USGS report spurs Noble, IPC to step up gas developments off Israel

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 4 -- Noble Energy Inc., spurred by a recent US Geological Survey report concerning oil and natural gas reserves off Israel, has contracted the Pride North America rig from Pride International for one firm well and seven optional wells from March-April 2011.

The contract, reported to be at a day rate of $275,000, follows Noble’s earlier agreement with Transocean for the Sedco Express rig to begin work off Israel from September until December at a day rate of $530,000.

Noble Energy’s efforts follow the release in April of a report by the USGS which estimated a mean of 1.7 billion bbl of recoverable oil and a mean of 122 tcf of recoverable gas in the Levant basin.

According to analyst BMI, “The report has set off a flurry of exploration interest in Israel, leading the country to issue four new exploration licenses in the summer of 2010 and to begin considering export options.”

Hardly had the ink dried on the USGS report than Noble updated its progress on the Tamar project, including securing a large portion of the services and supplies required for development, as well as furthering the discussions with local and federal authorities to finalize the onshore receiving terminal location.

“The Tamar project remains on schedule for sanction in 2010 and first production in 2012,” Noble said in June, adding that gross recoverable resources at Tamar have been increased by 33% to 8.4 tcf of gross natural gas as a result of updated reservoir studies.

Noble also announced the Leviathan prospect as its next planned exploration target in the region, to spud in this year’s fourth quarter.

Noble noted that Leviathan, off Israel in the Rachel and Amit licenses, has gross unrisked mean resources of 16 tcf of gas and “a geologic chance of success of 50%.” The firm estimated the gross unrisked resource potential on its Eastern Mediterranean acreage to be in excess of 30 tcf.

"This quantity of gas already will not be targeted for use in Israel,” said Zvi Greenfield, chief executive officer of Delek Drilling LP, Noble’s partner in the Tamar, Dalit, and Leviathan fields. “Not only will we not have to import gas, we'll turn into exporters, provided that there is a discovery.”

IPC seeking partners
Meanwhile, also eyeing the USGS report, Israel Petroleum Co. said its subsidiary IPC Oil & Gas (Israel) LP is seeking interested parties to participate in its interest in the offshore Sara and Myra licenses, either through a farmout, option, partial sale of interest, assignment, or debt financing.

In assessing the value of the acreage, IPC cited the USGS report, as well as one by Calgary-based consultant Chapman Petroleum Engineering Ltd., which estimated the unrisked net present value of IPC's 13.609% interest in the Sara and Myra licenses at between $677 million and $1.432 billion.

The Sara and Myra licenses cover about 310 sq miles and 25 miles off Israel in the Levant basin near the recent 8.4-tcf Tamar 1, Tamar 2, and the Dalit gas discoveries by Noble.

IPC said seismic data for Sara and Mira has been shot, acquired, and processed. The 3D seismic data in respect of the Sara and Myra licenses has been submitted to Israel’s Ministry of National Infrastructure (MNI).

“The first phase of the interpretation of the results of the 3D seismic data is expected to be completed and a report submitted to the MNI the first week of August, as per the agreed work program,” IPC said.

“Determination of a drilling prospect on each license and engineering for those prospects is expected by Dec. 31, 2010,” IPC said, adding that a contract with a drilling contractor is expected Mar. 31, 2011, followed by an expected spud date in third-quarter 2011.

Ownership of the 347/Myra and 348/Sara Licenses is held by a group comprised of IPC Oil & Gas (Israel) 13.609%, Emanuelle Energy Ltd. 24.161%, Emanuelle Energy Oil & Gas LP 19.161%, Modiin Energy LP 19.282%, and four other entities.

Israel Petroleum Co. is owned by Bontan Oil & Gas Corp. (Bontan), a subsidiary of the publicly traded Canadian company Bontan Corp. Inc., and the privately held Colorado-based International Three Crown Petroleum LLC.

Bontan holds 76.79% interest and International Three Crown Petroleum LLC holds the remaining 23.21%. IPC is managed and operated by H. Howard Cooper of International Three Crown Petroleum LLC.

Contact Eric Watkins at hippalus@yahoo.com.



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