Noble Energy to develop LNG export plant

COO Dave Stover told "Upstream" that Noble Energy is examining potential sites in Israel and Cyprus.

Energy trade magazine "Upstream" quotes Noble Energy Inc. (NYSE: NBL) COO Dave Stover as saying that the company would solicit proposals from several liquefied natural gas (LNG) contractors to develop an LNG plant at multiple sites under consideration as part of the company's plans to develop its "significant eastern Mediterranean gas resources".

Noble Energy is a partner with Delek Group Ltd. (TASE: DLEKG) in Leviathan, Tamar, Dalit, and Noa gas fields. It also has a concession to Cyprus's Block 12, located near Leviathan.

"Upstream" said that the study work would focus on multiple, potential sites that could host an LNG export plant in the region, including Cyprus where Noble Energy plans to spud a deepwater wildcat later this year, chasing the same reservoir as found at Leviathan. "We're actually looking at a couple of different areas. We want to keep all options open at this point," said Stover.

"Upstream" adds that Israel was another possible location, but there would be strong local opposition to a new facility being constructed there. Cyprus has long been touted as the obvious site for an LNG export plant to handle Leviathan's gas. "Cyprus is still a potential opportunity for a hub for exporting," said Stover. The size of any plant will be influenced by the results of the exploratory well at Block 12, which will target the largest remaining prospect in Noble's eastern Mediterranean portfolio.

The Israeli government is not giving up on plans to build a LNG at Dor beach, north of Hadera and near the Tamar and Leviathan fields, even after local residents and environmental groups torpedoed the plan last year. One of the government's arguments is that the construction of an LNG plant would create 4,500 jobs.

A $5 billion LNG plant would enable Noble Energy and its Israeli partners to receive and export gas from the Tamar, Dalit, and Leviathan fields, and possibly from Block 12 too.

Results from the Block 12 exploratory well are due in early 2012. Noble Energy CEO Charles Davidson said that the results would help determine the size of the reservoir, and preliminary work on the LNG plant would outline what was feasible and whether the company would need to bring in industry partners. "I think at that point, you're at the stage where you can decide just what should be the structure for going forward, in terms of whether it's looking at upstream or mid-stream partners, or partners who have expertise in LNG operations or LNG marketing", he said. "I think all those options are open to us, but we need to know what the scale of the project is to start with."

Meanwhile, the Leviathan 3 exploratory well is being drilled and is due to hit its primary gas-bearing target strata next month. The well followed the Leviathan 2 well, which was stopped when water penetrated the borehole. The Leviathan 3 well was delayed by several weeks when sand penetrated the pressure valves, forcing Noble Energy to bring in space parts from the US.

The production tests from the Leviathan 1 well will determine whether gas production from Leviathan is commercially viable. If the answer is yes, then Leviathan will be officially declared as a natural gas discovery. After the production tests, the rig is due to drill to deeper oil-bearing strata at 5,800 to 7,200 meters.

"Upstream" added that the Tamar project is reportedly on target to begin gas deliveries in early 2013 to meet Israel's rapidly rising domestic demand. The Noa reserve will be exploited as a bridging gas supply gas to the Mari B well (Yam Tethys, jointly owned by Noble Energy and Delek), until Tamar come online. Noa's $200 million development is partly in response to disruptions in gas deliveries from Egypt.

Published by Globes [online], Israel business news - - on August 14, 2011

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

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