1.5 Billion Barrel Oil Discovery in Israel?
August 19, 2010 by admin
News reports out Israel of a 1.5 billion barrel oil discovery lit up websites and news postings yesterday. Israeli oil exploration company Givot Olam announced to the Tel Aviv Stock Exchange (TASE) on Tuesday that, “Production test drilling at Givot Olam’s Meged 5 site near Rosh Ha’ayin indicated it holds 1.525 billion barrels’ worth of oil.” And boy did it start a stir!
Givot Olam stock shot up 69% at one point, before finally settling out at a 19.7% gain … meanwhile trading was suspended and the Israel Securities Authority demanded clarifications of the report from Givot Olam – who didn’t have anything to add. They said a full report would be available in September.
According to Israeli newspaper Haaretz, “This is not the first time Givot has issued partial and less than definitive information.” If you visit the Givot Olam website (http://www.givot.co.il/english/index.php) today you’ll read about the 2 billion barrels they “discovered” (but never produced) in 2004. The truth behind this week’s “discovery” is that their tests don’t show how much oil they can produce or how much the discovery may be worth financially. What they do know is that even if there is 1.5 billion barrels down there, only a small percentage of it is recoverable; estimates range from 10% to 25%.
Givot Olam has been pumping oil mixed with gas and water from the Meged 5 test well for about a week and a half, averaging about 380 barrels per day. Israel consumes 235,000 barrels of oil per day. At the rate the Meged 5 is pumping now the well would supply less than two tenths of one percent of Israel’s daily consumption. If just 10% of Givot Olam’s “discovery” was recoverable (150 million barrels), the Meged 5 would have to maintain its current pace for over a thousand years to harvest the field. Israel burns through 150 million barrels in less than two years.
Haaretz reports: A geophysicist in the field, however, called the most recent announcement “speculative” and said the 1.525 billion figure appeared “exaggerated.”
“The bottom line is that I want to see the well’s capacity of barrels per day over time,” he said. “How much the drilling site can produce – that’s what will answer questions regarding its economic viability. Regarding the reserves, I don’t think they can be assessed at the moment. It’s a very rough estimate and everything gets into the range of probabilities.”
That’s what the geophysicists in Israel (the guys who know) are saying. It’s the same thing they told me after Givot Olam announced its 2 billion barrel “discovery” in 2004.
Bottom Line: Givot Olam’s announcement of a 1.5 billion barrel discovery is highly speculative and most likely exaggerated. A “discovery” doesn’t mean how many barrels a company can actually commercially produce (2004′s 2 billion barrel “discovery” commercially produced exactly zilch). We’ll need to wait until Givot Olam submits their definitive report in September and watch production on the Meged 5. Yesterday’s announcement created a lot of hoopla, but nobody, including Givot Olam, knows the substantive reality of the “discovery” at this point.
But that didn’t stop some Israeli news agencies and Christian websites (Joel Rosenberg’s included) from running the headline “1.5 BILLION BARRELS OF OIL DISCOVERED IN ISRAEL” with few, if any, facts to back up the headline.
So why am I raining on everyone’s parade? Here’s why: the truth. There’s nobody that believes Israel will discover oil in a big way more than I do (except maybe John Brown of Zion Oil and Tovia Luskin of Givot Olam). And I believe the Bible (Torah) points to that discovery (so do John Brown and Tovia Luskin). But sensational headlines taken from unsubstantiated announcements don’t forward the search. When sensational headlines (like the 2 billion barrel “discovery” in 2004) don’ t pass the test of reality, they only disappoint the folks who believed them in the first place and hurt the credibility of those who ran the headline. That said, here are the facts:
■The Bible (Torah) states that Jacob (Israel) would “suck honey out of the rock, and oil out of the flinty rock.” (Deut 32:13) Of Joseph (Ephraim and Manasseh) it states: “Blessed of the LORD be his land, for the precious things of heaven, for the dew, and for the deep that coucheth beneath, And for the precious fruits brought forth by the sun, and for the precious things put forth by the moon, And for the chief things of the ancient mountains, and for the precious things of the lasting hills, And for the precious things of the earth and fulness thereof …. (Deut. 33:13-16). That Zebulun and Issachar “shall suck of the abundance of the seas, and of treasures hid in the sand.” (Deut 33:19) And that Asher would “dip his foot in oil.” (Duet 33:24)
■Tovia Luskin and John Brown founded their oil exploration companies based on their belief that scripture points to a major oil discovery in Israel.
■Zion Oil & Gas and Givot Olam have proven that oil exists deep below the territories the Bible (Torah) said it would be found. Givot Olam has pumped more than 3,000 barrels of it in the last week and a half.
