Tamar gas field

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Tamar gas field
Tamar gas field is located in Israel
Tamar gas field
Location of Tamar gas field offshore Israel
Country Israel
Location Levant basin
Eastern Mediterranean Sea
Block Matan licence
Offshore/onshore offshore
Coordinates 33°04′42″N 33°57′05″E / 33.07833°N 33.95139°E / 33.07833; 33.95139Coordinates: 33°04′42″N 33°57′05″E / 33.07833°N 33.95139°E / 33.07833; 33.95139
Operator Noble Energy
Partners Noble Energy (36%)
Isramco Negev 2 LLP (28.75%)
Delek Drilling (15.625%)
Avner Oil Exploration (15.625%)
Dor Gas Exploration (4%)
Service contractors Aker Solutions
Field history
Discovery January 2009
Start of production 30 March 2013[1]
Production
Current production of gas 985×10^6 cu ft/d (27.9×10^6 m3/d)
Year of current production of gas 2013
Estimated gas in place 307×10^9 m3 (10.8×10^12 cu ft)
Producing formations Tamar sands

The Tamar gas field is a natural gas field in the Mediterranean Sea off the coast of Israel. The field is located in Israel's exclusive economic zone, roughly 80 kilometres (50 mi) west of Haifa in waters 1,700 metres (5,600 ft) deep. While there have been small oil and gas discoveries in Israel over the decades, Tamar was the first large-scale hydrocarbon resource discovered in the country. It was also the first gas discovery made in geological layers dating back to the OligoMiocene era in the up-until-then little-explored Levant basin of the Eastern Mediterranean. Since Tamar's discovery in 2009, large gas discoveries have been made in other analogous geological formations of the same age in the region. Since Tamar was the first such discovery, these gas containing formations have become collectively known as Tamar sands.

History[edit]

Known oil and gas fields in the Levant Basin (US EIA)

In 1999, Israel's Oil Commissioner granted BG Group preliminary exploratory permits to deep-sea blocks that included the Tamar field. In December 2000, BG received an exploratory license, in a partnership that included three Israeli industrial companies, Mashav, Dror Chemicals, and Israel Petrochemical Enterprises.[2] In May, 2001, Mashav left the partnership and BG brought in STX, Isramco, Clal Industries, and Granit-Sonol, the latter two leaving the partnership in 2004.[3]

In December 2001, BG completed 3D seismic studies that indicated the potential of the Tamar field and of the adjoining Dalit field. BG recommended drilling an exploratory well at an estimated cost of $40 million.[4]

In May 2002, the BG license was extended by the Oil Commissioner, on the condition that drilling begin no later than September 2003. In February 2003, the Commissioner extended the deadline to December 2004, and in December 2004 a further extension was given to June 2005.[5] During this period, BG conducted negotiations for selling gas to the Israel Electric Company.[6]

In April 2005, BG announced that it was abandoning its stake.[7] According to some reports, BG quit after being unable to conclude an agreement to supply gas to the Israel Electric Company.[8] (Israel in mid-2005 reached an agreement to receive gas from Egypt for $2.75/mmbtu, a price that BG stated it was not willing to match.[9]) In May 2005, the Oil Commissioner extended the license to December 2006 and allowed the remaining partners, STX, Isramco, Dor Exploration, and Dor Chemicals to bring in the Delek-owned partnerships, Avner and Delek Drilling, on the condition that a contract for drilling be concluded by June 2006. (According to one source, Avner bought its stake from BG for one dollar[10]).

Noble Energy joined as operator in 2006.[11] In 2006, the license was extended to December 31, 2008, despite the failure to begin drilling, and despite the statutory seven-year limit on oil licenses set by Israel's Oil Law. Isramco reported in 2006 that exploratory drilling was expected to cost $69 million.[12]

Drilling of Tamar 1 began in November 2008. At the time, seismic studies indicated that there was a 35% chance that the formation contained gas.The studies further indicated that if there was gas, the median estimate for the producible quantity was 107 BCM.[13]

Tamar 1 was drilled to a depth of 4,900 metres (16,100 ft). The partners announced the discovery on January 17, 2009.[14][15] On July 7, 2009, the partners announced a second successful appraisal drilling at Tamar 2, increasing the estimated reserves of the field by 26%.[16] In mid-2011, four more appraisal wells were drilled, with additional gas found at Tamar 3.[17] In September 2011, Noble began production development.[18][19]

The field is considered to have proven reserves of 223 billion cubic metres (7.9 trillion cubic feet) of natural gas and is estimated to contain an additional 84 BCM of probable reserves and 49 BCM of possible reserves.[15][20][21] At the time of discovery, the field was the largest find of gas or oil in the Levant basin of the Eastern Mediterranean Sea and the largest discovery by Noble Energy. Production began in April, 2013.

