A possible solution is emerging for the Tamar gas field partners to store natural gas at Yam Tethys's Mari B field. Sources inform ''Globes'' that the Ministry of National Infrastructures has decided to allow Noble Energy Inc. (NYSE: NBL), a partner in both gas fields, to test the feasibility of storing gas from Tamar in the largely depleted Mari B field.
If successful, the test will open the way for a granting a gas storage license, thereby removing the danger of a natural gas shortage. Noble Energy believes that converting Mari B into a gas storage facility will make it possible to meet Israel's natural gas demand in full in 2015-16.
Minister of National Infrastructures Silvan Shalom's aides attach great importance to guaranteeing a natural gas supply to factories and power stations which have not yet signed natural gas supply contracts with the Tamar partners -Noble Energy, Delek Group Ltd. (TASE: DLEKG), Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - or their gas marketers. In view of these considerations, the ministry is leaning toward relaxing its demand for the construction of a natural gas pipeline from the Tamar production platform to Ashkelon.
Negotiations on this point have been stuck for over a year, after Natural Gas Authority director Shuki Stern demanded that the Tamar partners build the pipeline to Ashkelon as a condition for receiving a gas storage license for Mari B. Noble Energy opposes the construction of another pipeline, which would cost $1.2 billion, on the grounds that such an expensive engineering solution is not necessary to boost Tamar's gas production.
The current 22-kilometer pipeline from the Tamar production platform to the terminal at Ashdod has a capacity of one billion cubic feet (BCF) a day, or 10 billion cubic meters (BCM) a year. The compressors that Noble Energy is installing at the Ashdod terminal will boost the pipeline's capacity 20% to 1.2 BCF a day from 2016. Even this capacity will result in a gas shortfall of 800 peak hours during summer, from 2015.
This problem has been exacerbated by the delay in bringing the Leviathan gas field, also controlled by Noble Energy and Delek, into production, because of delays in approving construction of the onshore gas terminal in central Israel. The uncertainty has caused companies to freeze plans to convert factories to natural gas, despite the substantial savings from its use. Shalom recently cited the case of Shaniv Paper Industry Ltd. (TASE: SHAN), which saves NIS 15 million a year from the conversion of its Ofakim plant from industrial oil to natural gas.
Converting the Mari B field into a gas storage facility will make it possible to boost the pipeline's capacity to 1.5 BCF a day, or three BCM a year.
The Ministry of National Infrastructures also wants the second pipeline for reasons unrelated to Tamar, including the creation of redundancy in the gas supply system in the event of a breakdown in the pipeline to the Ashdod terminal, and the construction of infrastructure for future use by companies seeking to develop gas fields offshore from Ashkelon, such as Shimshon.
Published by Globes [online], Israel business news - www.globes-online.com - on January 9, 2014
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