Eastern Med Oil and Gas Discoveries—Israel and Cyprus

Natural gas and oil producers normally are not the way that Israel and Cyprus are characterized, but recent discoveries in the Eastern Mediterranean are changing that perception.

The Levantine Basin in Eastern Mediterranean (Source: USGS)

Israel  Two years ago, in June 2010, the Leviathan, the largest gas field in the Eastern Mediterranean was discovered by Houston’s Noble Energy.  The natural gas reserves in that find that are in Israeli territorial waters are estimated to be something in the range of 25 trillion cubic feet (Tcf).   Some experts are estimating that there might also be up to 600 million barrels of oil.  And that is not all.  The Israeli Tamar field is believed to contain more that 8 Tcf of natural gas. The Energy Tribune’s posting by Michael Economides notes that:

A statement released on Sunday by the Israel Opportunity energy exploration partnership said that prospecting at the Pelagic group of deep-sea fields, west of Haifa, showed a potential of 6.7 Tcf of gas and 1.4 billion barrels of oil.  

These finds are very timely, because Egypt has ended its contract to supply gas to Israel. 

 Cyprus  In December 2011 Noble Energy announced that their first well in the Cypriot Economic Zone of the Leviathan Field contains up to 9 Tcf of natural gas.   Energy Tribune reports:

The size of the ultimate recoverable gas in the Eastern Mediterranean, according to the United States Geological Survey, is of the order of 200 Tcf of natural gas and 3.7 billion barrels of oil. A dozen new Cypriot blocks, currently in the process of being offered to international bidders, will almost certainly add 50 Tcf, perhaps 75 Tcf to the already discovered.

On-shore delivery from the Levantine basin will not be easy.  The gas is located about 20,000 feet below sea level —6,000 feet to sea bottom and then an additional 14,000 feet of required drilling.) Further it is believed that the gas will need to be liquefied and delivered on shore by tanker because it will be too deep to put in piping. The size and cost of these facilities are the sort of things that can be managed by large oil firms but to date, these companies seem reluctant to work with the Israelis for fear of antagonizing their Arab partners.

The solution as outlined by Economides is:

Israel will need Cyprus to exploit its resources by employing the right size company to construct e.g., LNG or gas-to-liquids (GTL) plants. The size of the resources cannot allow them to even remotely be consumed domestically; export is the only option. The Cypriot and Israel reservoirs should be unified; they are geologically contiguous anyway. Cyprus, in turn, will need the shield provided by Israel in relation to saber rattling Turkey. The Israeli-Cypriot marriage is made in oil and gas heaven.

cbdakota