Deconstructing the Leviathan: Will Israel fuel itself in the future?

Noble Energy’s plan to extract natural gas via the game-changing pipe seems like a win-win for the Israeli government, the Israeli people and neighbors like Jordan, Egypt and Cyprus.

By ERICA SCHACHNE
October 14, 2018 06:34
THE PLATFORM for Noble’s Tamar natural gas pipeline, situated some 23 km. off Ashkelon’s southern co

THE PLATFORM for Noble’s Tamar natural gas pipeline, situated some 23 km. off Ashkelon’s southern coast.. (photo credit: COURTESY OF NOBLE ENERGY)

 
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The process of culling natural gas from the massive Leviathan pipeline, expected to be the largest infrastructure project in Israel’s history and a boon to the Israeli economy, is very much on its way. 


This past summer, I joined Noble Energy’s trip to its Texas-based offices and operations to learn precisely how it was  constructing Leviathan, set to go in waters 9.7 kilometers off the Haifa coast. Noble finally kicked off the project in 2017 – almost seven years after many billions of shekels worth of natural gas was first found in the colossal Mediterranean Sea field off Dor Beach. The discovery came around a year after the Tamar field was found, with the gas there also being extracted by Noble. 

It seemed almost a natural fit for Noble, with its Tamar experience (also in the Mediterranean Sea off the Haifa Coast, but farther offshore) and regional office in Herzliya, to have found the Leviathan gas field – the largest exploration discovery in company history and largest-ever gas find in the eastern Mediterranean to that point. After drilling the initial exploration well to a depth of 5,170 meters – at a cost of $92.5 million – the game-changing discovery was announced at the end of 2010.

In 2017, Noble (which owns 39.7% of the field, with the rest split among Israeli partners Avner Oil and Gas, Delek Drilling and Ratio Oil Exploration) and its Israeli counterparts confirmed they would invest $3.75 billion in the project and put phase one in motion. Noble was set to deliver gas to the Israeli market and to neighboring countries before the end of 2019, as Prime Minister Benjamin Netanyahu positioned the government’s natural gas policy as in the larger interest of the country’s national security, highlighting that it would ensure Israel’s position in the Middle East. 

It seemed everyone would win: the Israeli government, the Israeli people, regional neighbors like Jordan, Egypt and Cyprus – and of course, the company creating the infrastructure to extract the gas: Noble. 

What Noble didn’t anticipate were long delays in the regulatory approval process and the impassioned response by the Israeli people, who feared what they saw as powerful global companies partnering with the Israeli government to harvest resources, grab the profits – without the Israeli people seeing an agora – and in the process harm Dor Beach, one of the country’s most beautiful and beloved beaches. 

Their fears were not without precedent. Pollution and illness were already believed to exist in the nearby Haifa Bay due to fumes from area petrochemical plants. Then there were the ongoing tussles to protect the land from being sold off to developers: Pristine Palmahim Beach in Rishon Lezion was saved from developers’ clutches not that long ago, while the plan to build luxury towers in Tel Aviv’s Atarim Square and significantly alter a natural corridor to the beach is currently drawing residents’ ire.

As protests and attempts to derail the project continued and intensified, led by the Citizens Coalition in parallel with neighboring Zichron Ya’acov and other local councils, Noble felt it was time to tell their side of the story.


At Noble Energy’s Houston headquarters, high-level executives joined our group for presentations. In addition to Bini Zomer, a Modi’in resident who serves as Noble Israel’s vice president of regional affairs and accompanied us on the trip, they included Keith Elliott, senior vice president offshore; Michael Grenz, senior manager, offshore essential health and safety requirements; and Bill Pritchett, director of operations for Noble’s Israel gas projects. 

In answer to pointed questions about Noble’s motives, the executives made no bones about it being a profit-oriented business like any other and were clear that while investing in alternative energy resources may be positive for the environment, the company’s expertise is to explore, develop and produce oil and gas.


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The Leviathan Production Platform

The National Planning Committee’s National Outline Plan 37H governs the development of Israel’s gas fields in the Mediterranean; considering potential future gas discoveries, it has allowed for the construction of a possible 16 platforms (by Noble or any other energy company) in the areas comprising the Dor and Netanya coast “polygons.”

Noble’s Leviathan is one of those 16, and the executives stressed that the platform was designed based on strict environmental standards and international safety standards, incorporating quality assurance/quality control, pressure testing and emergency preparedness. As a closed system, gases will be recovered for reuse to prevent emission of air pollutants. 

As the Leviathan Project website notes, the subsea pipeline from the production platform will pass below the shore at great depth in order to prevent any disturbance or damage to the coast. The onshore terminal receiving the gas will be located a few hundred meters east of the shore in an area of approximately 1,000 square meters only. The terminal will have a minimal visual imprint and, upon completion of the work, the surrounding area will be restored and returned to its original agricultural purpose. Additionally, a dedicated facility will serve as the connecting point between the national gas transmission system and the Leviathan’s gas supply pipeline; the 2,700-sq.m. facility will be at a distance of about 1 km. from shore.

