Noble steps closer to sanctioning Leviathan

Operator on verge of making final investment decision for gas field development off Israel

Noble Energy is inching closer to sanctioning its Leviathan gas project off Israel, with the final investment decision still on track for the first quarter.

The US independent stopped short of announcing the project’s official approval during its fourth-quarter earnings release this week, but said that engineering design continued and procurement of long-lead items had begun.

The development is targeted to achieve first production by the end of 2019.

“The final steps to sanction are coming together nicely as we finalise contracts and permits required to begin construction,” chief executive David Stover told analysts. “We are moving full speed ahead.”

That includes bringing on “key suppliers”, many of which are veterans from the company’s previous Tamar and Mari-B projects off Israel.

Raw materials acquisition has begun for both the platform contract and subsea work, and development drilling is also expected to get under way by mid-2017, executives said.

Kiewit Offshore Services in Ingleside, Texas has been given the nod to build the fixed platform, according to industry sources.

The platform is expected to weigh in at more than 20,000 tonnes, with steel expected to be cut in the second half of the year.

The job follows Kiewit’s work with Noble on the earlier Tamar project.

Leviathan is to be developed via deep-water subsea wells sending gas to a shallow-water fixed platform. The discovery, which Noble says is the largest in the region, has an estimated 34 trillion cubic feet of gas in place.

Stage 1A of the Leviathan project is expected to cost $3.5 billion to $4 billion and exploit 1.2 billion cubic feet per day of gas, rising to 2.4 Bcfd by 2020.

Noble expects the wells to yield sustained production of more than 300 million cubic feet over time, with a design life of 25 years.

Noble said the project is fully funded with an “attractive cost structure” but it would continue to seek farm-in partners for both Leviathan and the nearby Tamar field.

Noble has a 39.75% working interest in Leviathan, with local partners Delek Drilling on 22.67%, Avner Oil on 22.67% and Ratio Oil on 15%.

Noble had earlier abandoned a plan to develop the field with a floater and instead moved for a fixed platform, reducing costs and allowing more flexibility and a faster path to first gas.