[Israel] Karish & Tanin

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[Israel] Karish & Tanin

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According to a CPR produced by NSAI in June 2019, the Karish Field contains 267 mmboe 2P reserves plus 37 mmboe 2C resources (70% net to Energean)

Energean made Final Investment Decision for the development project in March 2018. The Karish main field will be the first asset to be developed in the Karish and Tanin blocks by the Group. Karish was selected as the initial development as it is the largest discovery, is expected to provide the highest yield of liquid per volume of produced gas and is the closest discovery to shore.

TechnipFMC has been awarded a lump sum EPCIC Contract. Stena Drilling completed the drilling of three development wells during 2019.

The Company has decided to develop the Israeli fields using the "Energean Power" FPSO (Floating Production Storage Offloading) that will be installed 90 km offshore, making it the first FPSO ever to operate in the Eastern Mediterranean. The FPSO will have a gas treatment capacity of 800 MMscf/day (8 BCM/per annum) and liquids storage capacity of 800,000 bbls, which the Company believes provides a flexible infrastructure solution and, potentially the scope to expand output for potential additional projects.

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First steel was cut on the FPSE in Cosco Yard, in Zhousan, China on November 26, 2018. "Energean Power" FPSO hull sailed away from the Cosco Yard in China on April 3rd, 2020. The hull arrived in Singapore on April 15th, 2020.

Following a shut down due to the COVID-19 pandemic, works at the Admiralty Yard resumed in June 2020. Based on the excellent progress that has been made on the topsides, it is anticipated that the integrated Hull and Topsides will sail away from Singapore ten months later around with first gas from the project anticipated in 2H 2021.

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escveritas
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[Israel] Karish & Tanin

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This Field Development Plan (FDP) covers the development of the Karish and Tanin fields which are located between 75 and 120km offshore the northern coast of Israel in water depths of approximately 1750m. The Karish Main field, within the Karish Lease, was discovered in 2013 and lies some 25km north-east of Noble Energy’s Tamar field development. The Tanin Block A, B and C fields in the Tanin Lease were discovered in 2012. The Tanin mega-complex forms a northern extension of the super-giant Leviathan field that is currently being developed by Noble Energy. All discovered hydrocarbon accumulations contain sweet, lean, gas and associated liquids in high-quality, stacked, sands within the lower Miocene formation. The Karish C reservoir contains significantly more hydrocarbon liquids than the other discovered reservoirs. Separate exploration and production Leases have been granted over the two discoveries. These Leases were finalized and approved on April 25th 2017 and expire August 2044. 10-year extensions are allowed for in the Leases.

In addition to the discovered Karish Main field the Karish Lease contains numerous leads and prospects at multiple horizons. Similarly the Tanin Lease also contains significant yet-to-be drilled exploration potential (Blocks D, E and F in the Lease itself as well as segments of other accumulations that may close outside the Lease area). In addition to describing the development of the existing discoveries this FDP also indicates how additional discoveries would be accommodated and the potential impact such discoveries could have on the phased development timeline currently envisaged.

The following maps, prepared by Energean from the 3D seismic shot by Noble Energy, identify and name the discoveries, prospects and leads in each Lease at the lower Miocene level.

