Drilling at new Israel natgas site to start in Oct

Drilling at new Israel natgas site to start in Oct

Lebanon has said Israel may be encroaching on its waters.

August 29, 2010 5:01 by Reuters

A U.S.-Israeli exploration group said on Sunday it will begin drilling for natural gas at a new site off Israel’s Mediterranean coast in October and that there was a small possibility of reaching oil under the gas.

The main objective in drilling at the Leviathan prospect is to recover commercial amounts of natural gas.

Noble Energy, which leads the group and owns 40 percent of Leviathan, has said the well has gross unrisked mean resources of 16 trillion cubic feet of gas (453 billion cubic meters) and has a 50 percent geologic chance of success.

The consortium also includes Delek Drilling and Avner Oil Exploration, which hold 22.7 percent each, and Ratio Oil Exploration with another 15 percent.

Delek Drilling and Avner are units of conglomerate Delek Group.

The group said in a statement they will be drilling at a depth of 5,095 meters for natural gas.

It said that a secondary target would be to drill for oil at depths of 5,800 to 7,200 meters. The upper layer has gross unrisked mean resources of 3 billion barrels of oil but the probability of geological success is 17 percent.

The lower layer is estimated to have 1.2 billion barrels of oil but its probability of success is just 8 percent.

Israeli energy shares were up 6 to 9 percent.

The cost of the oil rig is $150 million, the group said.

It noted that drilling, which will take place some 135 km west of the northern port city of Haifa, will last for five months and will be the deepest ever in Israeli waters.

Another Noble and Delek-led group has already found commercial quantities of natural gas of 8.4 tcf at the Tamar site, some 90 km off the Haifa coast. That would be enough to supply Israel — which is looking for energy independence — with natural gas for about 20 years.

Israel also imports natural gas from Egypt.

The recent gas finds have triggered internal squabbles and tough talk from neighboring Lebanon.

Some Israeli politicians, led by Finance Minister Yuval Steinitz, are seeking to raise royalty payments from companies that find natural gas. A committee has been formed on the matter and is expected to make recommendations in the next few months.

Businessman have argued that raising royalties would harm Israeli investment. Steinitz and others believe Israel will be losing out on huge profits.

Lebanon has said Israel may be encroaching on its waters when drilling for natural gas but stopped short of accusing Israel of violating its territory. Earlier this month, Lebanon said it hoped to launch a licensing round for offshore gas exploration in early 2012.

(Reporting by Steven Scheer; Editing by David Cowell)