Bethel Finance: Mari B rig sinking faster than expected

www.bethelfinance.com
The Ministry of Energy and Water Resources is worried about the faster-than-expected sinking of the Mari B natural gas production rig at Yam Tethys, Israel's only supply of natural gas. Rig operator Noble Energy Inc. (NYSE: NBL) says that there is no immediate danger to the rig, but the ministry nonetheless secretly hired global energy consultancy firm RPS to carry out an independent assessment of the rig's condition and safety.

The ministry's Petroleum Department told RPS, "It is vital for the ministry to obtain an independent opinion from an external inspector that is not based on assessments by Yam Tethys" in view of the critical importance of the facility.

Yam Tethys' depleting Mari B reservoir is currently the sole natural gas supplier to Israel Electric Corporation (IEC) (TASE: ELEC.B22) and the Israeli market. The reservoir's reserves have plummeted due to over-pumping, which prompted Minister of Energy Uzi Landau to order IEC to keep as much gas as possible in the reservoir for peak demand expected this summer. IEC has warned the Ministry of Finance that if gas deliveries from Yam Tethys come to a complete halt, it will need a NIS 10 billion supplement to buy alternative fuels, such as diesel and fuel oil, or else there will not be enough electricity. This demand will raise the electricity rate beyond the 6% hike already set for 2012.

Noble and Delek Group Ltd. (TASE: DLEKG) produce gas from Yam Tethys's Mari B via a platform located on the border of Israel's territorial waters. Unlike floating rigs, the Mari B platform is tethered to the seabed. Noble Energy says that the rig will sink as the natural gas reservoir beneath is depleted, but the rate of sinking in recent months has been faster than expected.

Gas is also seeping out in the sea through cracks in the strata near the rig. Sources inform ''Globes'' that that the rig's rapid sinking and the gas seepage has already caused instability in the production wells, rendering some of them useless. Noble Energy staff told Petroleum Department officials that there was no immediate risk to the production platform.

The Mari B production rig is due to play important roles in the future. When pumping at Mari B is finished, surplus gas from the deepwater Tamar reservoir will be sent via pipeline to Mari B to replenish the reservoir, turning in into Israel's strategic reserve, as well as enabling the Tamar partners - Noble Energy, Delek, and Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) - to manage natural gas demand more efficiently.