Pinnacles gas starts flowing today

Delek and Noble Energy's Pinnacles well is due to produce 150 million cubic feet of natural gas a day and help reduce electricity prices.

Delek Group Ltd. (TASE: DLEKG) and Noble Energy Inc. (NYSE: NBL) will today begin the natural gas flow from the Yam Tethys' Mari B satellite field, Pinnacles, after bringing forward the field's development timetable. The Pinnacles well, located three kilometers from the Mari B well, is due to produce 150 million cubic feet of gas a day.

The Pinnacles field is one of Yam Tethys's two satellite fields, which are being developed as stop-gap measures, due to the depletion of the Mari B well, until the Tamar gas field, also owned by Delek and Noble Energy, together with Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS) comes on line next year.

The Pinnacles field will save Israel NIS 650 million this summer alone. The natural gas will provide environmental benefits through improved air quality and carbon dioxide emissions reduced by over 250,000 metric tons over the summer months. The field cost $105 million to develop.

Producers will receive $5-6 per million BTU for this gas, and because the gas will replace fuel oil for electricity generation, fuel cost savings to Israel will be about $13 per million BTU. Project schedule was another Pinnacles challenge; each day of delay cost Israel NIS 7 million and three million kilograms of carbon dioxide emissions. The Pinnacles was among the fastest development projects in the industry, taking only ten months from approval to subsea installation.

Noble Energy owns 47.1% of the Pinnacles field, and Delek Group owns 52.9%, through Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L).

Noble Energy Mediterranean VP Lawson Freeman said, "We are excited to bring the Pinnacles well on line. With time of the essence, Noble was able to utilize rigs from our Mediterranean drilling program and deploy subsea equipment from our other global projects. We are also pushing hard to accelerate the Noa development in the same way."

Delek Group's share price rose 0.6% in early trading to NIS 630, giving a market cap of NIS 7.1 billion, Avner's share price rose 1.5% to NIS 2.22, giving a market cap of NIS 7.3 billion, and Delek Drilling's share price rose 1.3% to NIS 12.34, giving a market cap of NIS 6.7 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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