Natural gas supply from the Tamar field to Israel could be at risk if additional production drilling to the prospect is not carried out in the next two years, according to a professional opinion recently submitted to the Ministry of Energy and Water Resources. The opinion was prepared by the Dutch energy development consultancy company SGS Horizon B.V.
According to Tamar's current development plan, natural gas will be produced from just five production wells and within seven years it is planned to add more wells. In addition, the field will be developed using the Tieback production method for the furthest distances known today worldwide. The gas will be pumped up from wells 1,450 meters underwater to platforms 180 kilometers from the field.
The investigation conducted by SGS found that there is a little likelihood that the gas pressure from the Tamar field will be enough to get by without additional wells in the coming years. The significance of the findings is that it brings forward tens of millions of dollars in development costs for the field. Furthermore, implementing more drillings raises the risk that water will seep into the gas field.
Tamar operator Noble Energy Inc. (NYSE: NBL) has rejected the findings of the SGS report. At a meeting last week at the Ministry of Energy and Water Resources, Noble Energy's staff claimed that SGS had not taken into account the latest data, which had been gleaned from the development procedures for the field. At the end of the meeting it was agreed to conduct an additional examination.
Noble Energy said, "We believe in our models and we are in close contact with the Petroleum Supervisor and SGS in order to look over their models and our models and bridge the gaps between them."
Sources at the Tamar partners said that bringing forward drilling would help the Tamar partners from the tax point of view as set by the Sheshinski Law. The law recognizes 260% of development costs during the first four years from the start of production.
The Tamar partners are Noble Energy (36%), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) (28.75%), Delek Group Ltd. (TASE: DLEKG) units Delek Drilling Limited Partnership (TASE: DEDR.L) and Avner (15.625% each) and Alon Natural Gas Exploration Ltd. (TASE: ALGS) (4%).
Published by Globes [online], Israel business news - www.globes-online.com - on December 26, 2012
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