June 24, 2012 / 4:27 PM / 7 years ago

Noa well starts supplying Israel with natural gas

JERUSALEM (Reuters) - Natural gas from the Noa field in the Mediterranean has started to flow, one of the partners of the exploration group said on Sunday, which will help Israel prevent an electricity shortage in the wake of Egypt’s decision to cut natural gas supplies.

Delek Drilling said in a statement to the Tel Aviv Stock Exchange that gas began flowing on Saturday.

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. Israeli electricity rates have jumped as natural gas supply dwindled.

Last month, Noble Energy and its partners — which include Delek Drilling — began laying pipelines connecting Noa and the nearby Pinnacles prospects to the larger Mari-B well off Israel’s Mediterranean coast.

Mari-B is expected to be depleted by the end of 2012 as production has risen due to repeated supply disruptions from Egypt.

As the large Tamar field, with estimated gas reserves of 9.7 trillion cubic feet, is not expected to come online until the middle of 2013, Israel is braced for months of natural gas and electricity shortages.

The small Noa well, which has reserves around 1.3 billion cubic meters (bcm), is 20 km west of Mari-B. Pinnacles, also with 1.3 bcm of gas reserves, is 3 km from Mari-B.

Pinnacles began supplying Israel with natural gas earlier this month.

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. Egyptian officials said it was a business decision and not political.

Noble owns 47.059 percent of Noa, with Delek Drilling holding 25.5 percent and Avner Oil Exploration owning 23 percent. The companies hold similar amounts in Pinnacles.

The trio are also the key shareholders in Tamar and the much larger Leviathan prospect, which is projected to begin production in 2017. Delek Drilling and Avner are units of conglomerate Delek Group.

Reporting by Steven Scheer. Editing by Jane Merriman

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