In September 2010, Noble announced that development of the Tamar field was beginning at an expected cost of $3 billion.[22] In March 2012 the Tamar partners signed a 15-year, US$14 billion deal with the Israel Electric Corporation to supply it with 42 billion cubic meters (BCM) of natural gas, with an option to increase the gas purchases up to $23 billion. By March 2012, the consortium developing Tamar had signed deals worth up to a total of $32 billion with six Israeli companies, committing up to 133BCM.[23][24] According to a study commissioned by the government, the prices set were significantly higher than the price that would be demanded under comparable circumstances elsewhere.[25]

Pipeline controversy[edit]

On June 14, 2009, Shaul Tzemach, Director General of Israel's Energy and Water Resources Ministry, announced that the Ministry would rely on an analysis to be prepared by Noble Energy to determine how and where pipelines from Tamar would connect to the national gas infrastructure. On September 22, Noble presented the results of its analysis to the national building planning commission. The plan called for connecting Tamar at a site on the Israeli coast below the Carmel mountain range, either adjacent to Moshav Ma'ayan Tzvi or 5 km farther north at Moshav Dor.[26] The main issue of public controversy was not the actual point of connection (the national gas infrastructure already included an ocean pipeline connected at Dor), but rather the location of a plant to clean and process the gas from Tamar. Communities in the Carmel region brought a petition to Israel's High Court in March 2010, demanding that the Ministry explain why alternative sites had not been considered. In July 2010, the High Court issued an injunction that the Ministry provide such an explanation. However, by that time Noble had already announced that it was planning to connect Tamar to the existing processing facilities offshore of Ashdod. Following the High Court injunction, Uzi Landau, Minister of Energy and Water Resources, officially announced that the connection would be at Ashdod.[27]

Sheshinski Commission[edit]

Through 2009, Egypt increased the price of gas being sold to the Israel Electric Company,[28] and the Israeli joint venture of Noble and Delek Energy, producing from the Yam Tethys field, followed suit.[29] Higher prices enabled Yam Tethys profits for the third quarter of 2009 to reach new records, prompting several Knesset members to consider the need for revising the country's tax and royalty regime. On February 23, 2010, the Knesset Economics Committee held a session to discuss options for increasing taxes and royalties.[30] During the session, committee member Carmel Shama stated that the government revenue from oil sales, as set in the Petroleum Law (1952), was relevant in an era when exploration risks were high and profits low, which was no longer the case in 2009. Gideon Tadmor, chairman of Delek Energy, claimed that changing the tax and royalty regime would freeze exploration and development.

On April 12, 2010, in response to the Knesset concerns, Israel's Treasury Minister Yuval Steinitz established a committee to consider the country's fiscal policy regarding its gas and oil resources.[31] Eytan Sheshinski was appointed to head the committee. By the time the committee presented its findings in January, 2011, the Leviathan gas field had also been discovered, increasing the significance of revising the tax and royalty regime.

The main recommendations of the committee were incorporated into the Petroleum Profit Taxation Law, 5771-2011, which passed in March 2011. The recommendations included: 1) eliminating the tax allowance for "depreciation" of a field's value as its gas and oil was produced; 2) leaving the royalty rate unchanged at 12.5%; and 3) imposing a windfall profits levy, which would reach 50% of a producer's profits once the producer had recouped a certain percentage of his exploration and development costs. The final version of the law set the "recoup" percentage at 280% for the Tamar field and 200% for the Leviathan field and any field that would be developed later.

