* Noble says 3-9 Tcf, not “more than 10 tcf” *
Block 12 may not hold as much natural gas deposits as some led us to believe, with Noble Energy’s initial estimates at a disappointing 3 to 9 trillion cubic feet, at best, below the 10 Tcf initially estimated by government officials.
In a statement issued in Houston, Noble said that “drilling is underway at the Cyprus ‘A’ prospect which has an estimated gross mean resource range of 3 to 9 Tcf and a 60% chance of geologic success.”
The news sent shockwaves across the sea with the share prices of the Israeli partners in the neighboring Leviathan field falling sharply on Tuesday.
The find makes Cyprus’ “Aphrodite” considerably smaller than the Leviathan and even the Tamar discoveries in Israel. Block 12 also has deep oil potential of 3.7 billion barrels.
“I am sure that the findings will be satisfactory to all,” an unnamed energy official told Reuters.
Noble started drilling the offshore prospect at the end of September saying it would need 72 days for the first results. However, the Christofias administration had been pressing Noble for earlier results in an effort to suggest that future earnings would help it avoid necessary cuts in the highly unionised public service in order to bring down its inflated budget deficit.
The move to drill for gas also angered Turkey, which disputes Nicosia's right to explore for hydrocarbons, sending research vessels of its own to the Cyprus Exclusive Economic Zone, even suggesting it would escort the ships with a naval task force.
Commerce and Industry Minister Praxoulla Antoniadou told a conference on Monday that the government will define in the coming days plans to launch a new licensing round for offshore oil and gas exploration in the remaining 12 blocks.
In Israel, share prices for Delek Group and its units Avner Oil & Gas and Delek Drilling fell sharply on the disappointing news. Delek has an option to acquire a stake of up to 30% in Block 12, subject to approval by the Cypriot authorities.
Delek Group's share price on the Tel-Aviv Stock Exchange fell 1.3% by mid-afternoon to NIS 794, Avner's share price fell 0.6% to NIS 2.37 and Delek Drilling's share price dropped 1% to NIS 13.53.
Tamar partner Isramco’s share price also fell 2.6% to NIS 0.457 and Leviathan partner Ratio Oil Exploration fell 7.9% to NIS 0.37, even though neither company has any connection with Block 12. Basically, it is collateral damage, accorduing to the Israeli Globes news site.
Noble Energy said that it has identified a total of 12 additional prospects that target sands equivalent to those discovered at Tamar with estimated gross unrisked resource potential of more than 20 Tcf. The Leviathan 3 exploratory well is still being dug, and the company plans to resume the Leviathan 1 exploratory well, which is targeting the deep oil-bearing strata, in early 2012.
Noble Energy said that the Mari-B field achieved record levels of production this year and has been successful in lowering Israel's energy costs by over $7 bln and reduced CO2 emissions by 17 mln metric tons since 2004. Noble Energy and Delek jointly own the field through Yam Tethys. The increased output of the field is causing its faster-than-expected depletion.
Meanwhile, a reappraisal of the Tamar field increased its gross resource estimate to 9 Tcf from 8.4 Tcf. Development of the field is on schedule for commissioning in late 2012. The platform jacket and deck fabrication, as well as pipeline installation, are about 50% complete and onshore facility expansion is underway. The Tamar partners are in the final stages of sales contract negotiations with Israel Electric Corporation and are in active discussions with existing and new customers. The Electricity Authorioty of Cyprus, too, hopes to buy gas from the neighbouring fields as early as in 2014.
Noble Energy said that Israel gas demand remained robust and expects demand to grow by 10% a year through 2020.
