In contrast to the expectation, the supply of natural gas from the Tamar reservoir will not be increased by 20%, even though Noble Energy today completed the compressors project on the gas pipeline between the Tamar production facility and Israel. The plan to increase capacity was based on the possibility of storing the gas in the empty Yam Tethys reservoir.
For years, Noble Energy was unable to obtain approval for storing the gas in the empty reservoir, and now the water pressure in it has risen to such a level that it can no longer be done. The gas sector in Israel will have to wait a few more years before the capacity can be increased. Meanwhile, customers who have signed gas contracts for interruptible supply will experience shortages already in the coming weeks.
When the Mary B reservoir ran out of gas after supplying gas to the Israeli economy for 10 years, the Ministry of National Infrastructure, Energy, and Water Resources considered the possibility of storing gas from Tamar in it. Storing gas in empty reservoirs as a backup in cases of severe malfunctions is a common practice around the world. The Ministry of National Infrastructure, Energy, and Water Resources allowed Noble Energy to examine the possibility of storing gas in Mary B, and the company responded positively to the idea.
Beyond the significant advantage of having a place to store gas, Noble Energy planned to use the stored gas at times of peak demand.
Today, there are quite a few hours in which the sole gas pipeline connecting the Tamar production facility to Israel is incapable of supplying the required quantity of gas. For this reason, Noble Energy installed compressors in the pipeline making it possible to enlarge its daily capacity from 1 to 1.2 mmcf per day. The compressors project was completed today. Noble Energy has spent a total of $265 million on the project to date.
Although the pipeline can now transmit more gas, it has no more gas to transmit. The bottleneck in the system has now moved to the two pipelines connecting the Tamar gas wells to the production facility off the Ashkelon coast. These pipelines can deliver only 1.1 mmcf per day. Meanwhile, Noble Energy did not receive permission to store gas in the Mary B reservoir. According to revised estimates by the Ministry of National Infrastructure, Energy, and Water Resources, the water pressure in the reservoir has risen to an extent that makes it impossible to store gas in it. According to the Ministry of National Infrastructure, Energy, and Water Resources, the pressure may rise even further in the future, making it even more difficult to put gas into the reservoir and remove it.
Increasing gas capacity will become possible only when the Tamar partners sign a a gas export deal with Spanish company Union Fenosa, which has a gas liquefaction facility in Egypt.
In order to export gas to Egypt, the partners must greatly increase Tamar's supply capacity. This includes drilling three more wells and building another pipeline - a third one - from the Tamar wells to the production facility. In any case, gas supply capacity for Israel will not increase for the next three years.
The inability to increase gas supply capacity means that customers who signed contracts for an interruptible supply of gas will suffer shortages in the coming weeks. At hours of peak demand, these customers will be the first to have their supplies cut.
A presentation by Delek Group Ltd. (TASE: DLEKG) to the Kandel team showed that these Tier 2 customers include the gas marketing companies, Dorad Energy, Oil Refineries Ltd. (TASE:ORL), and OPC.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015