bittersweet victory. He has been drilling holes in the Promised Land for nearly four decades, in a mostly futile search for energy. A month before drilling started on what would become the largest find in Israeli history, his financial backer pulled out. That forced him to relinquish his stake — today valued at an estimated $350 million.
“After 60 years of no success in oil exploration here in Israel, a miracle took place, and I lost out 30 days before it happened,” says Mr. Langotsky, 75 years old.
The pivotal role played by Mr. Langotsky in the historic discovery is undisputed. The two fields are named for his daughter, Dalit, and granddaughter, Tamar.
The fields, which won’t start producing gas until 2014, are relatively modest by Mideast standards. But they have already triggered a frenzy in the country’s quiet energy industry.
Since January, Israeli oil companies’ stocks have soared, some rising as much as tenfold. In 2009, oil companies have invested between five and 10 times as much in Israel exploration as at any point in the country’s history, says Yaakov Mimron, head of Israel’s Petroleum Commission.
In recent weeks, two international companies, including Houston-based Noble Energy Inc., which led the team that made the gas find in January, separately began extensive and costly 3D seismic surveys of more offshore prospects. A Noble spokesman said they expect to drill new wells next year.
In the past 60 years, oil companies have drilled about 450 wells, but choked out just 20 million barrels of oil, less than Saudi Arabia churns out in three days.
Israel’s dearth of oil in a region awash in it became a national joke. “My closest friends laughed at me,” says Mr. Langotsky.
Many Israeli oil geologists quit the profession. Many of those who stayed are a touch unconventional by industry standards. The two exploration companies currently drilling for oil onshore in Israel are both run by pious prospectors, one an Orthodox Israeli Jew and the other a born-again evangelical Christian from Texas. They both use a combination of biblical prophecy and sound geological data to decide where to drill.
Mr. Langotsky began his oil career as a graduate student in the late 1950s, studying oil prospects along the Dead Sea. He left the profession when he was called on to serve in the army. He played a prominent role commanding an elite reconnaissance unit that helped capture Jerusalem from the Jordanians in the 1967 war.
After leaving the army in 1979, Mr. Langotsky returned to the oil business. For most of the next two decades he roamed Israel, drilling as many as 60 wells.
In the 1990s, Mr. Langotsky and a handful of others began looking offshore. Israel’s fortunes started to turn with a series of moderate-size gas finds in waters off the coast of southern Israel and Gaza.
It was then that Mr. Langotsky first turned his attention to a vast tract of territory deep underwater in the Mediterranean Sea, farther offshore than others were looking.
He pitched the prospect to about 100 top international oil firms, he says. They all turned him down, except for Britain’s BG Group PLC, which agreed to form a partnership with Israeli companies to study the site. The site was set to drill in 2002, but then the project snagged.
Drilling costs in such deep waters nearly 60 miles offshore would likely reach hundreds of millions of dollars, and the partner firms started squabbling about who would shoulder what percentage of the risk. There were also technical problems. Many international oil companies were wary of working in Israel, for fear of alienating oil-rich Arab governments.
Companies started dropping out, including, in 2005, BG itself. The company said the project wasn’t one of its drilling priorities at the time. Eleven different companies were in and out of the project at various times in the nine years it took to start drilling.
At last, in 2007, Noble, a midsize Texan oil company, agreed to buy a 35% stake and take over operations.
Since the project’s conception in 1999, Mr. Langotsky remained its public face. He convinced new firms and investors to join whenever one dropped out, and lobbied the Israeli government.
“If Yossi had not been there, then things would be looking quite different today,” says Charlie Druckman, Israel’s petroleum commissioner until 2004.
Early in the project, BG offered Mr. Langotsky the chance to buy a 5% stake. Unable to finance the stake himself, he brought in Israeli billionaire diamond and real-estate magnate Benny Steinmetz, who agreed in 1999 to buy the stake and give Mr. Langotsky one-fifth of his share, Mr. Langotsky said.
But in the summer of 2008, amid the global financial crisis, another infusion of cash was needed to start drilling, and Mr. Steinmetz balked, according to Mr. Langotsky. He said he would no longer invest in the project, relinquishing his 5% stake — including the share pledged to Mr. Langotsky, according to Mr. Langotsky. Other investors in the project took over the stake.
Mr. Langotsky still had the option to buy a 5% stake, but couldn’t find an investor to back him. Soon after, Noble announced the big find at Tamar, followed by the smaller Dalit field — finds amounting to nearly 1.2 billion barrels of oil equivalent. Mr. Langotsky was left with nothing but bragging rights.
Mr. Langotsky has captured some sympathy from industry colleagues and in the Israeli media. In the Israeli media’s portrayal of the situation, Mr. Steinmetz has been vilified. In September, Israel’s leading economic newspaper named him most in need of forgiveness for Yom Kippur, the Jewish day of atonement, for leaving Mr. Langotsky in the cold.
Supporters of Mr. Steinmetz say it didn’t make sense to continue with a risky, capital-intensive oil venture at a time of global economic uncertainty.
Mr. Langotsky remains defiantly upbeat. The son of early Zionist pioneers who valued duty to country over self, he insists his passionate search for oil was never about the money. “I’m very proud; I feel great,” he says. “I am totally disappointed that I failed to keep my rights, but this discovery is one of the greatest achievements of my life.”
Write to Charles Levinson at email@example.com