Leviathan Partners Plan to Up Output to 21bn m³/yr
The Israeli partners in the Leviathan partnership have released their development program for the gas field in a filing with the Tel Aviv stock exchange.
Delek Drilling and Avner – two Delek Group subsidiaries – and Isramco have announced a 21bn m3/year, $5-$6bn development program that will include drilling of eight wells, building a fixed platform to handle the gas off shore Israel and initially a 12bn m3/year connector from the platform to the Israeli shore.
This compares with 16bn m³/yr in the partners' original plan.
The filing comes just before the supreme court is expected to release its decision on the stability clause in the natural gas regulatory framework. And energy minister Yuval Steinitz is on a trip to the US to persuade energy companies to explore for new hydrocarbon resources.
According to Yediot Ahronot, a popular daily, he will present his hosts with a new survey, conducted by BeicipFranlab, a French consultancy, which claims that natural gas reservoirs offshore Israel contain 2100bn m3, more than double the current assessment of Israel's reserves – although the definitions of reserves might not be comparable.
There are still no signed contracts for this project but customers are expected to include Israeli power generation companies and industrial customers; the Jordanian national electric company Nepco and industrial customers in Egypt. A 15-year contract with Shell, which was negotiated during the last two year with BG, for about 8bn m3/year and has still to be signed, would bring the total of firm sales to 21bn m3/year.
According to the filing in the first phase 4 wells will be drilled and a platform with a capacity to handle 12bn m3/year will be built at a cost of $3.5bn-$4bn. In the second phase another 4 wells will be drilled and the platform capacity will be expanded by 9bn m3/year. Overall investment in those first two phases will be reduced by around $1bn to $5-6bn while the production volume is expected to rise from 16bn m3/year in the original development program to 21bn m3/year in the new one.
During 2016 Leviathan partners are expected to invest $300mn in the project before the FID by the end of the year. Production is expected to start by 2019.
A second phase of development, which has not submitted yet, is expected to be promoted when Israel and Turkey would resolve their 6-year diplomatic crisis. Contract with Turkey will demand either a new platform or expansion of the first platform. When that happens Leviathan annual production volume is expected to be increased to 30bn m3/year.
Ya'acov Zalel