Noble Energy, Inc. (NBL) Halts Offshore Israel ExplorationVW Staff
This isn't the first time the company has suspended exploration in the Leviathan basin. In April 2011, Noble halted drilling operations for its first Leviathan location after testing deeper potential for the well.
The company resumed its exploration efforts in the area by drilling in lower layers earlier in the year, according to Delek Group (TLV:DELKG). Last week, Noble advised them of the well deepening suspension before it hit its intended target: middle Cretaceous and lower Cretaceous layers. This comes in at an end depth of 6,500 m (21,325 ft) below sea level–the deepest drill to date in the Leviathan basin according to Offshore.com.
Why was the drilling halted? It came from the high pressure found in the lower Oligocene layers higher up along with the wellbore mechanical limits. This was the initial venue for the exploration of the Leviathan natural gas reservoir.
Gas has been found around 6,300 m (20,670 ft) below sea level, but the layer has been acknowledged as a natural gas reservoir due to the rock's characteristics. Instead, heavy natural gas had been discovered.
Leviathan's Natural Gas Possibilities
The company discovered mountains of natural gas (an estimated 17 trillion cubic feet) in Leviathan back in 2010. Noble has a 40% ownership and with such a large discovery, it will affect all of Israel and make it a natural gas exporter, according to Seeking Alpha.
Furthermore, Leviathan's gas is close to a highly desirable natural gas audience from Europe which has been looking to Russia to meet their needs.
It is also spurring interest from other companies that have nearby interests. Unlike like a company such as Noble, IPC Oil and Gas Holdings (TLV:SLDL-M) doesn't have a multi-billion dollar market capitalization so a big gas discovery could help the company's valuation.
What's next for Noble?
For two months, Noble will analyze well data through electric, radio-active, and seismic logs gathered from drilling, reported Offshore.com. It will also review how useful it would be to utilize a rig and equipment to reach the desired lower layers.
According to Delek, there is a $270 million budget for this drilling program, with $100 million going to the deepening operation.
Meanwhile, Leviathan partners will conduct a three-week production testing on the Leviathan natural gas reservoir through the semisubmersible Homer Ferrington. It will begin soon and will include flowing gas from the reservoir layers at various rates (up to 40 MMcf/d or 1.1 MMcm/d), as a means to measure reservoir pressure and to analyze gas composition.
The testing will cost around $30 million, along with the $27 million for the requisite equipment and the rig to remain on standby.