Chevron To Drill More Wells Sooner on Israel’s Leviathan as East Med Gas Demand Soars

Chevron is having to drill a fifth production well at Israel’s Leviathan natural gas and gas-condensate field to keep production ahead of rising demand, driven by exports to Egypt’s growing LNG hub.

Chevron has moved up plans to early 2022 to drill a fifth production well at Israel’s Leviathan gas and condensate field in the Eastern Mediterranean, driven to boost production after demand for the field’s gas rose reportedly by an unanticipated 6% in the first half of 2021.

Field operator Chevron holds a 39.66% stake in Leviathan following its acquisition a year ago of Noble Drilling. Chevron’s partners are Israeli E&P partnership Delek Drilling (a subsidiary of Delek Group) which owns the majority 45.34% share and the Israeli limited partnership, Ratio Oil and Gas (15%).

The deepwater field 125 km west of Haifa has estimated reserves of 649 Bcm of natural gas and 41 million bbl of condensate which Delek said represents two-thirds of total gas resources discovered in Israeli waters so far.

Production initiated in late December 2019 supplies Israel’s domestic market and is exported to Egypt and to Jordan. But it is Egypt’s demand that is driving Chevron to fast track Leviathan’s drilling program as Egypt pursues its ambition of becoming a hub for processing East Med gas.

The Stena Forth drillship will drill the new production well (Leviathan 8) in the Leviathan North area, according to a Delek Drilling report to investors.

Drilling will take about 4 months and cost $248 million, an investment to be shared proportionally to each partner’s stake. Its purpose is to supplement the four existing production wells in the Leviathan reservoir and to improve the redundancy in the production system.

The sea depth at the planned development and production well is 1620 m. The planned final depth of the drilling is 5300 m below the surface, according to Delek Drilling. The required infrastructure will be constructed for the connection to the existing subsea production system of the Leviathan Project.

In supporting Chevron’s recommendation that new production wells need to be brought on stream sooner than expected, Delek Group noted in its Q1 2021 Investor Presentation in May that Leviathan’s annual run-rate had already hit 10.8 Bcm, exceeding the 10.2 Bcm forecast for 2021. The report also noted that

• Exports to Egypt had increased to 0.8 Bcm from 0.3 Bcm.
• Sales to the Israeli domestic market had risen to 1.26 Bcm from 0.73 Bcm.
• Exports to Egypt and Jordan had accounted for 54% of Leviathan sales in Q1 2021.

Besides Leviathan, Chevron also gained an operating stake (32.5%) in Israel’s second-largest offshore gas field, Tamar, with its acquisition of Noble Drilling. Chevron is also a partner in the Aphrodite-Yishai gas field which is split between Israel and Cyprus.

To keep gas flowing to Egypt as the region matures, Chevron, along with its Leviathan and Tamar partners, agreed in January to invest $235 million so that Israel Natural Gas Lines Ltd. could lay a new subsea pipeline and expand existing pipeline infrastructure to insure an annual capacity of 7 Bcm, Delek announced at the time.

Israel, Cyprus, Greece, and Italy are also discussing possible construction of the US-backed EastMed Pipeline which would transport 20 Bcm of gas annually from Israel and Cyprus to Italy, transiting Greece.

Read the latest issue of the OGV Energy magazine HERE.