“The deepest oil well drilled in Israel’s 65-year history may be the most important,” says “Bloomberg” in a report on the new Leviathan well, which will target oil-bearing strata, 6,500 meters below the Mediterranean seabed. The strata may have as much as 1.5 billion barrels of crude oil, equal to about 15 years of Israeli demand. The oil-bearing strata are beneath the gas-bearing strata, where 17 trillion cubic meters of gas has been discovered.
“While explorers have found enough natural gas in the past five years to turn Israel into an exporter, a major oil discovery would break new ground. The Middle East’s third-largest economy spends about $10 billion a year importing 98% of the oil it uses. Domestic production would increase tax revenue, boost the country’s balance of payments and reduce vulnerability to supply disruptions,” notes “Bloomberg”.
“The economic impact on Israel would be far greater than that of natural gas,” Delphi Global Analysis Group director David Wurmser told “Bloomberg”. “Finding the oil would mean big money for the Israeli companies and the government.”
Leviathan is owned by Noble Energy Inc. , the well operator, Delek Group Ltd. , and Ratio Oil Exploration (1992) LP . Australia’s Woodside Petroleum Ltd. is due to acquire 30% of Leviathan. Noble Energy will begin drilling the well to the oil strata in late 2013, when a new drilling ship is delivered from South Korea. The company rates its chances of success at 25%. “We believe there is potential for significant oil resources at this prospect and the basin,” said Noble Energy SVP exploration and business innovation Susan Cunningham.
“Bloomberg” says, “The key to finding Israel’s offshore energy deposits has been technology – developed in places like the US Gulf of Mexico and Brazil – to drill in deeper waters and further under the seabed. The Leviathan oil well will be drilled in 1,600 meters of water and probe a further 6,500 through the rocks below, according to company filings.”
“Thanks to advances in drilling technology, Israeli companies and their international partners can now reach greater depths that will enable oil exploration at lower geological levels than ever before,” Delek Drilling LP CEO Yossi Abu told “Bloomberg”.
“Bloomberg” adds that the new well will probably cost more than the $120 million spent making the original Leviathan discovery. It cites a report by IBI Investment House analyst Guil Bashan, who says that the greater profits from pumping oil over gas make the expense worthwhile, because while gas requires expensive pipelines or export terminals, oil can be easily put in tankers and shipped wherever it’s wanted.
Published by Globes [online], Israel business news – www.globes-online.com – on July 18, 2013