Houston-based independent Noble Energy Inc. has discovered a world-class natural gas field off Israel in the Levantine Basin. The Tamar field, with 6.3 Tcf of recoverable gas, is the second largest natural gas find in the world since January 2008, behind Petrobras’ subsalt Jupiter discovery off Brazil.

Noble and its four Israel-based partners, Delek Drilling, Isramco Negev-2, Avner Oil, and Dor Gas Exploration, drilled the discovery well on Tamar in November 2008.

Chuck Davidson, Noble Energy chairman and chief executive, says the Tamar discovery will transform both his company and Israel’s energy sector.

“Tamar is a transformational change for Noble Energy. Through these discoveries we are putting legacy-type assets into our portfolio,” Davidson said.

In-country history

Noble has been active in Israel since 1998. It drilled a successful test on the Noa prospect in the eastern Mediterranean in 2,500 ft (762 m) water depth in 1999, and followed that in 2000 with the 1-Tcf Mari-B discovery. Mari-B was drilled on the Ashqelon license, 15 miles (24 km) offshore southern Israel in 800 ft (244 m) of water.

With the discovery, Israel suddenly had a domestic supply of natural gas, and Noble and its partners began to nurture a national gas market.

After the Mari-B success, Noble pursued other opportunities offshore Israel, drilling the Hanna-1 rank wildcat, in 2003.

Noble picked up the Tamar farm-out because it presented as a huge four-way structure cut by faults. It was a fairly simple concept of good-quality Miocene reservoir sands draped across an immense feature. However, it was a deep subsalt play, lying below thick, tabular evaporites. Noble assumed operations and took a 33% working interest, eventually acquiring an additional 3%.

Deepwater contractors were reluctant to bring a premium rig to the area for a single well, but Noble secured a commitment from Houston-based Atwood Oceanics Inc.

Noble’s partners had to make sizeable commitments as well. The initial Tamar well cost US $140 million and was drilled to 16,076 ft (4,900 m) total depth in 5,500 ft (1,676 m) of water 57 miles (92 km) offshore. It encountered more than 460 ft (140 m) of net pay in three Miocene reservoirs. The discovery tested 30 MMcf/d of natural gas, constrained by facilities. Each production well will be capable of making 150 MMcf/d.

The feature covers 25,000 acres with a total gas column of 840 ft (256 m). Noble and its partners completed the well in January 2009.

Post-discovery

Immediately after the Tamar discovery, Noble moved the Atwood Hunter semisubmersible to the Dalit prospect on the Michal license, 28 miles (45 km) offshore in 4,500 ft (1,372 m) of water. At 12,000 ft (3,658 m) total depth, it was still subsalt but shallower than Tamar.

Dalit was a discovery as well that cut more than 110 ft (34 m) of high-quality Miocene pay and flowed 33 MMcf/d on a facilities-constrained test. Noble estimated a production well would be capable of making 200 MMcf/d and calculates Dalit’s recoverable reserves at 0.5 Tcf. After drilling Dalit, Noble returned to Tamar and drilled a 16,880-ft (5,145 m) appraisal well on the flank of the structure, in 5,530 ft (1,686 m) of water, 3.5 miles (5.6 km) northeast of the discovery. It came in as predicted.

Noble cored the appraisal well with superb results, so the company raised its estimate of recoverable gas to 6.3 Tcf for the Tamar structure alone. The gas is almost entirely methane.

After taking the Tamar farm-in, Noble picked up neighboring acreage bringing its holdings to 3 million gross acres in the Levantine Basin. Noble is shooting 1,200 sq miles (3,108 sq km) of new 3-D seismic on portions of its acreage to flesh out promising leads identified on 2-D data.

Corporate view

The discoveries at Tamar and Dalit are significant, with Tamar weighing in as Noble’s largest discovery.

“It’s not very often you get to be part of an exploration venture that has the potential to dramatically change a country’s energy supply,” Davidson said.

In fact, Noble found it hard to believe the early results from Tamar. “We kept telling ourselves, ‘It can’t be that good.’ Those first few days and even weeks we spent a lot of time going through the list of things that might be problems,” Davidson said. “We kept asking ourselves, ‘What don’t we know yet?’ and ‘What could go wrong?’”

Noble is now managing gross development projects of more than 2 Bboe; in the last 2.5 years, the company has discovered net resources of more than 700 MMbbl in Israel, the deepwater Gulf of Mexico (GoM), and offshore West Africa. That is equivalent to 80% of what Noble had on its books as proved reserves at the end of 2008.

The sizeable opportunities that remain to be drilled on its Israel acreage could mean more reserves for Noble and much more gas for Israel. Noble’s net remaining undeveloped acreage in the area is close to the size of 250 GoM blocks, so it is possible that Tamar could be the foundation of a thriving gas province. “If we should be so fortunate as to make additional discoveries, then we are looking at more opportunities for the entire region,” Davidson said.

“I’m hopeful that in the end, offshore gas will eliminate completely Israel’s need for imported oil for distillate or bunker fuel to generate power,” he said. “Tamar is a game-changer for Israel, for Noble Energy, and for our partners. Our role is to make sure it happens.”

Noble came into Israel as a partner with the Delek Group Ltd., a Netanya, Israel-based energy and infrastructure group. Delek solicited Noble because of its offshore abilities. In turn, Delek has provided the partnership with in-country expertise and relationships and helped interface with customers and government, beginning with Noble’s first well.

“It’s a partnership that has worked well for us and we have expanded to other areas of the world with Delek as well,” Davidson said. “It’s rare that a partnership lasts beyond a discovery, let alone stays together for two discoveries nearly a decade apart.”

Future plans

After the Tamar discovery, Noble shifted $100 million of its 2009 capital program to Israel to cover its costs on the Dalit and Tamar appraisal wells. This year, Noble’s total spending in Israel will be close to $140 million, about 10% of its total budget.

The company expects to bring another rig back in during the second half of 2010 and drill through 2011 on both exploration and development wells.

Israel has become significant enough to Noble that the company is scaling up a major project team for the country. Israel is one of the fruits of an effort that Noble launched in 2005 after completing its acquisition of Patina Oil & Gas Corp. and refocusing its exploration efforts on high-impact projects that could make a material difference to the company.

“Tamar has validated that strategy: we have made multiple discoveries in Israel, we have a lot of running room and we have an existing production base,” Stover said.

Noble is providing a revenue stream, clean energy, and a secure supply of gas to Israel for 15 to 20 years. It is a unique position.

“I’m excited for Israel,” Davidson said.

This article is adapted from a longer piece that ran in the November 2009 issue of Oil and Gas Investor.