Tamar production costs $1b higher than estimated

A British consultant's report says that the gas pressure at the Tamar well is one of the highest in the world.

The cost of producing gas from the Tamar field is $1 billion more than officially estimated by the partners in the field, according to a report by Petroleum Development Consultants Ltd. (PDC) for the Natural Gas Authority at the Ministry of National Infrastructures, a copy of which was obtained by "Globes".

The report's authors, leading global experts in the field, estimate the total cost of gas production and transporting it to consumers in Israel at $3.77 billion, compared with the $2.8 billion figure published by Tamar's Israeli partners in their notices to the Tel Aviv Stock Exchange (TASE).

The production cost could be even higher by $200-250 million, if it is decided not to build the onshore gas terminal at the Dor beach, but at the existing terminal at Ashdod or at an offshore terminal.

The report's authors said that the gas pressure at the Tamar well is one of the highest in the world. They believe that this fact will require construction of an offshore raft to reduce the gas pressure before its arrival onshore, in addition to the onshore gas pressure reduction facilities at the terminal at Dor, Hadera, or Ashdod. The authors said that construction of the offshore raft could delay gas production at Tamar until 2015.

Delek Group Ltd. (TASE: DLEKG) subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 15.625% of the Tamar gas prospect, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) owns 28.75%, Noble Energy Inc. (NYSE: NBL) owns 36%, and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd. owns 4%.

Published by Globes [online], Israel business news - www.globes-online.com - on May 23, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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