Panel: Save 400bcm of natural gas for domestic use – Jerusalem Post

04/05/2012 18:43
Environment Ministry says domestic needs are much higher than the gov’t appointed committee suggests.

Israel must retain at least 400 billion cubic meters (bcm) of its offshore natural gas reserves for domestic use between now and 2017, and producers can export the surplus, the government-appointed Zemach Committee recommended in its preliminary report Thursday.

New limits should then be set each year until 2042, in accordance with the Energy and Water Ministry’s demand forecasts, the committee said. It estimated that Israel would need between 420- 540bcm of natural gas until 2040, most of it for electricity production and the remainder for industry and transportation.

The committee determined that fields containing more than 200 bcm (7 trillion cubic feet) of natural gas will supply at least half of their reserves to the domestic market. Fields containing 100- 200bcm will supply at least 40 percent, and fields containing 50-100 bcm will supply at least 25%. Furthermore, natural gas developers will be required to safeguard an additional 15% of reserves as protection.

Israel’s two largest offshore fields, Tamar and Leviathan, contain an estimated 250bcm and 450 bcm of natural gas, respectively. It is expected that gas will begin flowing from Tamar in 2013 and from Leviathan in 2017.

Delek Drilling and Avner Oil Exploration, which hold a 15.625% each in the Tamar prospect and a 22.67% share each in the Leviathan prospect, reacted negatively to the report.

In a joint statement, they stated: “Exportation is a key condition for the continued development of Israeli energy.

The amount of gas allocated to exports must be expanded in order to strike the right balance between Israel’s energy independence and hidden economic and geo-political benefits of gas exportation.”

In response to the report, Environmental Protection Ministry Dir-General Alona Shefer-Karo sent a letter to the committee members, detailing her ministry’s criticisms of its stipulations.

The committee’s evaluation of domestic natural gas demand was too low, and should have been closer to a figure like 550 bcm, according to Shefer-Karo’s assessment. In the category of transportation, the committee assumed that in 2040, more than half of Israel’s vehicles will continue to be driven on petrol and diesel, and only one-third on natural gas – with the remaining being electrically powered.

“Given that vehicles powered with refined petroleum are the main cause of air pollution in city centers, and in light of government policies to promote transportation alternatives to oil, the base scenario is far from reflecting the desired future for Israel’s transportation system,” Shefer-Karo wrote.

In addition to assuming that most private cars and all public transportation vehicles will be running on natural gas by then, the committee should also take into account that many household needs might require natural gas, she added.

With a higher projected demand, the supply allocations to the local market also must be significantly higher, according to the ministry.

The ministry also objected to the domestic delivery obligation amount for large-sized fields, and felt that the numbers should be more incremental than a simple 50% requirement for fields with 200 bcm, and above.

With this low requirement, the largest fields, like Leviathan, would be able to stockpile huge amounts of gas for export, thereby reducing incentives for exploration and export in smaller fields, Shefer-Karo said.

Instead, she argued, fields over 400bcm should be required to preserve 80% of their supplies for local use; those between 300-400 bcm should preserve 70%; those between 200-300 bcm, 60%; those between 100-200bcm, 50%, those between 50-100bcm, 40%; and those under 50bcm, 30% for local markets.

As far as exports go, the ministry also disapproved any LNG facility establishment without a thorough investigation of all environmental implications – such as those on beaches and landscapes.

Meanwhile, although acknowledging that the report prioritized Israeli consumers for natural gas purposes, the ministry said that the details were “vague and insufficient” as to exactly how this prioritization would be accomplished.

In addition, if the government must require natural gas suppliers to provide the local market with more than the amount allotted for this sector (during a natural gas shortage, for example), the suppliers should only receive normal market prices without additional federal compensation, Shefer-Karo stressed.

Committee Chairman Shaul Zemach and his team will accept public submissions until May 6, and will submit their final report to the government on June 7.

Israel must keep gas for 25 years of own use — panel Jordan Times
Reuters | Apr 05,2012 | 22:30

TEL AVIV — Israel should retain enough of its natural gas resources to satisfy its own needs for 25 years and producers can export the surplus, a government panel recommended on Thursday.

Gas production is poised to soar in Israel after the discovery of two of the world’s largest offshore reserves in recent years.

The Tamar prospect off Israel’s Mediterranean coast holds an estimated 250 billion cubic metres (bcm) of gas, while the nearby Leviathan well holds about 450 bcm. Tamar is set to come online in 2013 and Leviathan in 2017.

As the quantity of gas is well above Israel’s needs, the finds have raised hopes among exploration firms of a windfall from exports.

A committee appointed by Prime Minister Benjamin Netanyahu in late 2011 estimated that Israel needs between 420bcm and 540bcm of gas till 2040.

“We have allocated about 400bcm for the domestic market and we have allowed the excess capacity to be exported,” Shaul Zemach, managing director of the energy and water ministry, told a news conference to publish the preliminary findings.

Zemach, who heads the committee, said 400bcm should be enough for Israel’s energy needs for 25 years.

Any liquefied natural gas (LNG) terminal that would be built for export purposes would be controlled by the Israeli government, according to the recommendations.

The panel recommended that wells with more than 200bcm must keep at least 50 per cent for the local market, while wells between 100bcm and 200bcm need to hold 40 per cent for Israeli needs. Small sites of 50-100bcm only need a minimum of 25 per cent. Final recommendations are due in June.

Israel’s government aims to become more energy independent following problems with supply of natural gas from Egypt.

Militants opposed to deals made by the Mubarak government to sell gas to Israel have blown up the pipeline 13 times since the beginning of 2011.

Israel’s electricity provider has been forced to use more expensive alternatives such as fuel oil and diesel as the country’s only gas field in operation is projected to run out this year.

A group led by Texas-based Noble Energy is developing the Tamar prospect. Noble holds 36 per cent of Tamar. Isramco Negev owns 28.75 per cent, Avner Oil Exploration and Delek Drilling hold 15.625 per cent each and Dor Gas Exploration has a four per cent stake.

Delek Drilling and Avner, whose shares were down 3.6 per cent and 2.8 per cent respectively in afternoon trade in Tel Aviv, are both part of Delek Group.

The group has already signed a number of deals, including one for $8 billion to supply Israel Electric Corp with gas.

Noble also holds 40 per cent of Leviathan, while Delek Drilling and Avner own 22.67 per cent.—-panel