Noble Energy: Stakeholder Collaboration Integral for Cyprus LNG Project
Natural Gas Europe was pleased to have the opportunity to interview a representative of Noble Energy regarding a future LNG plant in Cyprus, appraisal drilling of the Aphrodite well in Cyprus, the export options and routes for Cyprus and Israel and its activities in the Eastern Mediterranean.
Cyprus signed a Memorandum of Understanding with Noble Energy, Delek Drilling and Avner Oil Exploration on June 26 regarding the development of a liquefied natural gas terminal. What is the timeline expected? What are the export markets considered? Will the LNG terminal be used solely to transport gas from Cyprus or is it designed to receive and process gas from neighboring Israel and Lebanon?
Based on results of the A-1 well drilled in 2011, the estimated resource size for the natural gas discovery in Block 12 is 5 tcf to 8 tcf, with a mean of 7 tcf. If after the assessment of the data that will result from the appraisal drilling- this range is confirmed, one concept for the commercialization of Block 12 natural gas production would be to construct an LNG facility on land identified by the Republic of Cyprus in Vasilikos, where space is available for at least three LNG trains. We completed significant engineering work for this site and established its viability for a world-class LNG export facility. Ultimately, the decision regarding how an export project will proceed will be based on collaborative efforts with the Republic of Cyprus.
The cost estimates and timeline of an LNG project would be developed as a result of a detailed engineering FEED study.
It is intended that the LNG plant will be capable of being expanded to accommodate additional natural gas discovered in the Cyprus EEZ either in Block 12 or in other blocks which have been licenced to date (Blocks 2, 3, 9, 10 and 11) or may be licenced in the future, as well as natural gas from neighboring states.
Markets exist in Europe and Asia. Many regions are looking to diversify natural gas, and marketing options will be closely evaluated. Noble Energy is working with all stakeholders on plans to produce discovered Cyprus natural gas resources and maximize the potential value as quickly, safely and cost-effectively as possible.
Where will the LNG funding come from?
As with any LNG project, there are various funding options. Ultimately, the decision regarding how the LNG project would be funded will be based on collaborative efforts with the Republic of Cyprus.
When will Noble announce the results of the Aphrodite appraisal drilling? Will a disappointing result affect Noble's plans to move forward with the LNG project in Vassilikos?
We estimate drilling will take approximately three months to reach a total depth of about 5,600 meters below sea level. Water depth at the well is about 1,700 meters. After drilling is complete, assessment of the data is expected to take about 60 to 90 days. Based on results of the A-1 well drilled in 2011, the estimated resource size for the natural gas discovery in Block 12 is 5 tcf to 8 tcf, with a mean of 7 tcf. The aim is to confirm the range and ensure the minimum of that range is adequate to support the LNG project.
When is the Leviathan expected to come online? In Noble's views, how will Israel export its gas (which routes will it adopt and to which export markets)?
In partnership with the governments of Israel and Cyprus, we are evaluating multiple export options. Ultimately, decisions regarding how export projects will proceed in each country will be determined by each country's respective government.
Will the fact the Israeli cabinet reduced its export quota to 40% from 50% affect its attractiveness to investors?
We are studying the official decision and will provide comment when we have a full understanding of the details of the decision.
Will Noble be undertaking other exploration activities in the Eastern Mediterranean? And where?
Noble Energy leverages its success from around the world to safely and responsibly create exceptional opportunities. Noble Energy made a commitment to the Eastern Mediterranean region when it began energy exploration in the challenging deep waters of the Eastern Mediterranean.
Is Noble accelerating the pace of the LNG project in Cyprus to take advantage of the small window of opportunity before major players enter the gas market and potentially drop gas prices?
Various commercialization options for Block 12 natural gas production were considered. Noble Energy, its partners and the Government believe that an LNG plant at Vasilikos is the best option for developing and marketing Block 12 natural gas. Noble Energy is working with all stakeholders on plans to produce these resources and maximize the potential value as quickly, safely and cost-effectively as possible.
What are the main markets that the Eastern Mediterranean countries should be considering?
Markets exist in Europe and Asia. Many regions are looking to diversify natural gas, and marketing options will be closely evaluated. Noble Energy is working with all stakeholders on plans to produce these resources and maximize the potential value as quickly, safely and cost-effectively as possible.
Will Israel choose to go for pipeline, LNG in Cyprus or its own LNG? And if the latter, how in the absence of a coastal site?
The cost of a pipeline from Israel or Cyprus to Turkey would need to be studied carefully in light of the difficult physical terrain. Ultimately, decisions regarding how an export project will proceed in Israel will be determined by its government.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.
Follow Karen on Twitter: @karenayat