Thursday, November 20, 2014

Israel pitches ‘massive’ natural gas pipeline plan to Europe | Times of Israel

Israel pitches ‘massive’ natural gas pipeline plan to Europe

Silvan Shalom proposes multi-million euro idea to fellow energy ministers in Rome; project would reduce EU dependence on Russia

BY TIMES OF ISRAEL STAFF November 20, 2014, 9:15 pm

Energy and Water Minister Silvan Shalom visits a special processing plant off the coast of Ashdod in March, set to receive gas from the Tamar deposit for the first time in four years. (photo credit: Moshe Binyamin/Energy and Water Ministry)

Israel has proposed that EU countries invest in a multi-billion euro pipeline to carry its natural gas to the continent, noting that the supply from Israel would reduce Europe’s current dependence on natural gas from Russia.

A proposal for the “massive” project was introduced by Israel’s Energy Minister Silvan Shalom to energy ministers from Euro-Mediterranean countries who met in Rome earlier this week, Israel’s Channel 2 reported on Thursday.

It said the project would require a multi-billion euro investment from Europe to build a pipeline from Israel’s Mediterranean cost to Cyprus, from where the gas would be carried on to Greece and Italy.

The TV report said Cyprus, Greece and Italy were all supportive of the idea, and that Israel would make a formal presentation of the project to European representatives in Brussels in three weeks’ time.

Gas rigs in the Tamar field, off the coast of Israel, in June. (photo credit: Moshe Shai/FLASH90)

It would be cheaper for Europe to work on a supply route with Egypt, but this could expose the Europeans to instability because of the unpredictable political developments in Egypt, the report noted. Similarly, a pipeline from Israel to Turkey would be less expensive, but bilateral relations rule this out so long as Recep Tayyip Erdogan, a prominent critic of Israel, holds power there.

In September, Israel signed a deal to supply Jordan with $15 billion worth of natural gas from its Leviathan energy field over 15 years. The deal was Israel’s largest collaboration with Jordan to date, and will make Israel its chief supplier. Representatives of the gas companies involved, Delek Group Ltd. and Nobel Energy Inc., were in Jordan to sign the agreement.

Shalom hailed that deal as “a historic act that will strengthen the economic and diplomatic ties between Israel and Jordan.” Thursday’s report underlined that Israel hopes a natural gas partnership with Europe would also boost diplomatic relations with the EU, which are strained by major differences over policy on the Palestinians.

Israel decided last year to export 40 percent of the country’s offshore gas finds, and has since also signed a 20-year, $1.2 billion deal with a Palestinian firm. In June it signed a letter of intent to supply energy to an Egyptian facility as well.

Israel began pumping natural gas in March 2013 from the Tamar deposit — discovered in 2009 and located some 90 kilometers (56 miles) west of Haifa — which holds an estimated 8.5 trillion cubic feet of natural gas.

In addition to Tamar, in 2010 an even larger deposit, Leviathan — which boasts an estimated 16-18 trillion cubic feet of gas — was discovered 130 kilometers (81 miles) west of Haifa. It is expected to become operational in 2016.

Tamar gas group plans upgrade, including pipeline to Egypt | Reuters

Tamar gas group plans upgrade, including pipeline to Egypt

JERUSALEM Thu Nov 20, 2014 5:47am EST

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ANALYSIS & OPINION

'Leviathan gas reservoir to begin flowing by early 2018' | Jerusalem Post

'Leviathan gas reservoir to begin flowing by early 2018'

By SHARON UDASIN \

11/20/2014 19:28

One of basin's stakeholders, Delek Drilling, makes announcement in company's 3rd quarter financial report for 2014.

Israel's natural gas. (photo credit:MINISTRY OF NATIONAL INFRASTRUCTURES)

Israel's sizable Leviathan gas reservoir will likely begin flowing by the beginning of 2018, the basin's stakeholders announced on Wednesday night.

Delek Drilling, a member of the Leviathan partnership, made the announcement in the company's third quarter financial report for 2014. The 621-billion cubic meter reservoir, located about 130 km. west of Haifa, will eventually be used for both domestic and export purposes.

In addition to Delek Drilling – which owns 22.67 percent of the basin – another Delek Group subsidiary, Avner Oil Exploration, also holds 22.67% of the reservoir, while Houston-based Noble Energy owns 39.66% and Ratio Oil Exploration has a 15% stake.

The partners plan to develop Leviathan in two phases, with the first supply gas to the domestic market and the region, through the establishment of an FPSO. During the first stage, production capacity will be about 18 b.cu.m. per year.

Unlike the first phase, the second phase will mainly involve the export of gas, Delek Drilling reported. The project partners said are continuing to examine a range of possibilities for this stage, including the option of constructing a floating liquefied natural gas (FLNG) production facility.

According to preliminary assessments, the cost of the first phase of development alone is expected to be between $6 billion - $7b., the report said.

When the first phase of development is approved, the 2014-2015 budget will constitute approximately 20-30% of the total estimated budget, with the years 2016, 2017 and 2018 account for 30-40%, 30-40% and 5-10% respectively.

In addition to providing details about Leviathan's future development, the Delek Drilling report also offered some further information regarding the neighboring Tamar reservoir – and a potential deal to supply gas from the basin to a liquefaction facility in Egypt.

Israel’s 282 b.cu.m. Tamar gas reservoir, about 80 km. west of Haifa, began flowing to Israel’s domestic market in March 2013. Noble Energy holds 36 percent of this basin, while the Delek Group’s Delek Drilling and Avner Oil Exploration each own 15.625%, Isramco controls 28.75% and Dor Gas has 4%.

Among several regional letters of intent and deals discussed for both the Tamar and Leviathan reservoirs was a letter of intent signed between the Tamar partners and Spanish firm Union Fenosa Gas, in May. The relevant negotiations, which industry sources said was progressing as of early November, would involve a 15-year contract for the transfer of up to 71 b.cu.m. of gas to the company's liquefaction facility in Egypt.

In Wednesday night's Delek Drilling report, the partners indicated that assuming a binding agreement is reached, they would need to supply about 4.5 b.cu.m annually for that 15-year period. In order to do so, the partners would need to expand their processing system capacity up to 20.4 b.cu.m. annually, with the domestic supply capacity at 16 b.cu.m.

In order to expand the production capacity, the partners said they are planning the construction of up to three additional production wells, and an additional supply pipe from Tamar reservoir to the Tamar rig, as well as an upgrade of the Tamar and Mari-B platforms. A pipeline from the Tamar platform to the Union Fenosa facilities would also be constructed, with the Tamar partners and the Spanish firm jointly bearing the costs, the report said.

Assuming all agreements are signed as planned, gas should start to flow to the Union Fenosa facility by 2017, the report added. Costs associated with the infrastructural expansions would likely amount to $1.5b.-2b., the partners said.

Link to source: http://www.jpost.com/Israel-News/New-Tech/Leviathan-gas-reservoir-to-begin-flowing-by-early-2018-382419

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Thursday, November 20, 2014