The owners of the Tamar and Leviathan licenses lobbied against the law, claiming that it represented a breach of contract and would scare off future investors in Israel; Uzi Landau, Minister of Energy, argued against applying the law to the Tamar field in particular, saying it would delay the field's development.[32] Nevertheless, when Tamar production began on schedule in April 2013, both Landau and Noble CEO Charlie Davidson claimed that the project had been completed in record time.[33]

Monopoly Position of Tamar Partners[edit]

In January 2011, as the Knesset was debating the Profit Taxation Law, the Egyptian Revolution of 2011 began. Within weeks, the Egyptian-Israeli gas pipeline had been sabotaged, and in April the former Egyptian petroleum minister had been arrested for alleged corruption related to the sale of gas to Israel.[34] The original pricing policy of gas from Egypt to Israel had been an annex of the Egypt-Israel Peace Treaty, so at least partially this allegation was political in nature - the post-revolution government was less-favourably disposed to that Treaty. The cessation of gas from Egypt meant that the Tamar project would come on-line as the sole gas supplier to Israel. By the end of 2011, the Tamar group had raised the price of gas in its contract with IEC, effectively restoring to the partners most of the profit that they had expected before the passage of the Profit Taxation Law.[35]

In May 2011, Energy Minister Uzi Landau instructed the pricing commission of the ministry to evaluate whether the price of gas should be regulated. In May, 2012, the commission published its conclusion that gas should be a regulated commodity and that the commission would monitor contracts to determine whether prices were fair. A study sponsored by the commission showed that the Tamar partners annual after-tax returns could be expected to be 54% of assets, as opposed to the 19% annual return projected by the Sheshinski Committee.[36] In February 2014, Knesset Member Shelly Yachimovich issued an open letter to the government, berating it for not setting fair gas prices that could reduce the country's cost of living.[37]

Langotsky claims[edit]

An early promoter of the project was Israeli oil geologist Joseph Langotsky, who named the Tamar and Dalit fields after his daughter and granddaughter. Langotsky sued his former partner, mining tycoon Benny Steinmetz. Langotsky and Steinmetz were the owners of a limited partnership, STX, which had a 5% stake in the exploration rights. Langotsky claimed that Steinmetz dropped out of the partnership two months before drilling began, causing Langotsky to lose his rights to the fields.[38] After a long legal battle, in July 2013 the courts ruled in Langotsky's favor, ordering Steinmetz to pay him the sum of NIS 50 million (appx. US$14 million) in compensation.[39]

Maritime border with Lebanon[edit]

Following the discovery in 2009, some Lebanese leaders, particularly officials of the Lebanese Shi'a Islamist group Hizbullah made statements threatening Israel against developing the sites, and Israeli officials made counter threats against Lebanese intervention.[40] In August 2010, the issue was largely resolved when Lebanon submitted to the United Nations its official view regarding the maritime border, indicating that it considered the Tamar and Leviathan gas fields to be outside Lebanese territory (though it indicated other prospective fields in the region may be within Lebanese territory). The US expressed support for the Lebanon proposal.[41]

Production[edit]

Production is carried out by five wells connected by a 93 mile long subsea double pipe tie-back to a gas processing platform located offshore Ashkelon. First gas delivery took place on 31-March-2013 after four years of development work. The total initial delivery capacity is 985 MMCF per day or 10 BCM annually. Current contracts completely utilize this entire capacity. Therefore, an upgrade of the supply infrastructure from the processing rig to the onshore reception station in Ashdod is planned by 2016. In the first phase, capacity will be increased to approximately 1,200 MMCF/day and later to approximately 1,500 MMCF/day, with the latter upgrade possibly including the usage of the now-depleted Mari-B field, located nearby Tamar's processing platform, as a gas storage reservoir.[citation needed]

Export plans[edit]

Delek Energy held talks on exporting natural gas from Tamar to Cyprus and to South Korea. Shipments to Asia would be by Liquified Natural Gas, for which a floating liquefied natural gas terminal would be built by Daewoo Shipbuilding & Marine Engineering, with Front-end engineering of the terminal to be done by Höegh LNG.[42][43] In March, 2013, Israeli Minister of Energy, Uzi Landau issued a notice to the Tamar partners not to proceed with signing export contracts until it is granted permission to do so by the Israeli government.[44]

See also[edit]

References[edit]

