Adira Energy to explore shallow water prospects offshore Israel

Much of the pioneering exploration work in the shallow water basins was performed by a local company, Isramco, which subsequently was obliged to relinquish most of the licenses due to lack of funds. In the cases of Yam and Yam Yafo, "technical capabilities and economics prevailing at the time did not provide for continued development in those wells," explained Adira CEO Hezi Kugler. "However, we believe that advances in technology since then, as well as changed economics in the oil sector, now make for commercially attractive targets in these locations."

Adira expects to start drilling its three commitment wells on the licenses by the end of 2012, with the campaign probably continuing into mid-2013. The company could bring in a jackup for all three, or a semisubmersible for the deeper-water targets in Yitzhak and Gabriella. The hire could be on an exclusive basis, or via a time-share arrangement. A well is planned by the partners in the Shemen concession, targeting the same geological formation that stretches through Gabriella and into Yitzhak.

"Their schedule for drilling coincides with ours," said Kugler, "so we may co-operate with them on the rig."

In all three of Adira's licenses, oil is the primary target. In Yitzhak, the prognosed play is in Jurassic fractured carbonates, with a planned drilling depth of 4,600 m (15,092 ft). The same applies at Gabriella (4,900 m or 16,076 ft), although here there are gas prospects also in Pliocene/Pleisticene and Oligocene/Miocene turbidites and canyon-filled sands, at a drilling depth of 2,500 m (8,202 ft). Samuel has gas prospects in similar horizons, but higher up (2,000 m or 6,562 ft), while its oil targets are in lower Cretaceous carbonates with a planned drilling depth of 3,200 m (10,499 ft).

"If we prove commercial oil with any of these wells," Kugler added, "this could easily be delivered to Israel's existing oil offtake system – in particular via a new subsea pipeline direct to the oil refineries in the north around Haifa or to Ashdod in the south, or to the storage complex in Ashkelon. Should we find gas, our licenses are closer to the shore than the Mari B platform, from which the Noble-led Yam Tethys partnership supplies gas by pipeline directly to Israel's national grid. We should be able to do the same with no more difficulty."

More spare capacity could arise in the nearshore infrastructure Noble has commissioned to service the Tamar field.

Adira continues to build its in-house geological/geophysical and drilling engineering capabilities to prepare for the wells. The company has funds to cover its share of the pre-drill program, but will need positive resource evaluation reports to attract outside investment in order to start tendering for a rig by mid-2012. Each of the wells is likely to cost in the range $30-60 million, according to Adira's Executive VP and Co-Founder Alan Friedman.

Whatever the outcome of the individual wells, "we will continue to progress all of the licenses together," Kugler said, "and seek to optimize the potential of each of them, assuming it makes sense from a commercial standpoint."

Depending on the size of any discoveries, Adira is open to bringing in farm-in partners, Friedman added.