Ishai gas reserves much smaller than estimated

New tests will likely find much less gas than previously estimated at the field owned by Teddy Sagi and Beny Steinmetz and others.

Oil and gas exploration industry sources inform ''Globes'' that the amount of natural gas at the Ishai license, may be substantially less than first estimated. The sources, who saw the preliminary figures from the exploratory well, said signs of gas were found, and that they were waiting for the geologic tests (electric logs) to be completed to determine the thickness of the gas-bearing strata in order to accurately estimate the amount of gas present.

There is a strong chance that the tests will find much less gas than previously estimated. Other industry sources said that if the gas estimates are reduced, it would probably not be worthwhile to develop the reservoir, which is at a depth of 6,000 meters.

The Aphrodite 2 well, which cost $103 million, was mainly financed by the Ishai licensees: Benny Steinmetz's Nammax Oil and Gas Ltd. (which owns 42.5%), two companies owned by Teddy Sagi, Frendum Investments Ltd. and Daden Investment Ltd. (33.5%, and 9%, respectively), Israel Opportunity Energy Resources LP (TASE: ISOP.L) (10%), and well operator AGR Petroleum Services Holdings AS of Norway (5%).

In June, Ryder Scott Company LP estimated the potential gas reserves at Ishai at 3.7 trillion cubic feet (TCF), which would make it Israel's third largest gas discovery after Leviathan and Tamar.

The Ishai well was considered a relatively low-risk well, with a geological chance of success of 68-77%, because the prospect is a natural continuation of the Aphrodite reservoir in Cyprus's Block 12 nearby where an estimated 7 TCF of gas was discovered last year.

Drilling of the Aphrodite 2 well by Noble Corporation's (NYSE: NB) Homer Ferrington rig, began on November 2, and lasted 87 days.

Ishai is the first of the five Pelagic licenses to be drilled. The five Pelagic licenses - Aditya, Ishai, Lela, Yahav, and Yoad - cover 500,000 acres.

Published by Globes [online], Israel business news - - on December 26, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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