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Re: [Israel] Karish & Tanin

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Development Strategy

Detailed reservoir and facility studies have been undertaken over the last 12 months, assessing a range of
development scenarios taking into account uncertainties in reservoir size and performance (particularly strength
of aquifer), facility type and location, development phasing, current gas-market capacity, gas-market growth
potential and liquid disposition point. Value drivers were defined and used to rank the large number of potential
development scenarios identified. This process (see section 7 for details) generated an optimum development
plan as summarised below:
  • A phased development approach will be followed. The Karish Main field will be developed first. Tanin A, C and B blocks (and any exploration discoveries made following the Karish Main development within the Karish and Tanin Leases) will be tied back subsequently to the Karish facilities. Karish Main was selected as the initial development as it is the largest discovery, provides the highest yield of liquid per volume of produced gas and is the closest discovery to shore,
  • A new-build, spread-moored FPSO will be located immediately south of the Karish Main field in approximately 1700m water depth.
  • Three development wells will be drilled initially in the Karish Main field and tied back to the FPSO. One well will be located in each of the three mapped fault blocks close to local structural highs. These three new Karish Main development wells will be drilled deviated from a central location with a maximum offset of less than 1.2 km and angle less than 42o. The existing exploration well will not be re-entered and sidetracked. The wells will be completed in the C reservoir with an OHGP. Well positions have been optimised to provide good sweep of both the C and D zones. The D reservoirs are drained through communicating faults. Two scenarios for B sand production have been examined and are represented in the FDP as two alternative cases (see below for details).
  • A production manifold will be located immediately south of the well cluster and will include a spare slot for a Karish North discovery well or to enable an additional multi-slot manifold to be accommodated. The Karish Main manifold is designed to allow it to be extended should dedicated Karish Main A and/or B reservoir wells be justified at a later date. Karish North could also be tied back via this route if dual flowlines from a larger discovery/development are desirable.
  • The Tanin A, C and B blocks would be developed (in this order) after the Karish Main field. The exact date will depend on the rate of gas extraction (sales) from Karish Main and the pressure support provided by the underlying aquifer. It is also possible that other discoveries closer to the Karish FPSO would be developed before the Tanin discoveries. The initial Tanin development would consist of 3 wells in the A block tied back via a new manifold and a 40km long multi-phase production system to the Karish FPSO. The existing Tanin exploration well will not be reused. It is anticipated that the prospects in the NE part of the Lease would be explored/appraised prior to the development of Tanin to ascertain the total volume of resources in the Lease. A full development of the Tanin Lease may require up to 8 wells to be drilled eventually. After the A block, the C block would be developed with 2 wells and finally the B block with a single well. Although the volumes in the B block are small, a single well and tie back to an existing sub-sea system was shown to be commercial. It should be noted that in the economic case included in this FDP the 2nd C Block well
    and the development of the B Block are excluded (both costs and production) as at a flat 3 BCM/year production rate, and with the calculated in-place volumes, their associated gas volumes would be produced after November 2044 (end of the Lease) and hence are not captured in the presented economics. In reality Energean expects these wells would be drilled and the Lease extended, particularly if exploration wells have led to further discoveries. The Tanin E and F block prospects are the most attractive targets in the Tanin Lease from a development perspective and would be accelerated ahead of Blocks A and C if discovered. This would reduce the number of wells drilled in the Lease period. Any exploration wells drilled would be designed so they can be used as development wells considering the high POS calculated for these prospects.
  • The FPSO will process fluids produced from the Karish field, and later other nearby discoveries and eventually the fluids from Tanin. Three streams will be created:
    o dry gas to INGL pipeline specification;
    o a mixed oil/condensate stream stabilized to tanker specification;
    o Hydrocarbon-free water.
  • The FPSO will be developed with a design life of 35 years to ensure that it remains operable through to end of the available 10-year Lease extension period (November 2054),
  • Dry gas will be transported to the Israeli coast (Dor beach) via a new build, 90km, 24”/30” outside diameter pipeline. This pipeline will leave the FPSO with a 24” diameter and increase in diameter approximately 15km from shore to 30”. An “interface facility” will be included in the dry-gas pipeline at a distance of 10 km from the Israeli coast. This will consist of a full-bore, inline ball valve equipped with a valved T-piece upstream and downstream. This will enable 3rd party gas to be accommodated in the near-shore and onshore sections of the pipeline at a point in the future when
    other smaller fields are developed. INGL will install a manifold and tie it into these valved T-pieces at that time.
  • The last 10km of the offshore dry-gas pipeline and the onshore section will be owned by INGL and funded by the Israeli government. The costs and economics included in this FDP however assume the whole line will be funded by Energean. Energean envisages modifying its budget when the magnitude of government funding for this section of the dry gas line is confirmed.
  • A light-oil/condensate blend (approximately API 50) will be stored on the FPSO (up to 800,000 bbls of crude storage is available) and then transferred to tankers offshore and exported. 7 loadings per year are envisaged.
  • De-oiled produced water will be stored for a number of years before being discharged to sea.
  • The FPSO will generate its own power using either flash gas from the oil train or gas taken from the export line.
  • The FPSO will be designed to satisfy all security requirements of the Israeli Ministry of Defense.
In parallel with performing necessary technical studies, Energean has actively engaged with gas buyers in Israel to determine the potential demand for Karish gas by 2020 and the likely growth in demand following this production start-date. Based on this work it has been decided that the Integrated Production System outlined above will have an initial peak capacity of slightly more than 400 mmscf/day. This will allow annual gas sales
of between 3 and 4 BCM/year to be achieved. By using a spread moored FPSO equipped with spare realestate, the capacity can later be expanded as local market demand grows. A maximum capacity of between 600 and 800,000 mmscf/day is envisaged. For this FDP it has been assumed that Energean successfully sells 3 BCM/year of gas and that it maintains production at this rate until all discovered, commercial resources are produced. This means that the production plateau extends beyond the end of the primary Lease period.

