The Ministry of National Infrastructures has ordered Leviathan partners Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) to deposit a $30 million guarantee by the end of month as a condition for receiving a permit to begin drilling the Leviathan 3 well. The ministry also told the companies that they may have to bring in another rig to carry out the immediate abandonment of the Leviathan 2 well.
The ministry rejected the companies' request to allow them to postpone the abandonment of the Leviathan 2 well (a procedure that requires bringing a rig - A.B.) until after the drilling of the Leviathan 3 well is completed.
Noble Energy owns 39.66% of Leviathan, Delek Group units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) each own 22.67%, and Ratio owns 15%.
Drilling of the Leviathan 3 well, located one kilometer from the abandoned Leviathan 2 well, began last week. The well aims to estimate precisely the size of the reservoir's natural gas reserves discovered in late 2010. The Leviathan 2 well was abandoned in early May, when water penetrated the borehole.
The Pride North America rig, owned by Pride International Inc., and leased at a cost of $500,000 a day, is drilling both wells.
Following the fault at the Leviathan 2 well, the Ministry of National Infrastructures told "Globes", "We were very lucky that water, not oil or natural gas, leaked into the borehole, as they could have caused an ecological catastrophe." Before they obtained permission for the Leviathan 3 well, the Petroleum Supervisor ordered the companies to submit a detailed report on the leak and the measures taken to prevent its recurrence.
Sources inform ''Globes'' that among the conditions demanded by Ministry of National Infrastructures legal counsel Adv. Drora Lifshitz, the usual financial guarantee deposited for a well was doubled from $15 million to $30 million, and the period of the guarantee was extended from five months to one year.
All of Leviathan's partners were also required to comply with the Petroleum Supervisor's orders, and not just the lead partner, Noble Energy. The companies were given a deadline to comply with the orders by the end of June, otherwise $15 million of the guarantee would be foreclosed.
Importantly, the Petroleum Supervisor also ordered the Leviathan 2 well to be abandoned as quickly as possible, in line with the Petroleum Supervision Department's safety and professional instructions. This means that Leviathan's partners may have to bring in another rig to implement the abandonment, if this is required before drilling of the Leviathan 3 well is completed. The companies asked for permission to carry out the abandonment of the Leviathan 2 well only after the drilling of the Leviathan 3 well is completed, so that they could use the same rig.
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011