Eastern Mediterranean EEZ

Two Israeli Companies See Potential for a new Major Offshore Gas Field offshore Gaza/ Israel

An Israeli exploration group led by the Isramco Negev and Modiin Energy companies, announced on Sunday that it had found signs of a massive natural gas reserve off Israel’s Mediterranean shore, comparable in size to the Tamar field.

An Israeli exploration group reported yesterday that it had discovered what could be the largest natural gas field off Israel’s Mediterranean coast since Leviathan’s potential was first revealed just over five years ago.

The group, led by Isramco Negev and Modiin Energy, said a geological report showed there could be 8.9 trillion cubic feet of natural gas at the Daniel East and Daniel West, close to Gaza’s waters.

The size of the undersea reserves, according to the report by Netherland, Sewell & Associates Inc., would make them the most significant Israeli discovery since the massive Leviathan field, the country’s largest, Modiin said in an e-mailed statement.

The geological report prepared by the Texas firm Netherland, Swewell & Associates said its best estimate for gas being found at the Og structure was between 38% and 43%, while at the other structures at the site it was between 24% and 57%. By comparison, the best estimate odds for Tamar were first put at 35% and at Leviathan at 50%.
The Daniel East and Daniel West sites are in deep water roughly 100 kilometers (60 miles) off the coast. Aside from Isramco, Israel’s Modiin has a 15% stake with an option for an additional 10% to 15%, while ATP Oil &Gas and AGT have about 5% each.

Natural gas discoveries off Israel’s coast include the 10 TCF Tamar field and Leviathan, almost twice the size, which brought the nation closer to energy independence and to becoming an energy exporter. If gas is found at the Daniel licenses, it would help Israel become a regional energy hub and generate billions of dollars in revenues for the state,according to Israeli analysts as this has been reported by Reuters.

Israeli Energy Minister Yuval Steinitz has said experts estimate there are between 10,000 and 15,000 billion cubic metres (bcm) of gas in the east Mediterranean basin that includes Israel, Egypt and Cyprus  and enough to supply domestic needs as well as Europe.

Isramco, which already has a stake in a second gas field of a similar size, Tamar, was trading up 7.2 percent.

Isramco CEO Eran Saar sought to cool excess enthusiasm and put matters in their proper proportion:

“The findings are encouraging, and bring new hope to the oil and gas exploration sector in Israel, but we should not go overboard,” Saar said. “In my humble opinion, there is no drama here for the gas industry in Israel. This is not a discovery; it is only a report of potential resources, and there is no assurance at this stage that anything will come of it. I also emphasize that it involves 10 different blocs in the area of two Daniel licenses, each of which requires separate exploration drilling with different risks and chances. The road to a discovery, if any occurs, is still a long one.”

The Israeli Haaretz reports that as Global energy prices have fallen so sharply – and a day before sanctions on Iran were rescinded, clearing the way for supply to grow further – that analysts were far from certain that it would be commercially viable to extract the gas.

For The Times of Israel, the deal paved the way for a consortium comprising Noble Energy and the Delek Group to begin work on extracting gas from the massive Leviathan field, which is thought to contain some 22 trillion cubic feet of gas, and is expected to transform the country into a regional energy powerhouse.

For the history, the Israeli government has been under pressure from regulators, lawmakers and the public to open the sector to competition. The new field, if confirmed, will do that.

Until now the sector has been dominated by a partnership of Noble Energy and Delek Group, which controls both Tamar and the much larger Leviathan fields.

The report “is based on data from seismic surveys only and not actual drilling results,” according to a statement from an umbrella organization representing several groups of activists.

Sources: Haaretz, The Times of Israel, Reuters, Bloomberg, Jerusalem Post, Globes of Israel.