Undecided policies key to gas exports from Israel, Cyprus

Several options remain open for export of natural gas from large deepwater discoveries offshore Israel and Cyprus as operators await important clarifications of policy.

Export schemes under discussion include a marine pipeline to Turkey, a pipeline to an onshore LNG plant in Cyprus, a pipeline to Greece via Cyprus, and floating LNG schemes, according to Amit Mor, chief executive officer of the Israeli consultancy Eco Energy and a former assistant to the minister of energy and infrastructure. Use of gas as a feedstock for exportable methanol or petrochemicals is another possibility.

Mor said a pipeline to Turkey, a project for which his consultancy has done work, can be built for $3 billion and “makes the most economic sense.” But geopolitical risks are high. Banks supporting the project would require guarantees from the Turkish government, he said.

In Israel, Amit said, local opposition to onshore projects influences decisions and makes improbable the construction of onshore liquefaction plants.

“I don’t think it’s viable,” Mor said in an interview with Oil & Gas Journal during a visit to Houston.

All export options await a decision by the Israeli government about how much gas to make available to foreign markets. Export policy will influence development by groups led by Noble Energy Corp. of giant Leviathan gas field, the nearby Aphrodite strike in Cypriot waters, and other discoveries in the area. From Leviathan, Noble plans to produce 750 MMcfd of gas for Israeli use and 850 MMcfd for export in the first phase of development (OGJ Online, Dec. 7 2012).

Allocation controversial

Allocation of Israeli gas reserves between exports and domestic use is controversial. A year ago, a committee chaired by Energy and Water Ministry Director General Shaul Tzemach recommended an export-domestic split of 50-50. After a round of public objection, a change in government, and a second Tzemach committee recommendation, the Israeli cabinet lowered the export share to 40%, including nearby sales to Jordan and the Palestinian Authority.

Concerns have arisen that exportable volumes much below half current reserves estimates might not support LNG investment. Soon after the cabinet the cabinet approved the lower export allocation, Woodside Petroleum of Australia, waiting to farm into the Leviathan development, showed interest in an LNG plant at Vassilikos, for which Noble Energy and partner Delek Drilling had entered a memorandum of understanding with the government of Cyprus. The government hopes to make Cyprus an energy hub based on Aphrodite and Leviathan gas.

Woodside earlier had agreed to buy a 9.66% Leviathan interest from Noble for consideration estimated to total $802 million. Addressing the Leviathan project in a recent presentation, Noble said Woodside would represent “a strategic partner with LNG expertise” and said finalization of the definitive agreement awaited export rule approvals.

That wait continues. Opponents challenged the second Tzechmach recommendation in court, arguing the decision should have been made by Israel’s parliament. A Sept. 17 hearing on the question in the High Court of Justice was postponed until Oct. 20.

The need for gas

Mor pointed out that concern for domestic gas supply comes naturally to a small country surrounded by adversaries and needing growing amounts of natural gas.

Noble estimates Israel’s compound gas-demand growth rate during 2012-17 at 15%/year. Until early in 2012, the country received 40% of the gas it needed—90% for electricity generation—from Egypt via a marine pipeline between El Arish and Ashkelon. When civil war in Egypt disabled the pipeline, power generators switched to fuel oil and diesel, and electricity prices jumped.

The start-up of deepwater Tamar gas field in April by Noble and partners began replacing the lost Egyptian supply and eased electricity prices. The field’s peak deliverability is about 1 bcfd.

Mor said Tamar illustrates two problems in Israel: the vulnerability of energy facilities and the effects of “not-in-my-back-yard” pressure. The field produces from five wells completed subsea in 1,700 m of water about 90 km off Israel’s northern coast.

“The whole nation is dependent on this one chain of supply of gas,” he said.

Opposition hampered its start-up. Connecting Tamar by pipeline to new treatment facilities near Haifa would have been logical, Mor said. But controversy precluded onshore construction where the pipeline distance would have been least. The project group instead laid 150 km of dual 16-in. pipelines between the field and a platform built near mature Mari-B gas field so Tamar gas could flow to existing onshore facilities at Ashdod.

Mor estimates the longer route added $1.5 billion to the cost of Tamar development and delayed start-up by a year.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected