And we’ve got it ahead of schedule!
(Reuters) - A U.S.-Israeli consortium began supplying Israel with natural gas from its offshore Pinnacles well on Wednesday to help stave off a national energy shortage expected this summer.
Israel lost about 40 percent of its natural gas supplies in early 2011 when saboteurs in the Sinai peninsula began attacking the pipeline that carried gas to Israel from Egypt as part of a 20-year deal. In April, Egypt officially terminated the deal, sending Israel scrambling to find alternative power sources. (The Reuters reporter fails to mention the repetitive blowing up of the supply pipeline by Egyptian terrorists, which also cut off supplies to Jordan and Syria as they get it farther down the pipe after it passes through Israel. The report also fails to mention the impact to all the foreign investors in that pipeline, losing any possibility on return for investment with the cutting off of the foreign buyers.)
As a result, the Israeli government instructed all exploration groups in its economic waters, where large reserves of natural gas were recently discovered, to speed up operations.
Texas-based Noble Energy, which leads the Pinnacles group, said they were starting to supply Israel with 150 million cubic feet of gas per day almost a month ahead of schedule.
"Though limited in resource size, this well will provide much-needed gas production rate just in time for the hot summer months," the company said in a statement.
The new supplies will replace more expensive and dirtier fuels Israel has had to turn to, like diesel and fuel oil, and save the economy about $170 million this summer, Noble said. (Looking forward to lowering of electricity rates here in Israel…a man can hope, can’t he?)
(Globes of Israel) The Pinnacles field is one of Yam Tethys's two satellite fields, which are being developed as stop-gap measures, due to the depletion of the Mari B well, until the Tamar gas field, also owned by Delek and Noble Energy, together with Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Alon Natural Gas Exploration Ltd. (TASE: ALGS) comes on line next year.
The Pinnacles field will save Israel NIS 650 million this summer alone. The natural gas will provide environmental benefits through improved air quality and carbon dioxide emissions reduced by over 250,000 metric tons over the summer months. The field cost $105 million to develop.
Producers will receive $5-6 per million BTU for this gas, and because the gas will replace fuel oil for electricity generation, fuel cost savings to Israel will be about $13 per million BTU. Project schedule was another Pinnacles challenge; each day of delay cost Israel NIS 7 million and three million kilograms of carbon dioxide emissions. The Pinnacles was among the fastest development projects in the industry, taking only ten months from approval to subsea installation.
Noble Energy Mediterranean VP Lawson Freeman said, "We are excited to bring the Pinnacles well on line. With time of the essence, Noble was able to utilize rigs from our Mediterranean drilling program and deploy subsea equipment from our other global projects. We are also pushing hard to accelerate the Noa development in the same way."