  1. ^ Solomon, Shoshanna; Ackerman, Gwen (30 March 2013). "Israel Begins Gas Production at Tamar Field in Boost to Economy". Bloomberg. Retrieved 30 March 2013. 
  2. ^ Israel Government Reshumot, #4953.
  3. ^ Israel Government Reshumot, #4989 and #5359.
  4. ^ BG Group to invest $40 million on drilling off Haifa Coast (Hebrew)
  5. ^ Isramco Negev 2 Limited Partnership FINANCIAL STATEMENTS AS AT DECEMBER 31, 2004, 10-K,· EX-99.1
  6. ^ IEC confirms negotiating natural gas contract with Isramco, BG.
  7. ^ Isramco Negev 2 Limited Partnership FINANCIAL STATEMENTS AS AT DECEMBER 31, 2005, 10-K,· EX-99.1
  8. ^ March 2005, BG announced that it was quitting the Gal natural gas partnership.
  9. ^ BG says it will not return to Israel (Hebrew).
  10. ^ "Tamar-Mor". globes. 
  11. ^ Isramco Negev 2 Limited Partnership FINANCIAL STATEMENTS AS AT DECEMBER 31, 2006, 10-K,· EX-99.1
  12. ^ Isramco Negev 2 Limited Partnership FINANCIAL STATEMENTS AS AT DECEMBER 31, 2006, 10-K,· EX-99.1
  13. ^ "CONCLUSIONS OF THE COMMITTEE FOR THE EXAMINATION OF THE FISCAL POLICY WITH RESPECT TO OIL AND GAS RESOURCES IN ISRAEL". p. 141. Retrieved 30 Sep 2014. 
  14. ^ Delek Energy web site.
  15. ^ a b Haifa Gas Discovery Bumped to 5 Trillion Cubic Feet Oil In Israel, 10 February 2009
  16. ^ Noble Energy Successfully Appraises Tamar Offshore Israel
  17. ^ Tamar Field--Offshore Technology
  18. ^ A Noble boast offshore Israel
  19. ^ Israel began drilling in the Tamar natural gas fields despite the presence of Turkish warships
  20. ^ "Tamar Reserves Update". Isramco Negev 2, LP. 1 February 2014. p. 2. Retrieved 2 February 2014. 
  21. ^ "Tamar offshore field promises even more gas than expected". Haaretz. 2009-08-12. Retrieved 2009-08-12. 
  22. ^ Tamar Development Begins.
  23. ^ Katzowitz, Guy (24 March 2012). "Daewoo to Liquify Gas from Tamar". Globes (in Hebrew). Retrieved 24 March 2012. 
  24. ^ Noyman, Nadav (23 March 2012). "Isramco: Tamar Gas Potential Upped to 9.71TCF". Globes (in Hebrew). Retrieved 24 March 2012. 
  25. ^ BarEli, Avi. "Consultants: IEC paying too much in gas deal with Tamar partnership". 
  26. ^ Tamar project plans
  27. ^ Landau: Tamar to Ashdod
  28. ^ Al-Ahram "Gas Prices Revisted" 9 - 15 October 2008
  29. ^ "If Egypt renegotiates contracts with IEC, we won't stand by idly"
  30. ^ Protocol 194, Knesset Economics Committee
  31. ^ Sheshinski Committee Report January 2011
  32. ^ "Sheshinski eases proposed tax for gas exploration firms" Jerusalem Post, Jan 4, 2011.
  33. ^ [[www.tashtiot.co.il/2013/03/19/גז-טבעי-397/ [Hebrew] "Natural Gas is good news for Israel's periphery" March 19, 2013.]]
  34. ^ Egyptian gas to Israel uncertain
  35. ^ IEC overpays for gas.
  36. ^ "No Price Regulation planned" (Hebrew)
  37. ^ Yachimovich to government on gas price regulations
  38. ^ Oil in Israel
  39. ^ Barkat, Amiram; Ma'anit, Chen (3 July 2013). "Steinmetz to pay Langotsky NIS 50m compensation for Tamar". Globes. Retrieved 19 July 2013. 
  40. ^ http://www.ynetnews.com/articles/0,7340,L-3910329,00.html
  41. ^ Barak Ravid (2011-07-10). "U.S. backs Lebanon on maritime border dispute with Israel". Haaretz. Retrieved 2012-01-30. 
  42. ^ Baron, Lior (April 1, 2009). "Tamar partners in talks on exporting gas to Cyprus". Globes. Retrieved 14 June 2010. 
  43. ^ Barkat, Amiram (December 4, 2011). "Daewoo hires Hoegh to design Tamar floating gas terminal". Globes. Retrieved 4 December 2011. 
  44. ^ Yeshayahou, Kobi (March 12, 2013). "Energy minister warns Tamar partners not to sign export deals". Globes. Retrieved 21 March 2013.