Noble Energy bullish on offshore gas

US company believes "discoveries will help Israel maintain energy security."

A natural gas pipeline [illustrative]. (photo credit: Courtesy)
A natural gas pipeline [illustrative].
(photo credit: Courtesy)
Noble Energy CEO Charles Davidson is confident his company will find more natural gas off Israel’s shores.
“We are going to be here for decades,” he said Tuesday at a press conference in Tel Aviv. “I am hoping that we will find more resources in Israel for energy supply. We have just conducted a 3-D seismic survey, which will provide very sophisticated information enabling us to know whether there are more reservoirs and to examine potential sites for drilling.
“We are hopeful that there are other reserves adjacent to the Tamar and Dalit reservoirs. However, it will take several months to analyze the results of the seismic survey, but we expect to drill into another large structure during the second half of the year.”
US-based Noble Energy has been operating in the Mediterranean Sea off the Israeli coast since 1998. It has a 47 percent stake in the Mari-B field, Israel’s first offshore natural-gas production facility. It also has a 36% stake in the Tamar site, which was discovered early last year by an exploration consortium off the northern coast.
Tamar is the largest exploration discovery in Noble’s history, with gross gas resources of 6.3 trillion cubic feet. Other members in the consortium are Delek Drilling and Avner Oil, which each have a 15.625% stake; Isramco Negev, with 28.75%; and Dor Gas Exploration, with 4%.
“We and our partners have spent $700 million on this project, and the total size of development costs is expected to amount to between $2.5 billion and $3 billion,” Davidson said. “Our company is growing because of wells like Tamar. With the addition of the Tamar site, one-third of Noble’s proven reserves will be in Israel.”
Noble Energy’s total spending in Israel this year will be about $140m., which is 10% of the company’s total budget, Davidson said. He said he was confident expectations for production from the Tamar site in 2012 would be realized on time.
Noble Energy last year also discovered a natural-gas field at Dalit, which has gas reserves estimated at 500 billion cubic feet.
The initial contracting for the sale of natural gas at Tamar is under way, and the company has negotiated two multi-year letters of intent to deliver natural gas to the Israel Electric Company, Davidson said.
“Demand for natural gas in Israel will continue to grow and the discoveries will help Israel maintain energy security,” he said. “It is not very often you get to be part of an exploration venture that has the potential to dramatically change a country’s energy supply.
“At this point we do not see the potential of exporting gas from thediscoveries at the Tamar and Dalit sites, since the Israeli market isso strong that all of the gas reserves will be fully absorbed inIsrael. Chances of exporting gas to other markets will depend on thesuccess of future exploration.”
Davidson said the gas discoveries would greatly contribute to Israel’seconomy, lower energy costs for consumers by more than $1b. a year,while the Israeli government will gain about $400m. a year fromroyalties and taxes from the drilling.