Report: Gulliver Gas Field Small, but Accessible

Offshore field's proximity to proposed terminal near Michmoret beach drives production costs down

The offshore Gulliver license has a 25% potential for holding a best estimate of 2.87 billion cubic meters of natural gas according to its prospective resources report. This would make it a relatively small reserve, with gas valued at $560 million. The Tethys Sea reserve, by comparison, yielded over 10 times this amount 33 BCM.

Equipoise Solutions, the British company that prepared the report, mentioned that four formations in the license potentially contain gas but that it only dealt with two of these. The other two, the report said, would require further geotechnical work before assessments could be made and were classified only as leads. One of these, the Main Deep, lies underneath a larger reserve according to the report and will require exploratory drilling to estimate its scope.

The report was prepared for Gulliver Energy and the Zerah Oil and Gas Explorations limited partnership, each holding a 41.5% stake in the license. Gulliver is trading at a $7.5 million company value and Zerah at $4.4 million. The other stakeholders are Ashtrom Group with 12% and AGR Petroleum Services Holdings of Norway, which operates the site and owns the remaining 5%.

Based on 3D shallow water seismic surveys conducted in the license area three kilometers offshore between Netanya and Haifa covering 46 square kilometers from September to November 2012 at a cost of $6 million, the report followed PRMS (petroleum resources management system) guidelines. The gas reserves are at a depth of between 900 and 1,000 meters under shallow water running 20 to 30 meters in depth.

The high estimate given by the report was 6.1 BCM, equivalent to a value of $1.2 billion.

"In contrast with deep-water drilling and deep targets in the Mira, Sara, Gabriela, Yam Hadera and Shimshon gas reserves where costs of exploration drilling total about $100 million to $150 million, the cost of drilling in the Gulliver license gas reserve is estimated at just $30 million," said Rami Kremien, CEO of Gulliver Energy. "The proximity to shore and to the planned pipeline and terminal in the Michmoret-Dor Beach area bring the costs for underwater development for the reserve and connections to the gas pipeline substantially low in comparison to deep-water reserves."

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