Yossi Langotsky, Israel’s Unlucky Oil Man
December 11, 2009 by admin
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