Early Exploration Efforts

The first exploratory drilling in Israel began in 1947 in the Heletz area south of Ashkelon. In 1955 the original well was deepened and an oil field was discovered. At that point, several small North American and Israeli government oil companies drilled the surface structures in the area with the hope of making a major find. These attempts centered upon drilling the Cretaceous formations primarily in the Negev. Later the exploration centered upon the Upper and Middle Jurassic formations resulting in the discovery of the first gas fields (Zohar, Kidod and Hakanaim near Arad) and a further oil discovery in Kokhav, near Heletz. There was also a non-commercial oil discovery at Gurim, near Arad. In 1962, Lewis Weeks (then the former chief Geologist of Exxon) prepared a report for the Israeli government that estimated 500 million to 2 billion barrels of oil would ultimately be recovered in Israel.

After the 1967 war the Gulf of Suez became accessible and shifted the Israeli government’s interest away from oil exploration within the “green line”. The early post-war years, though, did see the first offshore wells drilled in Israel´s portion of the Mediterranean Sea to Cretaceous and Jurrasic targets, and some additional drilling in the Negev to the Jurrasic.

The 1970s and 1980s

The oil crisis on 1973 spurred the government’s interest in further oil exploration and its focus shifted to large structures in deeper unexplored sediments. In this period a large effort was expended in the Sinai and Gulf of Suez, resulting in the discovery of the Alma oil field and the Sadot gas field. Exploration continued in the Israeli coastal plain and resulted in the discovery of the Shiqma gas field and the Ashdod oil field.

In 1979, James Wilson (then the former chief gelogist of Shell Oil Company) prepared a report for the Israeli government that estimated that the onshore reserves potential of the country (excluding the Dead Sea area) was 330 million to 2 billion barrels. In 1980, the Superior Oil Company (now a subsidiary of Exxon-Mobil) completed an 18-month basin study of the onshore areas of the country and postulated a reef trend along the coastal areas of North Central Israel. One of their primary prospects coincides with our Ma´anit location.

Exploration in the Sinai and Gulf of Suez ended with the signing of the Egypt-Israel peace treaty in 1979. Moderate levels of exploration continued in the Dead Sea area resulting in live oil recoveries from Triassic tests but no commercial discoveries. Additional drilling took place in the Ashdod area for Jurassic carbonate reservoirs with the discovery of one small field.

1990s Industry Privatization Brings Renewed Activity

The OEIL was disbanded after competing the study, and the government began the process of privatizing the government-owned drilling, exploration and production companies. Since the early 1990´s, the bulk of exploration activities have been conducted by a number of small Israeli publicly-traded limited partnerships, generally managed by Israeli industry professionals without significant outside assistance. At the end of the decade, several large international oil and gas companies acquired rights in exploratory prospects and became involved in exploration activities primarily offshore. These included British Gas, Enserch, Reading & Bates, and Samedan (now Noble Energy.)

During the decade there was some drilling to Triassic and Paleozoic targets. Israel National Oil Company (now Israel Oil Company) made a small discovery at the Zuk Tamrur field near the Dead Sea that produced 150-200 barrels of light oil per day from the Lower Triassic Ra´af formation. Ultimately, the well produced approximately 250,000 barrels of oil. Also in the Dead Sea area there was a non-commercial discovery at Massada (Emunnah), which produced some oil on test.

North of the Ashdod area, the exploration effort consisted of Modi´in´s David #1 drilled into the top of the Paleozoic and with gas shows in the Triassic Ra´af; Givot Olam´s Meged #2, #3 and #4 which tested Silurian oil in the Meged #2 and #4 from the Upper Triassic - Mohilla and recovered a bottom hole sample from the Mohilla in the Meged #3. Sedot Neft attempted to drill a Triassic test at Ma´anit, but ran out of funds before the well reached its objective. Zion holds rights to the Ma´anit well in connection with its Joseph License and in 2005 reentered and deepened the well to the Triassic with reported numerous significant oil and gas shows in a 2,100 foot interval. The well was abandoned in spring of 2007 due to mechanical problems encountered during completion operations. The Meged #4 well was drilled and tested during 2002-2004. The drilling of a horizontal bore hole to test the well´s production capability was attempted by Givot Olam in 2005, but due to equipment failure was unsuccessful.

Three wells were drilled by a group led by Isramco Inc. during the early 1990´s off the Ashquelon coast. A group of U.S. investors led by Armand Hammer (of Occidental Petroleum) participated in these wells (as well as several onshore wells). Two of these offshore wells tested oil. Yam-1 is reported to have tested 800 bbls/day and the Yam-2 well is reported to have tested 500 bbls/day of oil from the Jurassic. This led to increased interest in offshore exploration by Israeli, U.S. and British companies.

1998 to 2008 – Offshore Gas Discoveries Make the Difference

Over the past several years, significant amounts of natural gas have been discovered off the coast of Israel, which is an extremely important development for a country with very limited domestic energy resources. Initial estimates are 3.5 trillion cubic feet (Tcf) in proven gas reserves from several Israeli and Gaza fields which were discovered and will be be developed by two different groups.

The Mari and Noa fields are the largest fields, with estimated reserves of 1.7 Tcf of gas. Both were discovered by the Yam Tethys Joint Venture, consisting of Noble (formerly Samedan) Mediterranean, Avner Oil Limited Partnership, Delek Drilling Ltd Partnership and several other Delek group entities.

The second group is a joint venture led by British Gas and Isramco, together with several other members of the Isramco group and additional Israeli entities. In August 2000, the BG-Isramco group announced that it had discovered a large gas field 12 miles offshore at its Nir-1 well. The well reportedly contains gas reserves of 274 Bcf. 

Development of production facilities for the Mari and Noa fields have been completed, including a gas pipeline to shore. Deliveries of gas from the Mari Field began in February 2004. Installation of additional onshore and offshore infrastructure for gas distribution to local markets is continuing. The Nir Field has recently been abandoned due to unfavorable economics following the failure of the appraisal well. The Yam Tethys and Isramco groups are planning to drill a deep water gas test in the Mediterranean 55 miles west of Haifa in 2008 on a prospect first developed by British Gas. The Isramco group is in planning stages to drill a deep offshore oil test near its abandoned Yam-2 test drilled in the early 1990s.

In addition to its participation in Israeli offshore gas exploration and development, British Gas discovered a large gas field 15 miles offshore Gaza under an exploration license granted to it by the Palestinian Authority. Estimated to contain 1.2 Tcf of gas, the field is located within a few miles of the Yam Tethys and BG-Isramco discoveries. Negotiations with the Israeli government are underway to sell the gas from this field to Israel.