Presented economics are cut-off at November 2044. 3 BCM/year is considered the minimum gas sales rate at which the Karish and Tanin development project would be sanctioned by Energean. All economics presented in this FDP are based upon this 3 BCM/year, gas sales rate.

The dry-gas pipeline linking the new build FPSO to Dor will be designed such that following expansion, peak rates of some 800 mln scf/day of gas can be transported to the INGL transmission system. Initial capacity of the installed 24”/30” line will be > 650 mln scf/day. This will be expanded by adding a second riser. These capacities take into consideration gas from 3rd party suppliers accessing the INGL owned section of the dry-gas
pipeline. The FPSO will initially be equipped with a single process train of nominal capacity 400 mln scf/day. A second identical train could be added to double capacity.
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Re: [Israel] Karish & Tanin

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Karish North Final Investment Decision and New Term Loan

London, 14 January 2021 - Energean plc (LSE: ENOG, TASE: אנאג (is pleased to announce that it has taken Final Investment Decision (“FID”) on the Karish North gas development, offshore Israel, 21-months after the announcement of the discovery.

In November 2020, DeGolyer and MacNaughton issued an independent Competent Persons Report that, inter alia, certified 2P reserves of 32 Bcm of gas plus 34 million barrels of liquids (approximately 241 million barrels of oil equivalent in aggregate) in Karish North as at 30 June 2020. The discovery will be commercialised via a low-cost tie-back to the Energean Power FPSO, which will be just 5.4km away. Production from the first well at Karish North is expected to be up to 300 mmscf/d (approximately 3 Bcm/yr) and first production is expected during 2H 2023. Initial capital expenditure in the project is expected to be approximately $150 million, or $0.6/boe; and Energean estimates that the project will deliver IRRs in excess of 40%.

On 13 January 2020, Energean signed an 18-month, $700 million term loan facility agreement with J.P. Morgan AG and Morgan Stanley Senior Funding, Inc. (the “Loan”), the primary uses of which will be:

• Accelerating the development of Karish North, enabling the capital expenditure on the project to be undertaken in advance of first gas from Karish Main. Following first gas from Karish North, the overall Karish project well stock will be able to produce well in excess of the full 8 Bcm/yr capacity of the FPSO, retaining operational redundancy in the well stock therefore further enhancing overall project reliability.

• Funding the $175 million up-front consideration for the acquisition of the minority interest in Energean Israel Limited, as announced on 30 December 2020, which becomes payable on transaction close, expected 1Q 2021. Energean views the acquisition, for between $380 million and $405 million in total, as highly value-accretive, with very attractive transaction metrics.

Additional uses of the loan are:

• Funding approximately $100 million of capital expenditure required to install the second oil train and second riser on the Energean Power FPSO, which will increase the Energean Power FPSO liquids production capacity to approximately 40 kbopd ( from 21 kbopd) and allow maximum gas production of 800 mmscf/d (approximately 8 Bcm/yr, from 6.5 Bcm/yr). Both the oil train and the second riser are expected to become operational
during 2022.

• The 2022 offshore Israel exploration and appraisal drilling programme in early 2022, with up to five wells including:

o Appraisal of the potential oil rim that was identified as part of the Karish development drilling campaign plus exploration of further prospective gas and liquids volumes within the Karish lease.
o Block 12, which is located between the Karish and Tanin leases, and is estimated to contain gross prospective recoverable resources in excess of 108 Bcm (3.8 Tcf) according to the D&M CPR, with the primary targets having geological chances ofsuccess ranging between 63% and 79%. The first well is expected to target the 20 Bcm (0.7 Tcf) Athena prospect, for which the primary target (11 Bcm /0.4 Tcf) has a 70% geological chance of success. Success at Athena would significantly de-risk the remaining 88 Bcm (3.1 Tcf) of prospective resources in the block. Any discovery in that block would be prioritised over the development of Tanin due to (i) lower capital expenditure investment (as compared to Tanin) and (ii) the
absence of any seller royalties, unlike the Karish and Tanin leases as Block 12 was not part of the original Karish-Tanin acquisition.
o Additional prospects assessed to contain 102 Bcm (3.6 Tcf) of gross recoverable prospective resources, based on management estimates, in Energean Israel’s remaining exploration blocks.

