natural gas rig 248.88.
(photo credit: Courtesy)
Delek Group chairman Yitzhak Tshuva said Wednesday that his company had underestimated the capacity of the Tamar 2 natural gas site after recent results showed that the natural gas prospect offshore from Haifa was 26 percent larger than previously estimated.
"An additional 40 bcm were found, estimated to be worth $8 billion. What's more, according to our research, there is more to be found and the drilling will continue," Tshuva told Army Radio on Wednesday.
Tshuva's Delek group, which operates the prospect with a 15.625% interest announced the largest natural gas find in Israel's history at the Tamar site in January.
Other owners include: Noble Energy, the US oil and gas company with a 36% stake, Isramco negev 2, with 28.75%, Avner Oil Exploration with 15.625%; and Dor Gas Exploration, with 4%.
Noble Energy said late on Tuesday night that the Tamar prospect was its biggest discovery on record, with an estimated 6.3 trillion cubic feet of gas. That's up from an estimated 5 trillion cubic feet announced by the company on February 10. The revised estimate was announced along with the "successful" results from drilling an appraisal well, Tamar 2.
"The results of the appraisal well are extremely positive for Noble Energy, our partners and the state of Israel," said Chief Executive Officer Charles Davidson. "As such, we are moving forward with development plans focused on bringing the first phase of production to the Israeli shores by 2012."
While Tshuva's declaration that "Israel is now blue and white energy independent," is premature, the find is one of the most promising in Israeli energy history. The Tamar site discoveries have begun to revolutionize Israel's energy market in the last six months and will continue to do so, analysts have said. The new estimate and other studies may indicate that there is much more natural gas to be found off Israel's coasts than anyone had previously expected even six months ago.
Delek and its partners have located an estimated 200 bcm so far - enough to meet Israel's natural gas needs for the next 10-20 years depending on which forecast you look at. At present, Israel uses 4-5 bcm per year, but that could grow to as much as 34 bcm by 2025, according to the high estimates of a study done for the National Infrastructures Ministry.
Natural gas is mainly used in Israel to run the gas turbines which produce electricity. The country's goal is to increase electricity production from gas turbines from 30% currently to 40-45% by 2020. The other two elements from which electricity is produced are coal and alternative energy. Coal currently produces about 70% of the whole, but could be reduced by as much as 20% in the future. There's a goal of 10% of electricity from renewables by 2020.
Israel has ambitious goals for gas turbines in part as an environmental matter. While still a fossil fuel, natural gas produces significantly less pollutants and carbon dioxide than oil and coal. The other motivation is to diversify Israel's energy needs as a matter of energy security.
"The finds show that the potential off of Israel's coasts are not one-time finds, this is the third drill site," Tshuva said in the interview.
The gas fields are considered national natural resources and Delek is expected to pay as much as 40% of the profits into state coffers, Tshuva said. "The [money] could enable the state to develop gas or car infrastructures, and the most important thing is to generate jobs during these hard times, so there won't be unemployment in Israel."
While the natural gas finds may be able to wean Israel off its dependence on foreign sources for gas, the National Infrastructures Ministry and the Israel Electric Corporation are adamant that at least one more coal-fired power plant is an absolute necessity. Project D, the second coal-fired power plant in the Ashkelon area, is set to come online in 2014. The consensus is that coal must be the bedrock of electricity production to ensure a stable supply.
At present, reserves are so low that rolling blackouts could occur this summer during peak times.
Environmental groups and Environmental Protection Minister Gilad Erdan (Likud), on the other hand, have vociferously called for the project to be scrapped. The world is moving away from the highly polluting coal plants, and yet in Israel we are building new ones, they have said.
However, according to the government's strategy, Tshuva's new estimate won't affect the decision for Project D since one is coal and one is natural gas. Some diversity in energy sources is absolutely necessary for energy security, so the government doesn't plan on tipping the balance between coal and natural gas too dramatically. The Tamar site might eventually make the country's natural gas deal with Egypt unnecessary, but it won't make Project D unnecessary.
Meanwhile, the Environmental Protection Ministry announced Wednesday that they had begun circulating draft emissions standards from power plants. According to the ministry, new regulations based on European ones from 2001 could reduce emissions by as much as 5% to 40% depending on the generator. The ministry also said that Israeli emissions standards lagged behind European ones by 10 to 20 years.
Bloomberg contributed to this report.
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