Wednesday, January 21, 2009

Israel Finds Major Natural Gas Field Off Haifa Coast

from BusinessWeek: Israeli Gas Find Tips Energy Balance; The discovery of a major natural gas field off the coast of Israel could help make the country an energy exporter

On Jan. 18, just hours after a cease-fire began in the Gaza Strip, Israel announced the discovery of a major natural gas field off its northern Mediterranean coast.

The news sent the Tel Aviv stock market sharply higher on Sunday as the size of the find appeared to eclipse the negative impact of the recession the country is now facing. Shares of the Israeli partners in the Tamar-1 drilling site jumped between 42% and 124%, though profit-taking pulled some down on Jan. 19. Even the Israeli shekel joined in, climbing by up to 1.6% against the dollar on Monday before settling the day up a half-point.

"This is one of the biggest finds ever, and could even turn Israel into a natural gas exporting country," predicts Yitzhak Tshuva, the majority shareholder in Israel's Delek Group (DELKG.TA), one of the partners in the offshore drilling. That would be a huge change for a country that has been nearly 100% dependent on imported oil and coal. Last year alone Israel spent $12.8 billion on fuel imports.


The find, located 90 kilometers due west of the port of Haifa, is the first large field discovered in the eastern Mediterranean and is significant even by global standards. "This is one of the most significant prospects that we have ever tested, and appears to be the largest discovery in the company's history," says Charles Davidson, chairman and CEO of Houston-based Noble Energy (NBL), the U.S. partner in the consortium.

Initial estimates put the value of the offshore gas at $15 billion, but experts say the estimate is preliminary and could go substantially higher. The partners in the project—Noble, Delek Drilling, Avner Exploration, Isramco (ISRL), and Dorgas—will have to invest around $1 billion to develop the field, and gas could begin flowing within three to four years. "The field can meet Israel's natural gas needs for the next two decades," says Israeli National Infrastructure Minister Benjamin Ben-Eliezer.

Noble and its Israeli partners are hoping that Tamar-1 is only the tip of the iceberg. They are already planning to search in areas adjacent to the discovery, which have gone unexplored until now. "The whole Eastern Mediterranean region will become a major focus for international oil and gas companies in the years to come," predicts Eitan Aizenberg, exploration manager at Ratio Oil Exploration, an Israeli company with a stake in five offshore licenses.

(Hat tip: normblog)

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