■Serious geological studies by the Geophysical Institute in Israel and the US Geological Survey have backed up Luskin’s and Brown’s belief by stating that they estimate a mean of 1.7 billion barrels of oil and 122 trillion cubic feet of natural gas are recoverable in the Levant Basin, which includes onshore and offshore Israel.
■Enough natural gas to supply all of Israel’s needs into the foreseeable future has already been discovered off the coast of Northern Israel.
The facts are enough. Israel has discovered huge quantities of natural gas, they’ve discovered oil right where the Bible said it would be, and I believe Israel is on the cusp of discovering major quantities of producible oil, both onshore and offshore – enough to supply them into the foreseeable future. It’s happening now, but it hasn’t happened yet. The prophecy of Israel’s oil, I believe, is being fulfilled before our eyes, but it hasn’t been fulfilled yet. Misleading headlines aside, Givot Olam’s discovery is a part of that fulfillment. I’ll report the facts to you as we see them unfold. In the meantime here’s a more balanced article on the subject from the Israeli newspaper Haaretz: http://www.haaretz.com/print-edition/business/givot-olam-meged-has-1-5b-barrels-of-oil-1.308683
Will Leviathan Oil Shale Discovery Make Israel the Next Energy Giant?
ReplyDeleteLeviathan Field could shake up crude oil dynamic
Apr 12, 2011, 12:59 pm EDT | By Mark Ingebretsen, Oil & Energy Writer
Talk about a game changer. Last year while prospecting the aptly nqmed Leviathan Field in the waters between Israel and Cyprus, Texas based Noble Energy (NYSE: NBL) discovered a gargantuan deposit of natural gas buried a mile beneath the ocean floor and beneath an additional 20,000 feet of rock.
The Israel oil find, estimated at some 16 trillion cubic feet, is large enough that Israeli Prime Minister Benjamin Netanyahu told CNN interviewer Piers Morgan that his nation could forego building additional nuclear reactors and enjoy generations of natural energy, instead. “It is only a matter of time before Israel becomes a big gas exporter,” said Philip Wolfe, an energy banker at UBS, the investment bank” was quoted on the UK financial Web site Fullermoney.com
But the bigger news was still to come. Harold Vinegar, formerly Royal Dutch Shell’s chief scientists and currently chief scientist for Israel Energy Initiatives (IEI), “has devised an ambitious plan that would, if successful, turn Israel into one of the world’s leading oil producers,” according to the Energy Tribune. Vinegar believes that the oil shale deposits within a 238 sq km area known as the Shefla Basin hold some 250 billion barrels of oil, an amount roughly equal to Saudi Arabia’s proven reserves.
While a debate is currently being waged among Israelis over how royalties from these newly discovered energy riches should be utilized, some early winners are have already become apparent. IEI, for example, is a division of the U.S. owned telecommunications firm IDT (IDT), whose stock has risen from below $24 in mid March to nearly $30 in April, while Noble Energy (NYSE: NBL) has gone from a mid-March price of around $88 to a March 30 high of $98.
Heavy hitting individuals have also moved into position. The Australian reports that “In November, 2010, an 11 per cent stake in Genie Oil & Gas, the division of IDC that is the parent company of IEI, was acquired for $US11m… by Jacob Rothschild, the banker, and Rupert Murdoch, chairman of News Corporation.” Genie’s advisory board also includes the likes of Dick Cheney and hedge fund investor Michael Steinhardt, according to the article.
Following the excitement of the natural gas find, Delek Drilling, part owner of the Leviathan Field, has seen its share price drop from a high near $1,600 last fall to just over $1,400 in recent trading. Pink sheet stock Avner Oil & Gas (PINK: AVOGF), another company involved with the Leviathan field has also seen a modest fall from its November highs. (Drilling at the field was recently halted due to technical reasons, Offshore Energy Today reports.)
It’s important to note that exploitation of Israeli’s newly discovered energy riches has yet to begin in earnest, so even these falling stocks might pay off handsomely once a full blown extraction begins. Meanwhile, should energy revenues begin pouring into the Israeli economy, the energy boom will extend to the many high tech firms involved in energy exploration and recovery related robotics and other infrastructure plays related to moving Israel’s oil and gas to energy hungry Europe.
To be sure, there are some clouds on the horizon, as Fast Company points out, “Leviathan straddles the Israeli-Lebanese maritime border. Israel is currently in a state of war with Lebanon and does not recognize the de-facto Hamas Palestinian government in the Gaza Strip.”
But compared to the turmoil raging elsewhere in the Middle East, this is a small issue. Moreover, it doesn’t take a State Department analyst to realize that all things being equal, Europe will seek energy from a stable supplier, and that makes Israel’s newly discovered energy wealth a geopolitical and economic game changer.
Hot Topics: Crude Oil, Israel