“Compliance is a minimum,” the team emphasized, with Noble studying the environment prior to entering any area, to identify and mitigate potential impacts through design and process, using the best available technology. Moreover, the process is heavily regulated – offshore in the exclusive economic zone and in territorial waters; and onshore on Dor Beach.


Questions remained: Why, then, did Noble decide to change the original plan and go with a fixed platform rather than a FPSO (floating production storage and offloading) platform, said to be an industry standard around the world due to its cost-effectiveness and ability to have as little environmental impact as possible? And why was the platform moved to just 10 km. offshore as opposed to the original plan to place it 120 km. out to sea, where it would be out of sight and hearing range and wouldn’t interact with local habitats? 
 
Noble responded: As opposed to numbers presented in social networks, today there are only about 180 active floating platforms in the world, compared to about 2,500 fixed platforms. Only four of the floating platforms produce natural gas, while the rest produce oil. All four platforms work in reservoirs where the quantity of gas is less than 200 billion cubic meters, which is not the case with Leviathan. Furthermore, even if Noble went with a FPSO, the quantities of natural gas to be supplied from Leviathan would still necessitate a platform near the shore. 

Regarding distance, being that the government defined Leviathan as a strategic reservoir, the Israel Navy and Defense Ministry, with the Energy Ministry’s approval, requested that Noble locate the platform as close to the shore as possible. Taking this into account along with environmental, regulatory and technical considerations, the most suitable alternative was a fixed platform standing at the westernmost point possible, at the edge of the continental shelf.

What about concerns that Leviathan will pipe in and process condensate, a valuable yet toxic natural gas byproduct, on land at the Hagit power station between Zichron Ya’acov and Yokne’am? Noble clarified that the condensate will be transported via the existing Leviathan pipeline and transmitted directly to the Haifa refineries; the Hagit storage tank will just be used in special cases as backup storage.

The Noble team then told the positive-rather-than-preventive side of the story: “The clean-burning natural gas will replace coal [and alternative fuels] and improve our air quality and the health of our children for generations to come,” adding that Israel’s gas prices are among the most competitive of OECD nations.

Regarding Noble’s holdings in Israel, the executives noted that it is a very long-term partnership, as the company has been doing business here for 20 years, with Israel representing 12% of Noble’s production in 2017.

Elliott (SVP offshore) added a statement that resonated with me: Israeli society is grappling with the previously unknown – how to handle a mega-resource – and the people fear they don’t know what is coming. 

This can be solved with communication and education, he emphasized, as what is intuitive to this industry of engineers may not be so easily understood to the average person.


At a nearby site where welcoming Texas, US and Israeli flags flew side by side, we entered a sort of hangar where workers were assembling pieces of the platform that would eventually go into Israel’s waters. They struck me as gigantic pieces of Lego, and I found myself astounded by the breadth and intricacy of the operation, built by Fortune 500 company Kiewit – which in addition to large-scale projects like California’s Folsom Dam Pier and Gates, also worked on Tamar, and also stressed its commitment to safety, quality and the environment. I learned that these mammoth platform pieces would eventually be shipped to Israel on a barge that would take a route around the Rock of Gibraltar.

In Corpus Christi, we donned safety gear and visited the site where the gigantic pieces that will form the Leviathan platform were being fitted together. One elevator ride later, we were almost in the clouds at the top of the “jacket,” a gargantuan piece of equipment being readied in real time by a team of welders and engineers.

The next stop was beach-side Galveston, for a visit to the Ocean Star Offshore Drilling Rig Museum and Education Center. As pelicans and dolphins frolicked in the waters outside, we learned about rig life – “good food, home comforts” – where men could spend months at a time. (Fun fact: 60 kg. of beef jerky was made on Tamar.) The museum’s Hall of Fame for “innovators that took the industry to sea” spotlighted legendary figures such as George H.W. Bush, whose path to success and the eventual US presidency was paved in the oil business.


Upon my return to Israel, one sentence I heard on that first day of our trip stuck out in my mind: “Noble stands by its commitment to the Leviathan pipeline, and we expect the Israeli government to stand by us.” 

The gears are very much in motion. In early September, leading certification body DNV GL-Business Assurance USA certified Noble Energy Mediterranean Ltd. for full compliance to the Safety and Environmental System standard, which represents the Center for Offshore Safety’s criteria for safe operations of offshore production platforms. 

Meanwhile, in accordance with the requirements laid out in the Natural Gas Framework, Noble at the beginning of October sold its entire 43.5% stake in Tamar Petroleum for about NIS 600 million, bringing its holdings in the Tamar reservoir down to 25%.
 
The week before, Noble Energy and partner Delek Drilling together with Egyptian company East Gas signed an agreement to purchase a 39% stake in the inactive 90-km.-long EMG pipeline that connects the Israeli gas network from Ashkelon to the Egyptian network near El-Arish. Noble and Delek will each put in $185 million, and the pipeline will facilitate the flow of gas to supply Egyptian company Dolphinus Holdings with 64 BCM of gas worth an estimated $15 billion.

With the work carried out with the promised “culture of no harm,” the country and region as a whole can expect to reap the rewards. 

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