• Whilst total pre-production capex guidance for the Karish Main project remains at $1.7 billion plus the $140 million of deferred payments to TechnipFMC, the balance of the Loan will provide further financial flexibility for Energean Israel Limited.

The Loan will only be drawn to the extent necessitated and drawn amounts will attract a margin of 5.75%, which steps up by 0.25% every three months, with a maximum of 7.00%. The Loan has been sized to cover the cost of associated fees and interest. Energean maintains its target to retain
its medium-term net debt / EBITDAX ratio below 2.0x On 13 January 2021, Energean also agreed with the existing lenders of its $1.45 billion project
finance facility to extend the maturity by nine months, from December 2021 to September 2022.

Combined with the above Loan, the extension to the maturity date of the project finance facility provides Energean the necessary time and flexibility to optimise its long-term capital structure. This is expected to take place in 2021, depending on market conditions.

Mathios Rigas, CEO of Energean, said: “I am delighted that we have taken Final Investment on Karish North, proving the value of the Energean Power FPSO as a quick and low-cost commercialisation route for our assets in Israel. We are also increasing the liquid processing capacity of our FPSO to process the additional volumes we discovered for minimal incremental cost. The new term loan and the extension of our project finance facility are a further testament of the confidence of the financial markets in Energean and I want to thank all the institutions for their support. We remain committed to optimising our capital structure to ensure that we maximise total shareholder returns whilst implementing our growth ambitions in Israel and the East Med. We remain on track to achieve our goal of delivering meaningful free cash flows that will supportthe payment of a sustainable dividend whilst also moving towards our stated target to achieve net zero emissions.”
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Re: [Israel] Karish & Tanin

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TechnipFMC Receives Integrated EPCI (iEPCI™) Letter of Award (LOA) for Energean’s Karish North Development in Israel

LONDON & PARIS & HOUSTON--(BUSINESS WIRE)-- TechnipFMC (NYSE:FTI) (PARIS:FTI) has received a letter of award (LOA) by Energean Israel Limited for the development of the Karish North field, located offshore Israel.

TechnipFMC will design, manufacture, deliver and install subsea equipment including the subsea production system, rigid flowlines and umbilicals as a tieback to the ‘Energean Power’ FPSO as well as the second gas export riser.

Jonathan Landes, President Subsea at TechnipFMC, commented: “We are delighted to partner again with Energean.This LOA demonstrates the value of our in-depth field knowledge and previous experience with Energean through the Karish main development, awarded to TechnipFMC in 2018. Early client engagement, leveraging our iFEED™ capability, as well as our ability to offer a full suite of services and global experience, form part of our unique fully integrated EPCI (iEPCI™) offering. We look forward to further expanding our partnership with Energean through the development of Karish North.”
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Re: [Israel] Karish & Tanin

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Re: [Israel] Karish & Tanin

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First gas from Karish

London, 26 October 2022 - Energean plc (LSE: ENOG, TASE: אנאג (is pleased to confirm that first gas has been safely delivered at the Karish field, offshore Israel.

Highlights
• First gas has been achieved on the Karish project
• Gas is being produced from the Karish Main-02 well and the flow of gas is being steadily ramped up
• Preparation for transmission through the gas sales pipeline is progressing and gas sales to Energean’s customers are expected to commence in the next couple of days
• Karish Main-01 and Karish Main-03 wells are expected to be opened up in approximately two and four weeks, respectively

The Energean Power FPSO and the sales gas pipeline have an ultimate capacity of 8 bcm/yr. The initial capacity is up to 6.5 bcm/yr, and commercial gas sales are expected to reach this level approximately four to six months following first gas. Energean’s growth projects – the Karish North development, the second oil train and the second export riser – are on track for completion in late 2023, following which Energean will be able to produce to the full 8 bcm/yr capacity of its infrastructure.

Mathios Rigas, Chief Executive Officer of Energean, commented:

"I am delighted to confirm that Energean has reached first gas at the Karish field, offshore Israel.

“We have delivered a landmark project that brings competition to the Israeli gas market, enhances security of energy supply in the East Med region and brings affordable and clean energy that will displace coal-fired power generation, making a material impact to the environment.

“We are committed to reach our medium-term targets of 200 kboed production and $1.75 billion of annualised EBITDAX and the delivery of the Karish project is a major milestone towards this goal. We are now focused on ramping up production and delivering the full 8 bcm capacity through our expansion project to the Energean Power FPSO.”
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