* Block 12 may have 1.49bln barrels of crude *
Noble Energy expects the first natural gas to be produced from its Block 12 concession in the first half of 2019, despite the second downward adjustment of the estimate of resources from 5.2 trln cubic feet (tcf) to 4.1 tcf.
But the good news is that the Houston-based exploration and production company said in a stock filing on the New York Stock Exchange early on Tuesday that Cyprus and Israel share a crude oil potential of about 3 bln in the same area, with the balance tipping in the favour of the neighbouring exclusive economic zone.
“There is evidence of multiple opportunities in the Eastern Mediterranean with approximately 3 bln barrels of gross unrisked oil potential in the deep Mesozoic play in both Cyprus (1,496 MMBoe) and Israel (1,538 MMBoe). We are evaluating 3D seismic data on an ongoing basis and plan to resume exploration drilling in the Eastern Mediterranean in late 2014 or early 2015,” Noble said in its announcement.
“Current plans are to resume exploration drilling in the Eastern Mediterranean in late 2014 or early 2015.”
Local media reports suggested that the near 1.5 bln barrels of crude could be worth about $60 bln, probably by conservative estimates.
In a presentation to investors and analysts on the NYSE, chief executive Chuck Davidson said that Noble Energy Inc. (NYSE: NBL) expects to spend $4.8 bln on capital investments next year, almost $1 bln more than this year's target, and also boosted its fourth-quarter volume estimate as the oil and gas company posted improved sales in the U.S., West Africa and Israel.
Noble plans to spend 30%, or $1.6 bln of its capital allotment on global deepwater activities, including Cyprus and Israel.
The company also expects lower exploration expenses because of successful exploration drilling in the deepwater Gulf of Mexico and Eastern Mediterranean. The updated range is $200 mln to $225 mln.
Noble shares were little changed at $69.34 in early trading on Tuesday. The stock is up 38% in the past 12 months and 20% in the past 6 months.
In the Eastern Mediterranean, discovered gross resources in the Cyprus Block 12 and Israel’s Leviathan and Tamar gasfields have grown to 40 tcf of natural gas, while demand continues to increase rapidly, in both Israel and various regional markets.
Earlier this month, Delek Drilling and Avner Oil & Gas, joint 30% partners in the ‘Aphrodite’ gasfield, lowered their estimations on gas reserves in Cyprus Block 12.
The total best estimate of resources fell from 5.2 tcf to 4.1 tcf, mainly because of a reduction in the estimate of the thickness of the C sands layer. The estimate of the probability of success in that layer rose, however, from 79% to 95%.
Meanwhile, Noble’s EVP fro the Eastern Mediterranean, Keith Elliott, said that the Leviathan gasfield will cost $8 bln to develop and is confident of finding oil in the region.
Speaking at the "Globes" 2013 Israel Business Conference, he said, "Leviathan is our next major project in Israel."
"Leviathan will be developed in stages, a domestic component and an export component. The expected cost of developing the field is $8 bln, and we'll start production in late 2017, a year behind our initial estimate. The reasons for this are known, such as Israel's export policy. We need an environment that supports investment. We intend to develop Leviathan as fast as we can, and we're confident that the challenges will be solved."
Commenting on the potential of oil at Leviathan, Elliott said, "We've been working in the Mediterranean since 1998, and we have an ongoing work plan between Israel and Cyprus. We think that there is a strong probability of an oil discovery in this region."
As for the Tamar gas field, Elliott said, "The Tamar discovery should generate more than $30 bln for the Israeli economy. Tamar's performance has been outstanding. Within three days of the start of operations in March, we reached the field's full output."
Elliott added, "We're continuing to drill and explore in Cyprus. We've completed the assessment for Block 12. We're planning its development."
According to the company’s NYSE filing, drilling in the Cyprus EEZ Block 12 should begin in early 2015, with further wells in 2017 and 2018, with the ‘first gas’ expected to be produced in the first half of 2019.
EXPORTS
With joint export opportunities of about 19 tcf of natural gas from the Israeli and Cyprus gasfields, Noble is planning ahead looking to regional and LNG markets.
The company still considers the pipeline export options as viable solutions, with the Cyprus domestic market requiring a mere 60-100 mln cubic feet daily, whereas the Vassiliko LNG plant would have an output of about 500 mln cfd and Turkey has a need for 1 bln cfd.
The East Mediterranean gasfields are also well positioned for LNG export markets, making them cost competitive to the U.S., West Africa and Trinidad, areas where Noble has other natural gas and oil concessions.
However, in the presentation to investors on the NYSE, Noble has also proposed the prospect of a floating LNG facility, that would ideally be located between the Cyprus EEZ and Israel’s Leviathan and Tamar gasfields.
Thus, the three main options floated by Noble are the onshore LNG facility at Vassiliko (4 years from construction to first gas), a floating LNG (3-4 years), and a pipeline to Egypt’s onshore LNG facility (3-4 years).
