In his October 7 Newsletter, Zion Oil & Gas CEO Richard Rinberg wrote. “Our schedules may change, but today, we believe that it is most likely that Zion’s next well will be drilled in our Jordan Valley License in 2012.”
Earlier this month Zion signed a seismic acquisition agreement with the Geophysical Institute of Israel (GII) to conduct a 2D field seismic survey in its Jordan Valley License area that is scheduled to commence in late 2011 or early in 2012.
Israel has plans to enlarge its navy as the potential of a Mediterranean war with Lebanon looms over oil. According to an October 18 UPI report, Israel is considering adding Israeli built warships to protect the Leviathan and Tamar offshore oil and gas fields. Israel’s navy is already scheduled to receive three new German made Dolphin class submarines.
According to the UPI report, “Neighboring Lebanon, which is technically at war with Israel, claims that Leviathan, the largest field yet found, runs into its territorial waters. Israel rejects that claim. The Iranian-backed Hezbollah has threatened military action to prevent Lebanese energy reserved being ‘looted.’”
In the south, Israel also must protect its current offshore gas platforms near Gaza from potential Hamas attack.
Both Hezbollah and Hamas are reported to have acquired anti-ship missiles from Iran that could be used against Israel’s offshore drilling platforms. Additionally, terrorist groups could simply sail explosive laden boats up to the platforms and detonate their cargo.
Lebanon’s news agency, The Daily Star, reported today that, “Lebanon is gearing up for a long-term oil and gas production program although the looming diplomatic crisis with Israel over each country’s share of undersea fossil fuels threatens full-scale conflict …”
Lebanon, still technically at war with Israel, disputes the current Israeli Lebanese maritime border and claims that thousands of square kilometers of Israel’s Tamar and Leviathan gas fields are within Lebanon’s maritime ‘Exclusive Economic Zone.’ The terrorist organization Hezbollah, now an official member of Lebanon’s government and backed by Syria and Iran has vowed that it will not let Israel take possession of the offshore oil and gas fields. Hezollah leader, Seyyed Hassan Nasrallah , stated earlier this year, “Those who put a hand on the Lebanese territories that have oil assets will have their territories harmed in return.”
I received a comment from a reader (Bill) yesterday; he was worried, as a lot of folks are, about the recent fall Zion’s stock price. Here’s the comment:
“The price today at $1.50. What’s the process at this end. Does the company fall off the board if it hits below a dollar say? Is there limits? Is there continued values to these stocks if the price falls to say .50 cents or less than a dollar, or less than a quarter? I’m not a stock guy, so if you have this type of information, please post it. Thanks!”
I’m not a genie or a guru and, like Bill, I’m “not a stock guy.” I do have my own opinion of the situation, but before I share it, let me tell you a story.
Not quite 2,000 years ago there was a guy – his parents named him ‘Saul’, but he went by ‘Paul’. After a dramatic meet up with G-d on the road to Damascus, Saul/Paul literally ‘saw the light’ and became the world’s most famous Jewish missionary. This did not please the Jews at the time, at least those who held the community’s political and religious power. They were always accusing him of ‘crimes against G-d and against Rome’ (whatever that meant) and as a result, Paul spent a lot of time in court or in jail. Things began to get dicey; there were death threats and plots, and there was a pretty good chance that if Paul let the locals have their way he would meet an ‘accidental’ death on the way to court. Paul played his trump card – even though he was a Jew, he was also a Roman citizen, and as such he had a right to be tried for his ‘crimes’ in Rome, far away from the locals who had promised that Paul would be dead before he made his court date.
The Roman authorities put Paul on a boat to Rome (really it was just a connector boat, but it did get him to the real boat to Rome). While he was sailing on the real boat to Rome a storm came up – a big storm. The crew did all they could but everyone on the ship knew this storm would be the end of them. Everyone but Paul. In the night an angel visited Paul and said (paraphrased), “Look, you’ve got to tell Caesar your story, you’re definitely going to Rome. Don’t worry about your life or the lives of those on the boat, not one person will be injured or die from this storm … but, the ship will run aground on some island.” Paul would fulfill his mission of standing before Caesar; the storm wasn’t a catastrophe, just a detour.
Nice story, but what does it have to do with Zion Oil?
Zion Oil isn’t the only stock in the cellar right now, have you looked at the Dow averages? We won’t even talk about European economies. It ain’t pretty. How about Israel and all this talk at the UN about Palestinian Statehood? That can’t be good. And there sure is a lot of sabre rattling by Israel’s neighbors to the north about offshore drilling. Things are tense, they don’t look good, there’s a storm a-brewing!
The sailors on Paul’s boat threw everything overboard and tried to escape in the lifeboat. Good thing they didn’t, they would have been killed.
When you’re in the middle of a storm the natural thing to do is panic, toss stuff overboard and go for the lifeboats. That’s the natural thing … sometimes the natural thing is the wrong thing. It’s tough to keep the goal in mind when waves are coming into the boat, but storms come, and then they go, and the goal remains.
John Brown was given a vision and a mission thirty years ago; before there ever was a Zion Oil & Gas, before there were any stock prices to worry about, before anyone knew there actually was oil and gas in Israel. In thirty years there’s been a lot of foul weather and a lot of fair weather, but the goal hasn’t changed. I don’t know if Paul’s angel ever visited John Brown in the night, but I do know that there’s oil and gas in Israel and that Zion is committed to finding their share of it. It’s not easy to ignore the storm and keep your focus on the goal. The easy thing to do is cut and run for the lifeboats … it’s just not the right thing to do.
So Bill, I’m not a ‘stock guy’. I’m just a guy on the boat; I know that storms don’t last forever and, eventually, we’ll get to where we’re going. Until then, I’ll look for daylight.
Steven Spillman speaking at the 2010 Louisiana Bible Prophecy Conference. “Jacob’s Blessing: The Treasures of the Deep”. The Bible prophecies a last days oil discovery in Israel.
Ratio is the investment bank’s stock pick in the energy sector.
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.
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
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.
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.
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.
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.
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 editor responsible for this story: Claudia Maedler at email@example.com
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.