Gas export pipeline will be hard to protect


Former Noble Energy advisor Abraham Sofaer recommends the construction of floating LNG facilities.

The security threat to Israel's offshore natural gas facilities might justify the establishment of floating installations on ships, says Abraham Sofaer, a former advisor to Noble Energy Inc. (NYSE: NBL) during the Sheshinksi committee hearings.

In a presentation at the "Lloyd’s Conference in Tel Aviv: Specialist Solutions in the Face of Changing Risks", Sofaer said, "If distribution is limited to Israel, existing facilities may suffice. If exports are undertaken, the challenges increase, depending on which countries are involved and in what form exports are made. Since distribution and transportation infrastructure are the most vulnerable aspects of oil and gas production, additional infrastructure and transport requirements beyond Israel’s control would increase risks significantly."

Sofaer quotes a report, which said, "Although the terrorist attacks on the oil and gas sector are a relatively small proportion of terrorist attacks overall, the data show that a significant number of attacks have occurred over the period 1990-2005." He added that types of possible attacks include the full range of threats posed by war and terrorist activities: rockets, explosives, torpedoes, bombings, suicide attacks from the air or sea, communications hacking, kidnapping of personnel, and hostage taking.

Sofaer said that almost 70% of terrorist attacks on oil and gas infrastructures in 1999-2005 targeted energy pipelines and transport networks, and 15% target production facilities. The recent attacks against Egyptian natural gas pipelines in Sinai fit in with these statistics, as the attackers found the system's weak point - the miles of pipelines in the wilderness which the central government has trouble protecting.

Current options under consideration for exporting gas from Leviathan include construction of an undersea pipeline to Greece or Turkey, and construction of a liquefied natural gas (LNG) facility in Israel or Cyprus. Leviathan's partners prefer the Cypriot LNG option, partly because of the probable opposition to building a facility along Israel's coast, as happened with the proposal to build the Tamar gas terminal at Dor beach.

Floating LNG facilities are the latest word in gas transportation technology. Fuel giants, led by Royal Dutch Shell plc (NYSE: RDS.A; LSE: RDSN), are developing such facilities at a cost of billions of dollars. The first floating LNG facility is being built for the Prelude gas field 200 kilometers offshore from Western Australia in the Timor Sea. The $10 billion facility is due to come on line in 2017.

Sofaer said, "Options to reduce risk and maximize flexibility could include using a floating platform capable of processing gas into LNG. All security efforts would be concentrated at the drilling platform and FLNG facility, thereby reducing other, greater risks in natural gas production and transportation. Experts regard the risks of protecting vessels transporting LNG significantly lower than those of protecting pipelines and other stationary facilities."

He said, "Israel and its armed forces will play the major security role, through the use of naval and air resources, as well as commando units and divers.

Published by Globes [online], Israel business news - - on June 26, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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